Another deterrent for companies is the stock exchange listing fees, alongside other costs such as legal fees and the cost of making company trading information accessible to shareholders.

“So let’s take a company that is operating in several African countries, if one would want them to be listed in all of the countries in which they operate you are expecting that company to not only go and incur multiple listing fees, but also this cost of being listed, of engaging with the market in multiple jurisdictions,” explained Visser. “And that is where the companies sort of stop and ask ‘why do we want to incur these extra costs if we don’t really see this as a viable capital raising market for us?’ It then becomes so much easier for them to then go and list in a market which they know they can easily interact with, they can get lots of liquidity, lots of capital and so on.”

What should African stock exchanges be doing?

Visser suggested that African stock markets should firstly make listing on them as easy as possible. The Stock Exchange of Mauritius is a good example of this.

“They have worked very closely with the regulator in their own market – whether that is the financial market regulator or whether it is the Ministry of Finance or whether it is the central bank – they engage directly with those regulators to make sure that the regulations that are put in place make it as transparent, simple, straightforward and easy as possible for companies to go and invest in Mauritius or to be invested on the Mauritius stock exchange. That level of interaction is certainly something that can go a long way towards facilitating additional listings in a market,” she continued.

“But often it’s not even your laws or your regulations… If you look at things like what your pension funds are allowed to invest in, in many of these markets the majority of their investments are still represented by bonds; a lot of them don’t actually allow for a lot of equity investments by their pension funds. So to expect a company to go and list on a stock exchange but then the pension funds of [their] own market are not allowed to really invest in a lot of the shares, means you are sort of placing a natural limit on the amount of investment that can be raised by equity capital markets. And it’s those sorts of regulations that all need to be addressed almost proactively by all the role-players in a particular market… of which the stock exchange is really just one.”

Visser added that the Stock Exchange of Mauritius has done well in terms of creating a feasible environment in which companies can list. “It’s wonderful to see the market in which they have been able to do it so successfully, you know Mauritius definitely comes to mind. I know that they specifically would like to position themselves as the gateway to Africa in terms of financial markets,” she continued.

“When I look at Botswana to see also the extent to which they facilitate amongst the specific regulators [and] all the involved parties really, to improve just the working of the market, what is necessary, what needs to be done… [that] speaks to a stock exchange that is proactive enough to engage pre-emptively, almost helping to make these things happen and that is really what is necessary.”