The African Securities Exchanges Association (ASEA) and the African Development Bank (AfDB) Group have signed an agreement for a $600,000 grant to expand the number of linked African exchanges from an initial seven to 15 under the second phase of the African Exchanges Linkage Project (AELP).
The development would go a long way to accelerate cross-border trading and pan-African investment flows and bring more liquidity to African markets.
Cross-border deals are transactions that involve more than one financial jurisdiction or involve many stock markets and national regulatory authorities
The AELP is a flagship project of ASEA and the Bank Group aimed at linking African capital markets, thereby, unlocking pan-African investment flows, promoting cross-border securities trading, increasing liquidity and diversifying investment opportunities for investors and facilitating regional integration through African stock exchanges linkage amounting to up to $1.3 trillion in combined market capitalisation.
According to the Nigerian Exchange Limited (NGX), the funds will come from the Korea African Economic Cooperation Fund (KOAFEC) Trust Fund, managed by the ADB.
AELP’s second phase will 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 stock exchanges. The grant will also support the capacity building of institutional investors and capital market operators.
President of ASEA and Chief Executive Officer of the Botswana Stock Exchange, Thapelo Tsheole, on behalf of the association, said the association was poised to expand technical connectivity and linkage among African stock exchanges, especially in the areas of creating a broader pan-African network
“We express our gratitude to the AfDB for their invaluable support and dedication to the development of African Capital Markets (ACM). With the generous grant funding, we are poised to expand technical connectivity and linkage among African stock exchanges, creating a broader pan-African network. Together, we are working towards a fully integrated Africa for the benefit of investors, businesses and governments across the continent.”
The bank’s Group Vice President for Private Sector, Infrastructure and Industrialisation, Solomon Quaynor said the bank is pleased to extend its partnership with ASEA through the follow-on support for Phase 2 of the project.
According to him, the collaboration between the bank and ASEA through the AELP aligns with its objective of leveraging institutional investor groups and capital markets financing to boost infrastructure and the real sector in regional member countries.
The objectives of the AELP align with the African Union’s Agenda 2063 and the African Continental Free Trade Agreement’s (ACFTA) goal of establishing a liberalised market to ease the movement of capital and investments and deepen the continent’s economic integration.
The project also advances the bank Group’s ‘High 5’ strategic priority to integrate Africa. The African Development Bank supported the first phase of the AELP, which was also funded with a KOAFEC grant. Phase one supported the setup of an infrastructure interconnectivity platform involving seven stock exchanges and 31 stockbrokers. It also offered training for over 1,000 capital market operators.
At the rollout of the first phase of the African Exchanges Linkage Project (AELP) link technology platform, the Chief Executive Officer of the Nigerian Exchange (NGX) Limited, Temi Popoola stated: “At NGX, we are optimistic that today’s milestone will further hasten efforts at capital market integration across Africa.”
He said the work of the AELP is significant, as it will ultimately 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.
“We, therefore, take this opportunity to commend the efforts of ASEA and AfDB, and reiterate our continuing support of the AELP.”