African capital market players challenged to innovate, educate and advocate

By: The WFE Focus Team Dec 2016

A summary of the key themes and issues from the recent African Securities Exchanges Association (ASEA) Annual Conference.

The 20th African Securities Exchanges Association (ASEA) Annual Conference took place from 28 to 29 November 2016 at the Kigali Serena Hotel in Rwanda.

The conference, hosted by the Rwanda Stock Exchange (RSE) with the theme ‘Road to 2030: Making the African Capital Markets Relevant to the Real Economy’ brought together 300 delegates from the continent and beyond, and sought to demystify the capital markets to ordinary African citizens and its direct impact thereafter.

The annual ASEA conference is the flagship event of the Association that brings together key stakeholders of the African financial markets with the aim of positioning the capital markets as an engine of economic growth in the continent. The guest speaker at the conference was the Right Honorable Prime Minister of Rwanda Anastase Murekezi, who was accompanied by other members of the Rwandan Cabinet including Mr Claver Gatete, the Rwandan Minister of Finance. Mr Murekezi delivered a message from the President of Rwanda, His Excellency Paul Kagame, in which he commended the Association for its role in deepening the capital markets as a way of addressing the challenges that have hampered Africa from taking its place at the global economic level. Mr Murekezi also challenged the conference participants to embrace and work towards regional integration of the markets.

The forum brought together well recognised speakers with rich experience and knowledge on finance and the capital markets, including Professor Kingsley Moghalu, a former Deputy Governor of the Central Bank of Nigeria; Mr Tonye Cole, Founder of Sahara Group; Ms Staci Warden, Executive Director, Milken Institute and Chair of Capital Market Authority, Rwanda; Mr Sandy Frucher, Vice Chairman of Nasdaq; Mr Paul Muthaura, CEO, Capital Markets Authority Kenya; Mr David Grayson, Co-founder and CEO of Auerbach Grayson & Company, as well as CEOs from ASEA Member Exchanges.

The speakers touched on various topics, and the following key points summarise the discussions:

  • In order to be more relevant to the African economy, in growing their markets African countries must pursue industrialisation while also promoting sectoral variety in the stock exchanges.
  • African capital markets must be demand driven, rather than prescriptive. They must be formed by the needs and demands of the ‘main-street’ and must seek to ascertain the specific needs of investors and issuers in their respective markets.
  • African capital markets must find a balance between the local context and environment and alignment with global best practices.
  • African exchanges must champion sustainability in their markets and the wider economic ecosystem. Greater emphasis should be placed on Environmental, Social and Governance (ESG) components for the purposes of enhancing corporate transparency and performance.
  • Government participation and engagement remains key to creating an enabling environment that encourages investment, economic growth and development. Regulation must be responsive to market needs and create an enabling environment for growth and development.
  • Financial literacy and investor education are critical to making capital markets more accessible to the ‘main-street’. Capital market players must engage in aggressive and robust public education initiatives to deepen their respective markets and boost the uptake of product offerings.
  • African markets must continue to innovate new ways and products to reach the ‘main-street’ by leveraging technology and through the use of non-traditional platforms.
  • There is a need to find innovative ways to finance Micro, Small and Medium Enterprises, which are latent engines of economic growth which need to be nurtured by the financial markets to realise their full potential.

The conference was summarised by take away action points that challenged the financial sector to take up in product innovation, financial inclusion and advocacy of favourable regulatory frameworks.

Speaking at the close of the conference, Mr Celestin Rwabukumba, CEO of RSE noted that through innovation and technology, Africa’s capital markets have the potential to harness resources needed to fuel the structural transformation that the continent requires. “Currently, less than 5% of the African populace participates in the capital markets; this means there is a huge opportunity to widen the base of Africa capital markets by incorporating new models based on technology and other creative innovations that target provision of direct linkages with the ordinary citizens in order to bring them in the loop of resource mobilisation and utilisation,” said Mr Rwabukumba.