NeMa Conference Africa Day
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Overview of the African Custody Market
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NeMa Conference Africa Day
- 1. Africa Securities Summit Keeping Abreast of Infrastructural Challenges in the Emerging and Frontier Markets of Africa
Editor's Notes
- Africa – the sleeping, potential economic giant – is stirring. Acceleration in private capital flows to sub-Saharan African countries is stimulating growth and creating opportunities not seen in this part of the continent in many years. Although this resurgence in interest may suggest an economic transformation in the region, risks still remain for investors. What makes this growth so astounding is that until recently Africa was referred as “ the worst economic tragedy of the 20th Century ” by the World Economic Forum in 2004. In 2008, the region has implemented more reforms than in nay previous years, as Mauritius, Botswana, and Malawi were top performers in their categories and Rwanda was the world leader in reforms. The flow of capital from private equity funds into Africa is also starting to accelerate such as Alquity Investment Management that launched a fund last month aimed at creating more opportunities in Africa, by donating a minimum of 25% of its net fee revenue to microfinance projects in the continent with the aim of creating about 100,000 jobs by the end of 2012 and 100,000 jobs annually thereafter. This is not to say that the economic path ahead for Africa will be smooth. Unstable states threaten regional stability. According to the World Bank, Africa faces an annual $23 billion financing gap to build necessary infrastructure and corruption remains a scourge.
- Some experienced investors are optimistic, Renaissance Capital led by my old boss at CSFB Moscow, Stephen Jennings expects “ Africa to grow faster than Asia did at the equivalent stage of its take-off ”. Their ambition is to dominate trading flows on the continent. “ Call us crazy, but when we look at Africa we believe this will be the fastest growing part of the world ”. Also “ We believe that the highest investment returns will be from this part of the world over the next 20 years ” Further demonstration is the announcement in March that the Nigerian Stock Exchange, Ghana Stock Exchange and Bourse Régionale des Valeurs Mobilières of Cote D’Ivore have agreed to integrate their capital markets into the West African Securities Market. Stating that “ our markets may be younger than some, but it is for this reason we are looking to drive growth through strategic partnerships. It is equally important to provide a safe and effective market place to support wealth creation and to offer product diversity to investors ”. At the last meeting of the African Stock Exchange Association held in Abuja, Nigeria last December, the delegates examined the challenges faced by the African securities exchanges in entrenching strong corporate governance, which was agreed to be more important than financial issues. The participants opted for regulations or compliance of upholding corporate governance ethics, in preference to self regulation. It was only unfortunate that as far as one can tell, no press releases put out and neither the ASEA secretariat nor the press liaison people from the NSE have been replying to emails.
- From an article published on the 21st May, SSA has “become the region to invest ” Strong market growth (equities have fallen 11% in Brazil, 21% in China and 1% in India. SSA have witnessed strong growth with Kenya & Nigeria with YTD rises of up to 30%) High GDP (expected growth 4.7% and 5.8% in 2010 and 2011) Huge natural resources ( 12% of proven oil reserves , 6% of proven gas reserves and the region remains the least explored in the world – recent discoveries in Uganda & Ghana)) Low sovereign debt levels Attractive valuations of banks Rising inter-regional trade China increasing investment & trade ties expected to top $100bn in 2010 Huge investment opportunities in power, road & telecoms Progress recorded in the fight against corruption While Africa was the last of the world’s regions to make the switch from traditional to modern stock exchanges that process has been gathering pace over the past 5 years. The economic downturn, far from slowing down that transition, has accelerated it, and African stock exchanges are now positioning themselves for an anticipated revival in investor appetite for frontier market stocks
- Egypt, Cote D’Ivoire, Kenya Malawi Morocco, South Africa, Tanzania, Tunisia Angola, Mozambique & Cambodia (don’t ask me but that was what an unnamed Global Custodian sent to me)