Over the coming months, two exchange operators plan to embark on ambitious projects they say could begin to turn Africa’s fractured capital markets into deep pools of sub-Saharan liquidity.

The two initiatives – one for a pan-African commodity bourse, the other to lure the biggest African names to list on the Johannesburg stock exchange – reflect what analysts say is a growing trend to regard the continent as a potential single market for investors.

The JSE, by far the continent’s biggest exchange, intends this month to unveil the first member of its “Africa Board”, an adjunct to the JSE’s main board on which it hopes some of the biggest African companies outside South Africa will take secondary listings.

The first will be Trustco, a Namibian financial services and education conglomerate.

The JSE is also in talks with companies in Nigeria, Cote d’Ivoire and Zimbabwe, according to Nicky Newton-King, deputy chief executive.

At the same time Financial Technologies, an ambitious Indian-based technology and exchange company, in December announced plans for Bourse Africa, a continental spot and derivatives exchange for commodities, currencies, bonds and diamonds.

Herbie Skeete, managing director of Mondo Visione, a UK-based exchange research company, says this is “probably the beginning of a trend to look at Africa as one entity, whether its commodities or equities”.

However, it would take some time “because there are so many barriers in the way”, he said.

Those barriers are daunting. Exchange controls abound and regulatory regimes are haphazard in much of Africa.

The JSE is facing some resistance from other stock exchanges in the region wary of an exodus of liquidity from their bourses. They are keen to preserve their own market for reasons of national pride.

“Stock exchanges are like airlines – every head of state wants one,” says one senior banker.

A potential complication for the JSE, which already sells its own range of futures contracts for agricultural commodities, is the arrival on the continent of Financial Technologies, which owns MCX, the Indian commodities exchange.

It plans to launch Bourse Africa as the first pan-African commodities exchange by the third quarter and hopes by the end of March to conclude talks about placing 40 per cent of he venture’s equity with seven “pan-African investors”.

Based in Botswana, the new exchange will use what it calls a “hub and spoke” model to allow traders at local bourses to conduct spot transactions and trade commodity derivatives with counterparties across the continent using Bourse Africa’s network.

The initial contracts will include gold, cocoa, wheat, maize and crude oil, with metals and energy to follow.

The effects of such financial instruments on a continent overflowing with natural resources could be far-reaching, says Chris Goromonzi, Bourse Africa’s executive director.

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