Roundup: Experts push for retail investment for stock market growth in Africa

Financial market experts have called on African economies to encourage retail investment for the growth of the emerging stock markets.

They made the call on Tuesday during the closure of Africa securities exchanges conference in the Rwandan capital Kigali.

Rwanda hosted the 20th African Securities Exchanges Association (ASEA) annual conference from November 27 to 29 dubbed: "The Road to 2030: Making the African Capital Markets Relevant to the Real Economy."

"If you're looking to invest money into the bond market, then government retail bonds could be the perfect option because strong participation of domestic investors in the economy would lead to the growth of vibrant capital markets," said Celestin Rwabukumba, chief executive of Rwanda Stock Exchange (RSE).

He noted that African economies ought to develop domestic investor confidence, which is very crucial for the long term health and stability of the capital markets.

The three-day meeting brought together more than 300 global and regional experts and stakeholders in capital markets, regulators, law firms and issuers, domestic, regional and international investors, rating agencies, portfolio and investment managers and government representatives among others to discuss the future of Capital markets development in Africa.

At the meeting experts argued that African stock markets should lower transaction costs and encourage new listings if they want to lure new investments in the financial markets.

According to Sunil Benimadhu, chief executive of Mauritius Stock Exchange (MSE), Africa stock markets need to first attract more retail companies to list, grow their investor base and expand globally.

"In order to become real contributors to economic development, SMEs need to grow to large corporations. We should ensure that we raise the level of participation of retail investors in the market, which is the only way we can maintain the strength of the market. We could look at a way of using exchanges' disclosure methods as a way of enabling small firms to raise financing," he said.

The forum recommended that educating retail investors on the need to embrace the Africa capital markets will help solve the issues of foreign dominance.

However, Karim Hajji, chief executive of Casablanca stock exchange-Morocco said: "We need to invest in technology for integration of our markets so as to channel funds to areas it's needed."

The bourses meeting projected capital markets to be the key channel for massive investments to drive Africa's economic growth over the next 20-30 years, including finance for business, infrastructure, social and development gains.

African financial markets are dominated by banks, but capital markets are slowly developing and are beginning to play an increasingly vital role in strengthening African economies, according to the International Monetary Fund.

African Development Bank (AfDB) says that bond markets in Africa remain largely underdeveloped, with corporate bond markets non-existent or in their infancy.

ASEA, formed in 1993, aims at developing member exchanges through provision of a platform over which exchange of information is carried out.

At the conference, African Securities Exchanges Association re-elected Oscar N. Onyema, chief executive of Nigeria Stock Exchange as the association president.

The meeting announced Egypt as the host of the next year's 21st African Securities Exchanges Association annual summit. Endit