The 22nd ASEA Annual Conference took place in Lagos at the end of November. What were the key takeaways from the event?
The 2018 edition of the African Securities Exchanges Association (ASEA) conference was insightful, and I had a lot to take away from the robust agenda of panel discussions and presentations by more than 50 industry leaders and speakers over the two days of the conference.
At the top of my mind is the charge by the Vice President of the Federal Republic of Nigeria, His Excellency, Professor Yemi Osinbajo, GCON to ASEA members to do more to support technology startups in delivering clean-tech products that will ensure the sustainable development of the African continent. We were further challenged by the Vice President and Treasurer of World Bank, Ms. Arunma Oteh, who called on the Association to grow the total number of listed companies on member exchanges from 1,100 to 44,000 and scale users of our platforms to 100 million, leveraging technology.
Still on the theme of technology, our distinguished speakers explored the market potential of emerging technologies, such as blockchain, in achieving the democratisation of wealth and improving access to finance for SMEs. The key takeaway for me here is that African capital markets need to effectively exploit technology to empower a larger proportion of the populace to access the capital market, and more effectively cater to the real economy. Though we have seen this in a number of markets, for example, the mobile powered m-Akiba bond in Kenya, I believe that African exchanges can do more to fully exploit the powerful potential of mobile and other technologies to drive internal operations, product development, investor education etc. and ultimately enhance the liquidity and efficiency of our markets.
Over the last few years, ASEA has made efforts to strengthen collaboration between exchanges and improve the availability of reliable data on our capital markets. I am therefore most pleased about the launch of the Sustainability Roadmap and Market Development report, which is a result of the collaborative efforts of member exchanges to proffer 'home-grown' solutions to market challenges, and recommendations for achieving greater global competitiveness. Other key highlights for me were the signing of a Memorandum of Understanding (MOU) between ASEA and the World Federation of Exchanges (WFE), and the first African Exchanges Linkage Project (AELP) roundtable meeting for brokers, which was held on the sidelines of the conference.
Looking back over your four-year tenure as ASEA President, what are your most significant moments?
I am proud of all that ASEA has accomplished over the last four years through the dedication of our members and support of our strategic partners, regulators, intermediaries, governments and other key market stakeholders.
Since 2014, we have formalised several relationships that continue to provide significant value to ASEA and its members. Key among these are our relationships with the: (i) African Development Bank (AfDB); (ii) Chartered Financial Analyst (CFA) Institute; (iii) Chartered Institute for Securities & Investment (CISI); (iv) Financial Sector Deepening (FSD) Africa; (v) African Corporate Governance Network; (vi) Africa Investor; and of course (vii) sponsors of our annual conference and capacity building events. We are in the process of strengthening our ties with the Africa Union Commission (AUC) and signed an MOU with the WFE on 28 November 2018.
I am pleased with the strides the Association has made in the critical area of regional integration. The AELP, a joint initiative by ASEA and the AfDB, seeks to facilitate cross-border trading and settlement of securities across participating exchanges in Africa. In its initial phase, the AELP will create linkages between six (6) African capital markets that represent ~85% of Africa’s total market capitalisation. The participating exchanges are: i) The Nigerian Stock Exchange (NSE); ii) Nairobi Securities Exchange (NSE); iii) Johannesburg Stock Exchange (JSE); iv) Casablanca Stock Exchange (CSE); v) Bourse Régionale des Valeurs Mobilières SA (BRVM); and vi) Stock Exchange of Mauritius (SEM). Ultimately, the project is expected to boost Pan-African investment flows, promote innovations that support the diversification needs of investors in Africa, and help address the lack of depth and liquidity in Africa’s financial markets. Last month, the project received a grant of $980,000 from the Korea-Africa Economic Cooperation (KOAFEC) fund via the Africa Development Bank (AfDB), which will create greater impetus towards its actualisation.
In order for ASEA to better understand the needs of its stakeholders and be better equipped to respond, we developed a five-year strategic roadmap for the Association this year. The strategic plan sets the tone and direction for the Association and rests on five main pillars: (i) Positioning and branding; (ii) Capacity building and knowledge sharing; (iii) Advocacy and regulations; (iv) Operational excellence; and (v) Leadership. I am confident that the strong corporate governance we instituted and this plan will guide the Association’s continued success as the new Executive Committee of the Association settles down to drive the various initiatives under the plan.
The WFE and ASEA signed a landmark MOU at the conference, pledging to collaborate with each other to develop the wider African capital market. Why is this partnership so important?
The WFE is the global industry association for exchanges and clearing houses, which is home to nearly 45,000 listed companies, with a market capitalisation of over $82.5 trillion at the close of 2017. ASEA on other hand, is home to approximately 1,100 listed companies with a total equity market capitalisation of $1.5 trillion – which leaves a tremendous opportunity for the Association to tap into the wealth of experience of The Federation and its members to boost capacity, efficiency and liquidity in Africa’s capital markets.
As an active member of the ASEA and the WFE, I can say that both organisations are completely aligned in their quest to unlock the transformative power of capital markets. As such, this partnership will inspire and support African exchanges to achieve greater levels of competitiveness through collaboration, information sharing and the adoption of best practices based on global standards - while remaining appropriate to the needs of the customers and economies we serve. At the same time, we also expect that the partnership will offer WFE members a unique perspective on capital market issues and provide stakeholders in the global capital market with new prospects in the world’s 'next frontier of growth'.
What is the status of NSE demutualisation?
The Demutualisation Bill (which allows the conversion of the NSE from a company limited by guarantee to a company limited by shares), was signed into law in September 2018. This was achieved through the broad-based support of our members, the Securities and Exchange Commission of Nigeria, National Assembly, Association of Stockbroking Houses of Nigeria, Corporate Affairs Commission and other key market stakeholders. Having achieved this significant milestone, The Nigerian Stock Exchange (NSE) is now working towards implementation of the process vis a vis changing the legal status, structure and governance of the exchange. We expect that the successful conclusion of this process will ultimately position our market as a more significant driver of socio-economic development.
NSE has just received the Securities and Exchange Commission approval of its disclosure guidelines; how significant is this for the capital markets in Nigeria?
As a member of the United Nations Sustainable Stock Exchanges (SSE) initiative, and the WFE, the NSE committed to providing its listed companies with guidance on sustainability reporting in the third quarter of 2015. To set the ball rolling, we hosted the inaugural Nigerian Capital Market Sustainability Conference (NCMSC) in 2015, which served as a stakeholder engagement session to discuss the business value of investing and enhancing transparency on Environmental, Social and Governance (ESG) issues. The outcomes from the conference and several other assessments were valuable inputs in developing the Sustainability Disclosure Guidelines (SDG).
As the first exchange to list a sovereign green bond in Africa, the issuance of the SDG will further enable investors ascertain their exposure to ESG risks whilst providing our issuers a platform to showcase their good work and report them along common themes for comparability. We will also continue to support peer exchanges in Africa to enhance data disclosure in their markets and encourage participation and engagement along the investment chain.