CAPE TOWN - Which of South Africa’s new exchanges will be South Africa's version of the US Nasdaq composite, an index which is heavily weighted towards information technology companies? 4 Africa Exchange (4AX) shows promise.
Early start-up phase business got a welcome funding boost this week as Finance Minister Malusi Gigaba’s Budget speech outlined measures to support them. He allocated a R2.1billion fund over the medium term that was being developed between the departments of Small Business Development and Science and Technology and the National Treasury to benefit small and medium enterprises during the early start-up phase - an area that has "historically had limited support because of the risks involved”.
As South African businesses embrace the Fourth Industrial Revolution (4IR) to remain relevant, the Johannesburg Stock Exchange may not suit the needs of these growing tech companies, with its onerous and expensive listing procedures.
These start-ups may look to South Africa’s alternate exchanges, including 4AX, Equity Express Securities Exchange, ZAR X, and A2X.
Fay Mukaddam, the chief executive of one of South Africa’s new stock exchanges, 4AX, in an open discussion with Business Report (BR), said: “We are very excited by the National Treasury’s decision to review the relevant provisions of the Income Tax Act that refer to the JSE to include the newly introduced stock exchanges.
"This is an important step that will open the playing field - and as our listing requirements for REITs have already been approved, we are open for business in this segment of the market.
“Our vision is for 4AX to be the preferred alternative exchange for Africa’s top companies and innovators. We are the only other exchange, apart from the JSE, that is licensed to list equity and debt. What really differentiates us is that because of our structures and listing requirements, we are able to accommodate diverse listings - offering innovators and entrepreneurs the opportunity to list new ventures, including bankable projects,” she said.
Mukaddam recognises the important role of the JSE and told BR that “the opening up of the capital markets will be game-changing for South Africa - and our vision for 4AX is to be a catalyst for tangible change in the local market.
“South Africa is a country with enormous potential, we have a vibrant young entrepreneurial society that will lead our country to prosperity,” she said.
The 4AX list of pipeline issuers and related industry sectors consist of the hospitality, construction, property development, property, retail, renewable energy, agriculture, financial services and health/alternative healing sectors.
The issuers range across first listings, dual listings and inward listings, and the combined market cap value is between R40 and R50bn.
Mukaddam aims to transform the securities industry and change the status quo by providing an alternative licensed exchange that is simpler, more affordable and more accessible to ordinary South Africans.
She said: “We make financial markets more inclusive by providing a safe and licensed platform that provides easier access and more product variety.”
This is the commitment straight from the heart of a woman who believes that South Africa can work, that life is not about oneself, but about what we give back and how we treat others.
“Our business is modelled on providing a simpler, more cost-effective and efficient listing and trading alternative in the local market.
"4AX is about transparency, local economic development and affordability, about being a vehicle for diversity and real economic inclusion that will drive transformation growth in South Africa and beyond."
4AX officially opened for trade in September 2017, two years after applying for a licence, with two issuers listings, NWK Limited and NWK Holdings and CA Sales listing in November 2017, and closed the year with commitments of at least nine more listings.
The challenges of starting a new business are immense in any industry. To start a business with the JSE as the incumbent is remarkable.
The challenge 4AX faced, and still faces, is that it is “unknown”.
“We need to educate and convince the market that our offering is a legitimate and well-regulated listing and trading alternative and that we are a fully-fledged stock exchange,” said Mukaddam.
She spoke about the new leadership changes in South Africa.
“It cannot be understated that growth, development and transformation depend on a strong and capable state. However, as a resilient and proud nation, we cannot expect the responsibility to fall solely on the state.
"President Ramaphosa’s message in his Sona about 'Send me' was a call upon every man, woman and child to take collective responsibility and participate in effecting positive change in the country we share.
"We are at a precipice, with burgeoning opportunities for growth and development within our grasp, and how everyone bands together to lend a hand will significantly influence our nation’s growth - for a South Africa for all,” said Mukaddam.
“While markets and society alike are not naive that poetic words will cleanse the country and restore the economy to be a prosperous one, what cannot be denied is that the tone from the top has been clear, inclusive and definitive since December."
She said the buoyancy could be seen in the markets, where the rand had strengthened and commodity prices had improved.