Johannesburg Stock Exchange (JSE), has partnered with African Development Bank (AfDB), six strong African exchanges and the African Securities Exchange Association (ASEA), to strengthen investments into Africa.
The collaboration comes to foster cross-border trading and settlement of securities across African countries’ exchanges. Further—the initiatives go after unlocking the Pan-African investment potentials, which also leads to the diversification needs of investors and attending to various drawbacks such as the inadequate depth and liquidity in Africa financial markets.
According to a report by Quartz Africa, Foreign Direct Investment (FDI) is expected to have risen by 20 per cent in 2018 to $ 50 billion after tanking in 2017 by 21 per cent to $42 billion.
More importantly, the seven Stock Exchanges participating in the first phase of the AELP represent about 85% of Africa’s securities market capitalization.
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The JSE is based in Johannesburg, South Africa where it has operated as a marketplace for the trading of financial products for 132 years. It connects buyers and sellers in equity, derivative and debt markets. The JSE is one of the top 20 exchanges in the world in terms of market capitalization and is a member of the World Federation of Exchanges (WFE). The JSE offers a fully electronic, efficient, secure market with world-class regulation, trading and clearing systems, settlement assurance and risk management
Despite Africa’s diverse financial landscape, it is still potential for the continent of 1.2 billion people to take a giant step into bolstering its investment line.
Anne Clayton, Head of Public Policy at the JSE found AELP to be a pivotal angle to other collaborative avenues across the continent.
“The AELP is a great addition to many collaborative initiatives around Africa. As the JSE, our focus is to enable sustainable and inclusive growth and development, not only in South Africa but on the continent as well. There is great interest within Africa for investment, and the AELP provides an opportunity for alignment of exchanges within the continent, therefore collaborations with key stakeholders will continue to be at the centre of securing a growth path for Africa,” she adds
Emmanuel Diarra, Manager of Capital Markets and Development at the African Development Bank opening remarks rationalized on partnership and development of capital markets.
“The African Development Bank has a long history and partnership with the African Securities Exchanges Association. This partnership complements the Bank’s interventions toward the development of deep and resilient capital markets in Africa.” He adds
AfDB has been a vibrant financial player within the African investment landscape, offering African developing nations a competitive advantage to boost their collective economies, hence—the collaboration will enhance AfDB’s efforts within regulation lines.
“The Bank will continue to enhance its work with regulatory institutions, institutional investors, stock exchanges and other capital market stakeholders to strengthen regulatory frameworks, broaden market participation and product offerings, as well as improve the dissemination of capital markets data for transparent pricing mechanisms” Diarra commented.
According to AfDB, the AELP kicked off in 2016 with only four exchanges and has grown to seven participating exchanges. The participating exchanges are the JSE, the Egyptian Exchange, Stock Exchange of Mauritius, the Casablanca Stock Exchange, Nairobi Securities Exchange, the Nigerian Stock Exchange and Bourse Régionale des Valeurs Mobilières which serves Francophone West Africa.
However, the main goal is for all 27 African stock exchanges to join the Project and increase Africa’s competitive advantage compared to other emerging markets.
Further, per AfDB press release, the AELP has aligned its goals to include the creation of a central trading platform linked to exchange trading systems; the free flow of trading information between linked exchanges; broker access to the linked trading platform, and the creation of products based on securities from the allied exchanges.
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