Africa’s financial and capital markets are on a “path of evolution” and this is impacting on foreign investment and competition on the continent, says exchange trading platform 4 Africa Exchange (4AX) business development head Noah Greenhill.
The evolution of the markets is creating opportunities to attract foreign investment as well as driving intra-Africa investment, he tells Engineering News. It is also impacting on increased competition in the capital market space, which is influencing innovation and developments to bring new service models and product solutions to market.
Meanwhile, he points out that listing on an exchange is critical and gives companies some credibility, as there are certain requirements a company needs to fulfil to be able to list on an exchange. He adds that companies that are dual-listed in Africa drive intra-Africa trade.
“Being listed on multiple African exchanges expands the horizon for investment,” he highlights.
Further, he explains that increased competition is driving innovations such as blockchain. Different jurisdictions in Africa could adopt, roll out and develop blockchain in innovative ways in the future. From a trading perspective, the ability to trade and access information on a mobile phone has created innovation, he adds.
Meanwhile, blockchain technology is influencing the addition of new asset classes, such as cryptocurrencies being listed on stock exchanges. Greenhill mentions that blockchain has not been adopted widely in Africa, but will be in the future.
However, he comments that derivatives, exchange-traded funds, exchange-traded notes and bonds are slowly becoming more widely accepted and the exchanges in Africa are developing mechanisms to trade these assets.
Greenhill advances that the mobile phone penetration in Africa is massive and provides an opportunity to use cryptocurrencies for transaction purposes and for trading. However, he warns that the downside is fraud and abuse and says it should be monitored and managed carefully.
“Each jurisdiction in Africa will have to consider its infrastructure and adopt a strategy to manage the regulation of the cryptocurrencies. I don’t think that there can be a universal regulatory infrastructure for the whole of Africa.”
Access to information and the ubiquity of information will allow jurisdictions in Africa to quickly learn and adopt new technologies and strategies to manage such technologies, he concludes.Creamer Media Senior Deputy Editor: Features