Lagos — One strong and virile African stock market, united by technology, is the ultimate dream. That dream for an integrated African capital market will take the centre-stage this week in Abuja, Nigeria's inland capital, at the four-day conference of the African Stock Exchanges Association, holding from Wednesday, October 25 to Saturday, October 28.
Seven-year-old ASEA, the prime organiser of the conference, has taken upon itself the task of promoting capital market activities in Africa, and ultimately creating what can be called an African Stock Exchange.
Achievement of that target, ASEA has realised, hinges on the acquisition and application of technology to the operations of Africa's stock markets. Which explains the emphasis on Information Technology by the organisers of the conference. The strategic objectives of the conference, ASEA has said, include the need to highlight the technological hurdles "that must be scaled for foreign enhanced investment flow."
Topics for discussion at the conference include: Information Technology and Capacity Building: A Challenge for Emerging Markets in Africa; and The Central Securities Depository Clearing and Settlement Systems, the Nigerian Experience
Others include: Automated Trading System of the Nigerian Stock Exchange; Challenges of Developing Municipal Bonds in Africa; Integration of Stock Exchanges and Cross-border Linkages, and Commodities Markets and the Interface with the Stock Exchanges
Among the speakers are: Mengistu Alemayehu, Senior Capital Market Specialist, IFC, Washington; Jim Mbaru, Chairman, African Stock Exchanges Association, and Gerrit H.de Marez Oyens, Secretary General, International Federation of Stock Exchanges.
Other speakers include Dave King, Executive Chairman, Duff and Phelps Credit Rating Co, South Africa; Ayo Salami, Nomura Securities, London, and Ndidi Okereke-Onyiuke, Director-General of the NSE.
The conference presents an apt opportunity for both capital market operators and regulators in Africa to review the situation of the market, and chart the way forward. They will seek to locate the level at which each of the 17 stock exchanges in Africa is operating, in terms of technological sophistication and regulatory framework.
At the moment, most of the stock exchanges in Africa still operate the call-over trading system, where the Call-Over Chairman reads out names of listed companies, and invites brokers to make their offers and bids. The major exceptions to this so far are the Johannesburg Stock Exchange in South Africa, and the Nigerian Stock Exchange (NSE) here. Both have achieved automation in trading systems.
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NSE, established in 1961, commenced the Central Securities Clearing System (CSCS) in 1997, and followed that with the introduction of the Automated Trading System (ATS) last year. This transition, together with that of South Africa, will be showcased as the target that other stock exchanges should aim at.
The conference is thus taking place against the background of a real challenge on the technological front. Only automated markets can be integrated for investors to derive value from their real-time investment decisions. "The idea is that it should be possible for an investor in London to call his broker in Lagos and buy shares here and in Cote d'Ivoire," says Victor Adeniji, a capital market operator here.
In the past investors from the developed countries shied away from African markets, citing high risks and unstable economic and political environments. But in the last 10 years, Africa countries have taken steps, including in some cases the establishment of stock exchanges, to reform their markets and make them attractive to investors.
Among the Emerging Markets therefore, Africa as a region currently ranks among one of the best places for investors to put their funds. In 1993, for instance, the Ghana stock exchange, then just three years old, was judged the sixth best market among the emerging markets. In 1994, it was judged the best index performing stock market. And just last year, the Nigerian market was judged the best among the emerging markets.
"Africa will always provide an opportunity to diversify portfolios in terms of the emerging markets," says Adeniji.
