The total market capitalization of African securities exchanges was $1.3 trillion as of March 2023. The Johannesburg Stock Exchange (JSE) is the largest stock exchange in Africa by market capitalization, with a total market capitalization of $1.2 trillion. The Nigerian Stock Exchange (NGX) is the second largest stock exchange in Africa by market capitalization, with a total market capitalization of $66.7 billion.
It is important to note that the market capitalization of African securities exchanges is highly concentrated. The top 10 exchanges account for over 90% of the total market capitalization. This is due to a number of factors, including the relatively small size of many African economies, the lack of liquidity in many African markets, and the high cost of compliance for companies listed on African exchanges.
On June 28, 2023, The African Securities Exchanges Association (ASEA) and the African Development Bank Group signed an agreement of a $600,000 grant to expand the number of linked African exchanges from 7 to 15 under the second phase of the African Exchanges Linkage Project (AELP).
According to the African Development Bank, the funds will come from the Korea African Economic Cooperation Fund (KOAFEC) Trust Fund, managed by the African Development Bank. The AELP is a flagship project of ASEA and the Bank Group to link African capital markets, thereby promoting cross-border securities, increasing liquidity, and diversifying investment opportunities for investors.
Furthermore, AELP’s second phase is set to provide investors access to over 2,000 securities listed on up to 15 capital markets through a cross-border securities trading platform tailored to the needs of regulators, central depositories, policymakers, and stockbrokers. Participating stock exchanges include the Botswana Stock Exchange, where the grant signing took place; the Ghana Stock Exchange and six other exchanges. The grant is also meant to support capacity building of institutional investors and capital market operators, according to the African Development Bank.
Thapelo Tsheole, the President of ASEA and the Chief Executive Officer (CEO) of the Botswana Stock Exchange, said: “We thank the African Development Bank for their invaluable support and dedication to developing African Capital Markets. Together, we are working toward a fully integrated Africa for the benefit of investors, businesses, and governments across the continent.”
Despite some of the challenges that African securities exchanges may encounter, such as the high cost of compliance for companies listed on African exchanges, the African securities market is growing rapidly. The market capitalization of African securities exchanges has grown by an average of 10% per year over the past five years. This growth is being driven by a number of factors, including the increasing economic development of African countries, the growing number of companies listed on African exchanges, and the increasing interest of foreign investors in African markets.
The African securities market is still in its early stages of development, but it has the potential to become a major global market in the years to come. As African economies continue to grow, so too will the African securities market.