By Aduragbemi Omiyale
The African Development Bank (AfDB) has approved the release of funds to the African Stock Exchange Association (ASEA) for the launch of phase two of the African Exchanges Linkage Project (AELP).
The organisation is looking at the third quarter of 2023 for the launch of the second phase of the scheme, which is designed to enable cross-border trading of securities in Africa.
AELP was created to ensure investors take advantage of the wide array of investment prospects across African capital markets.
Speaking at a meeting with market stakeholders, the president of ASEA and chief executive of the Botswana Stock Exchange, Mr Thapelo Tsheole, provided insights into the benefits and objectives of the AELP, Pan African Payment and Settlement (PAPSS) and other cross-border transaction requirements.
The event, themed Exchange Linkage Project- Facilitating trades across borders, was hosted by Nigerian Exchange (NGX) Limited and supported by Chapel Hill Denham Securities Limited, Central Securities and Clearing System (CSCS), Cordros Securities Limited and Stanbic IBTC Limited.
Applauding the NGX for promoting the AELP initiative, Mr Tsheole noted that although African economies have encountered numerous challenges, the continent’s resilience in the face of adversities underscores its potential for sustained economic resilience and initiatives such as the AELP are very vital for Africa to rely on itself as it presents a momentum of opportunities for investors across Africa and the world by fostering deeper integration and connectivity among Africa’s capital markets.
“Having successfully launched phase one of the project in December 2022, connecting 7 exchanges across Africa, we urge Nigerian brokers in the process now to reach out to their counterparts in other countries and strive for expanded cross-border trading across the continent.
“We are looking at the rolling out Phase 2 of the AELP in Q3 2023 as funding has already been approved by the African Development Bank (AfDB)
“We will expand the number of participating exchanges to about 15 exchanges, and we think this will enable investors in the continent to maximize and take advantage of the wide array of investment prospects across Africa,” he said.
Corroborating Mr Tsheole, the Project Manager, AELP, Lina Tonui, in her presentation, said through the support of the AfDB, it received $980,000 from KOAFEC for the AELP implementation, phase one of the project while adding that the opportunities in the project is huge.
Tonui added that phases 1 and 2 would see linked exchanges with a market capitalization of $1.5 billion, increase visibility to domestic and global investors, give access to diverse investment products, support innovation and facilitate Pan-African capital raising through IPOs.
Also speaking, the Head, Technology and Operations at PAPSS, Ositadimma Ugwu, said the key benefits for every participating exchange are that local currency payment will reduce the pressure on any country’s reserves and the elimination of third-party dependencies will make intra-African trade significantly easier.
Earlier in his opening remark, the chief executive of NGX, Temi Popoola, stated that African stock markets still face challenges despite offering high potential for growth and investment returns. He noted that the AELP would encourage increased participation in investments and further enhance financial inclusion in the country and added that the NGX would continue its collaboration with all market stakeholders for the collective growth and development of the capital market in Africa.
In a goodwill message, the Director-General of the Securities and Exchange Commission (SEC), Lamido Yuguda, said the SEC is committed to providing regulatory support that will further deepen and enhance the transparency of the market and added that the commission is also equally supportive of all initiatives that will impact positively on the development of the capital market.
For his part, the Managing Director, Chapel Hill Denham Securities Limited, Mr Akeem Shadare, said the AELP has the potential to bring significant benefits to participating African countries and their capital markets, helping to promote economic growth and development.
