A new Anglo-French alliance: Building West Africa’s mega stock exchange


Over the last decade the Africa Rising narrative has alerted the world to the enormous potential abound in the resource-rich continent. From infrastructure development to the rise of ICT, Africa’s challenges, and resources alike, have provided the likes of China, India, U.S, and Europe, an array of investment opportunity that have yielded dividend, which has so far been largely unmatched by any other region globally. However, a segment of the continent’s financial industry that has played host to a bulk of this massive inflow of investment is the capital market.

Nigeria, Zambia, Ghana, and South Africa all benefited from the increased inflow of investment into local capital markets as the world stepped up its interest in Africa. The Nigerian Stock Exchange’s (NSE) annual 2013 review and outlook for 2014 revealed a 47 percent growth in equity market capitalization to $82.80 billion, with the total market capitalization growing 28.9 percent to $119.41 billion, from $94.74 billion by the end of 2013. This made it the second fastest growing in Africa at the time, just behind Zambia.

The 2013 performance placed Nigeria’s stock market, along with Zambia, amongst the top 10 markets in the world last year. Both nations were also touted as the next generation of emerging economies. The prevailing view amongst financial experts were that these markets, like a few other African bourses, had completed a “bounce-back” and were gearing up for a new era in the coming years.


But that narrative was sharply reversed in the early months of 2014, when a combination of economic, societal and political challenges forced foreign investors to retreat. South Africa has been subjected, in months past, to multiple strike actions from workers seeking higher wages and improved welfare schemes. These strikes cost South Africa over $6 billion in lost output and discouraged a number global conglomerates like Ford from coming in. Its unstable political scene, social uncertainties like the fear of a xenophobia resurgence, and the recent energy struggles have all taken a toll on the country’s economy in 2015, particularly its capital market. Nigeria’s challenges have been similar. Its capital market suffered from a tense build-up to the tightly-contested April presidential elections. Its fate hasn’t been done any favours by the crashing Naira, which is expected to face its third devaluation in two years in the coming months.

The new coalition

Down in West Africa, capital market operators are keen to shield their markets from further harm. Regulators are said to be joining forces to facilitate the take-off of a joint exchange in the region.

The region’s countries, both English and French-speaking, have joined forces to develop a joint capital market that will ease cross border listings and better absorb local and global socio-economic shocks.

It remains the region’s biggest move—beyond its economic agreement (ECOWAS)—aimed at rivalling the rapidly emerging economic bloc (East African Community) being developed by East African member states. And like most of such bold moves, challenges are a common place.

In a bid to minimize the impact of such challenges, member countries of the new coalition have formed a body to ensure it overcomes obstacles that may prevent the start of the initiative. The new body will help with information sharing, risk management and harmonization of rules and regulations guiding the various capital markets. The integration of West African markets is expected to be completed as early as 2016.

In recent years, West Africa has failed to keep up the pace with its neighbouring regions—South, East and North Africa—despite been one of the first to develop an economic bloc. However, if it is keen on staging a solid fight back, initiatives like this will remain paramount to achieving success.

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