African markets should embrace innovation to remain competitive - CNBC Africa

African markets should embrace innovation to remain competitive

Special Report

by Trust Matsilele 0

SWIFT's Ian Bessarabia says there has been significant growth in Africa’s capital markets over the past decade. PHOTO: Getty Images

There has been significant growth in Africa’s capital markets over the past decade but there is still a long way to go before markets reach their full potential and Africans benefit fully from this growth; this is according to SWIFT’s Ian Bessarabia, head of business development for Sub-Saharan Africa.

According to experts addressing delegates at SWIFT‘s African Regional Conference 2015 in Cape Town, Africa’s growth would be supported by deeper, more accessible capital markets, and this called for improved technology so that markets can support growth and remain competitive with global peers.

Ade Bajomo, of the Nigerian Stock Exchange, said technology was critical, not only as a game changer but because [technology] fundamentally changes the way business is done and brings competitive advantage against peers.

Bajomo added that the NSE is working with other infrastructure in the region to create a harmonised regulated environment across West Africa taking advantage of 290 million people with a GDP size of 65 billion US dollars.

“The integration will create deeper liquidity and investors will find it easier to balance their risk portfolios across various exchanges in the region,” he said.

Bajomo added that the recent elections held in Africa’s biggest economy had helped ease fears that the outcome would affect markets.

“We are very delighted with the smooth transition of power from an incumbent to an opposition winner.”

Donna Oosthuyse, director of capital markets at the Johannesburg Stock Exchange said South Africa’s capital markets were being influenced by what was happening globally.

“Developments in the United States and elsewhere have helped lift performances globally and the perception of emerging markets remains strong by investors,” said Oosthuyse.

“We have to continue to innovate, for investors and issuers, and leverage much more the fact that we are a multi asset class exchange, which is relatively unusual.”

Oosthuyse also said investment community should ensure that the technology being used in the region remains competitive, adding there is a direct link between technology and levels of activity, especially by ensuring the safety and security of transactions.

Nerina Visser from ETF South Africa was critical about the heavy focus placed on aid.

“Aid can never be the solution to the challenges the region is facing as it comes with strings attached,” she said.

“[Instead] capital markets have the potential to give everyone the opportunity to benefit from the growth of their own continent. So, the big issue we have to address is how do we enable people to participate in that growth – what tools and products do we have to develop in order to empower investors?”

Visser said terminology was a critical element when trying to increase investor participation across Africa. Technical jargon and acronyms alienate retail investors, she said.

“The ability to communicate with people wherever they are, is fundamental to education, we need to drop the industry jargon so as to ensure that what we say resonates with retail investors,” said Visser.  

David Kanyi from Capital Markets Authority Kenya said the East African country had developed a 10-year master plan to develop the capital markets, working with all the stakeholders in the country’s financial sector.

In developing this, he said Kenya had taken learned lessons from the experience of both Malaysia and Indonesia, which had followed a similar development process. 

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