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Johannesburg - Africa needs a single stock exchange to unlock better value for companies.
This is the view of Absa Group [JSE:ASA] CEO Maria Ramos.
Ramos and chief executives of other local and international companies, as well as authoritative economists, got together this weekend at the Fortune, Time and CNN Global Forum in Cape Town.
She pointed out that there are currently 23 stock exchanges on the continent, and this was unsustainable.
There was already talk about bringing out greater regional cooperation, she said in a panel discussion on growth in Africa.
These talks include the removal of regulatory obstacles, such as the cost of doing business.
Trade and Industry Minister Rob Davies told Sake24 that talks about a single African stock exchange needed to be part of discussions on the integration of the entire African region.
The discussion on regional integration had continued for some time, but little could be done before underlying underdeveloped production structures in Africa received attention.
Davies was referring to the Southern African Customs Union, where 98% of tariffs had already been abolished in 2005, but whose trading patterns were still basically unchanged.
This, he said, was not an obstacle. Critical issues included production.
Slow progress was being made. For instance, the aim of establishing a single Southern African Customs Union this year had not been attained.
This objective was under review.
No problems have so far been experienced with the idea of free trade areas, and tariffs have in fact been removed faster than in any other region in the world.
Growing support has also been received for a large free trade region from Cape to Cairo, said Davies.
A region such as this could include more than 700 million people – essential if a local African market for domestic production is to be created, Davies believes.
President Jacob Zuma, who is currently attending the G20 summit in Canada, told delegates to the forum by satellite that the developing world economies are now big enough.
Davies noted that there were a number of projects currently investigating a single stock exchange for Africa.
The issue is whether it can come about through cooperation between the different African stock markets, or whether the African Union will decide where and how the exchange should work.
On Sunday Russell Loubser, chief executive of the Johannesburg Stock Exchange, said that in theory a single stock exchange would be the best thing for the continent.
It would be highly liquid and attract greater investment, besides being evolutionary and a great step forward for the continent.
But, he said, there was no current initiative to bring it about because such an exchange would receive tremendous political opposition, making the consolidation of existing exchanges impossible.
- Sake24.com
For business news in Afrikaans, go to www.sake24.com.
