Johannesburg - The African Development Bank (AfDB) and the African Securities Exchanges Association (Asea) said yesterday that they had signed a five-year memorandum of understanding to jointly promote resources mobilisation to fund Africa’s economic growth.
The parties said the partnership, signed this week, would facilitate various projects that targeted areas such as financial markets infrastructure development, the introduction of new products in the market, improving market liquidity and market participation, information sharing and capacity building.
The African Exchanges Linkage Project was one such project that addressed the lack of liquidity in African capital markets by creating linkages across markets. Zeona Jacobs, a director of marketing and corporate affairs at the JSE, said yesterday that the project was under way and had completed phase one, which was the feasibility study.
“The main benefits… will be to increase liquidity through increased demand and supply, remove barriers to capital market investment in the continent through the alignment of policy and regulation, increase competition and reduce cost and… create (a) more integrated market,” Jacobs said.
“The plan is for the four current exchanges to be linked up and regional hubs first (as a pilot). When the latter is confirmed to be a success, the smaller exchanges in each region will link up through their regional hub. It is envisaged that in the long term all Asea members will link up as and when they are ready, including other African exchanges that are not Asea members currently.”
Akinwumi Adesina, the president of AfDB, said: “The strengthening and deepening of Africa’s financial markets as a powerful tool to mobilise… savings at an efficient cost and channel them towards funding Africa’s private sector is critical to accelerate the pace to achieve the bank’s 10-year strategy… for green and inclusive growth in Africa.”
Francois Conradie, the head of economic research at NKC African Economics, said: “The co-operation between exchanges would be welcomed by finance professionals, but we think that Africa’s generally low savings rates means that participation in formal financial markets will be limited for some time.
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