Are African stock markets robust enough to serve the continent?

The African continent is facing significant challenges in its capital markets, with issues such as plunging IPOs, global oversight, retail reluctance, and government interventions impacting the overall perception of African equities markets. To delve deeper into these challenges and explore potential strategies, CNBC Africa spoke with Lina Tonui, the Project Lead at African Exchanges Linkage Project. Tonui highlighted the collaborative efforts being made by African capital markets to address these issues and ensure a stronger market presence both locally and globally. The key themes of the discussion revolved around the need for regulatory reforms, stability in fiscal policies, combating corruption, and enhancing government support for market expansion. One of the primary concerns raised during the interview was the impact of exchange rate controls and inconsistent fiscal policies on African markets. Tonui acknowledged the challenges faced by countries like Kenya, which have been blacklisted by global institutions due to regulatory issues. She emphasized the importance of collaboration between regulators, stock markets, and governments to promote currency stability and facilitate new exchange listings. Through initiatives like the African Exchanges Linkage Project, efforts are being made to enhance market stability and reduce dependence on foreign currencies. Another critical issue discussed was the prevalence of corruption in some African markets, which can deter investors and undermine market integrity. Tonui highlighted the role of government in combating corruption and implementing regulatory reforms to protect investors and improve market transparency. By working closely with organizations like the African Union Commission and UNECA, efforts are underway to lobby governments for stricter regulations and policies that promote investor confidence. The conversation also touched upon the importance of changing global perceptions of African capital markets to attract more investments. Tonui stressed the need to raise awareness about the opportunities in African markets through roadshows, partnerships with international exchanges, and regulatory compliance. By highlighting initiatives like the African Exchanges Linkage Project, which provides a streamlined access point for investors, African markets aim to shift from negative to positive perceptions and align with international standards. In conclusion, Tonui expressed optimism about the role of government in expanding African markets through privatization and public asset listings. By fostering public-private partnerships and easing regulatory processes, governments can stimulate market growth and offer more investment opportunities. Collaboration between market stakeholders, regulatory bodies, and governments is essential to drive innovation, investor confidence, and market expansion in the African continent.