It's Time for Africa

Author Name: 
Russell Loubser, CEO, Johannesburg Stock Exchange

It is clear that there is increasing appetite for Africa as an investment destination. Both investment flows into the continent’s markets and the number of funds focused on the region are increasing as low yields in developed countries prompt investors to search for high returns in previously unexplored emerging markets. This is good news for the continent.

Investors considering putting funds into a new investment destination look for a number of things including: a sound economy, companies with promise and, for listed investments, a stock exchange with regulatory and operational standards which meet investor standards. In each context, exchanges must have predictable sets of rules, fair operating schemes and properly operating systems. If any of these factors aren’t present, another investment destination may be found.

A major hurdle for investors wanting to put money into Africa is the difficulty involved in transacting on a large number of small exchanges, some with as few as five listed companies and each with its own regulatory system – often very different from the regulatory systems investors are used to. It is a disincentive to investors to trawl through different standards to establish whether these are acceptable. Particularly for multinational institutions, the investigation required into each market is not always worth the effort, given the low number of potential investment opportunities and the relative high costs of executing trades in these markets.

While many African markets are small, nevertheless economies need those local markets as part of well functioning and mature capital market systems. One way to achieve development of a mature capital market system is to have one integrated exchange for the continent. 

In theory a single stock exchange would be good for the continent and could make it a viable investment destination, attracting more investment in the continent’s less developed markets. There have been some calls to pursue such integration.

However there are also other ways to achieve the same goal, such as providing opportunities for top African issuers to list on their home exchanges and dual list on a globally recognised exchange. Another is technologically linking exchanges and routing orders to one another. The Johannesburg Stock Exchange is working on both of these to achieve with issuers, investors and other exchanges across the continent.

A discussion on capital markets at the Africa Forum of the World Economic Forum in May 2010 recognised that although many African stock exchanges have outperformed those in developed markets during the global financial crisis, many of these financial markets are not yet sufficiently large or developed to cater to the region's financing needs.[1]

The participants at the Forum, held in Tanzania, noted that in sketching out a roadmap to redesign Africa’s capital markets:
• “A predictable regulatory framework and access to information is critical, as is the ease of doing business and a competitive tax regime across a region;
• The optimal execution for transactions is key. Investors should be able to decentralize their investments and easily repatriate funds;
• To give African exchanges credibility on the global stage, they should become members of institutions such as the International Organization of Securities Commissions and the World Federation of Stock Exchanges (WFE); and
• The support of regulators is essential. National exchanges could work closely with central banks to convince – and educate – policy-makers that frameworks to support robust capital markets are needed.”


The JSE, a long-standing member of the WFE, is positioning itself as a gateway to investors worldwide wishing to access opportunities throughout the African continent and has developed the strategic links and technological capacity to do so. The South African exchange is known to investors globally, who have developed a level of comfort with its systems and regulatory framework. The JSE's Africa strategy is in line with its commitment to various Africa-centric business and stock exchange organisations, including the Committee of Southern African Development Community Stock Exchanges, the Association of Stock Exchanges in Africa and the Nepad Business Foundation.

We are doing this in four main ways.

First, we have created an Africa Board, a listing venue for companies domiciled in Africa or with assets on the continent. Companies listed on the Africa Board may well be listed elsewhere in Africa also and will have a listing on the JSE. Infrastructure for the new board, which uses existing equity trading systems, was completed by end-2008. The Africa Board was launched in early 2009, welcoming Trustco of Namibia as its first listing.

For issuers, a listing on the Africa Board increases liquidity in their shares, gives increased visibility and access to a liquid, cost effective and easily accessible exchange with extended trading hours. For investors, the board offers access African stock on a secure, cost effective and easily accessible trading platform and through an exchange that is World Federation of Exchange (WFE) accredited. It offers guaranteed settlement of all central order book trades and globally accepted standards of corporate governance.

In the run up to the launch of the Africa Board and during the months that followed, the Africa Board team has travelled extensively on the continent, meeting with exchanges, regulators, issuers and brokers. The aim of the meetings was to strengthen relations and build an understanding of the Africa Board model as a win-win solution for issuers and investors and generally increases liquidity in the issuer’s shares listed on other exchanges as well. Though the board was created at a low period for new listings globally, we believe we are making good progress and we expect increased listings once global financial uncertainty has subsided and issuers have obtained the necessary domestic regulatory approval. We were delighted when Wilderness Safaris joined the Africa Board this year.

Second, we have launched a series of indices which reflect issuers listed in countries across the continent to enable investors to track the performance of top issuers across the continent.

Third we are developing a hub and spoke model of technologically linking exchanges and routing orders and data to and from African exchanges.

Fourth, the exchange is working to forge closer relationships with African exchanges to help develop new businesses and markets. This includes working with various exchanges on the continent to ready themselves to be admitted to the World Federation of Exchanges. The JSE continues to create joint initiatives and to foster long-term relationships and business entities in South Africa, the SADC and the continent in order to increase interest and awareness in the local financial markets and to highlight the continent's financial opportunities.  

The debate about the development of African markets and the call for integration comes at a time when developing markets are under the spotlight as the global financial crisis pushes investors to look for investment returns elsewhere to offset sluggish returns in the slow-growing developed world. An increasing number of institutions are finding investment bargains in lesser known markets on the continent.

The time is therefore appropriate to make use of this momentum and interest to make investment in Africa more ‘mainstream’ rather than a temporary alternative, with the aim of attracting longer-term and more consistent investment flows. The JSE, which is home to companies whose combined value makes up about three quarters of all those listed on exchanges across the continent, believes that it has a workable solution to this while contributing to the development of markets within their own economies.



About Russell Loubser

Russell Loubser joined the JSE Securities Exchange South Africa (JSE) as Executive President designate on 1 January 1997 and assumed office as Executive President on 1 February 1997. After the restructuring of the JSE in December 2000, Russell became the JSE’s CEO. 

As CEO, Russell has been responsible for the fundamental strategic repositioning of the JSE, including its pioneering agreements with the London Stock Exchange and FTSE as well as the take over of the South African Futures Exchange (SAFEX) by the JSE.  

Up until his appointment at the JSE, he was Executive Director of financial markets at Rand Merchant Bank Limited (RMB). He joined RMB from Finansbank Limited in 1985 where he remained, except for an absence of fourteen months spent at Investec & Sechold. During 1987, he was part of the team which started the futures industry in South Africa. He was Chairman of SAFEX for 2 years and Deputy Chairman for 1 year. Prior to his career in merchant banking, Russell qualified as a Chartered Accountant (South Africa) in 1982 while with Arthur Andersen & Co, and obtained a Mcom in Statistics at the University of Pretoria, South Africa. 

Russell is a member of several leading South African organisations: the King Committee on Corporate Governance; the Securities Regulation Panel; the Policy Board for Financial Services and Regulation and the Financial Markets Advisory Board. He is also a member of the Executive Committee of the International Federation of Stock Exchanges. 

Russell is a keen sportsman. He played hockey and squash at senior provincial level, and also represented South African Universities at hockey. He has completed many standard marathons, including the Comrades and Two Oceans ultra-marathons. Now he prefers cycling and has completed the Argus 12 times. Apart from cycling, Russell plays golf and tennis, and has rekindled an earlier passion – motorcycling. 

He is married to Alma and has a son Mark and a daughter Carine.