African stock exchanges looking for business

Africa’s stock exchanges need to take action to boost performance and relevance to attract investors. A clear change in policy can change the fact that only a relatively small part of Africa’s companies is listed on one of the stock exchanges of the continent.

BusinessDay Live reports that of the 1.5 million businesses registered in Africa, only 1,600 are listed on the stock exchanges of the 23 states that make up the African Securities Exchanges Association (ASEA). At the latest ASEA conference it became clear that the weakness of the many stock exchanges across the continent is that most remain illiquid with little trade and few listed companies.

With many African countries wanting to establish a stock exchange of their own, companies in Africa are not aware of the benefits of stock exchanges. Also, a large portion of African companies is family-owned; the owners are often reluctant to cede management control to shareholders.

“Although bank lending is expensive in Africa, it remains the preferred way to raise capital. Companies often prefer to pay the premium than grapple with the intricacies of a stock exchange”, BusinessDay Live analyses. To tap into changing attitudes of Africa’s new business leaders, “stock exchanges need to change; to find innovative ways to reach out to the African private sector and attract the kind of capital that mobile banking has shown exists in these markets.

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Image by ASEA

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