In further evidence of the absence of the African Stock Exchanges Association’s (ASEA) capacity to deliver meaningful vision to African capital markets the NSE sought financial assistance from the private sector to fund the ASEA 13th annual conference held in Abuja in early December 2009. The request came just three weeks before the event.
The conference, touted as the highlight of the activities of ASEA, has been advertised from the beginning of the year. One would assume that, if ASEA had meaningful relationships with its members and Africa’s more than 1,300 listed companies, some form of sustainable funding could have been raised and applied to greater benefit. The objectives of ASEA have not been pursued effectively and therefore ASEA and the NSE find themselves short of cash.
I guess the National Institute of Investor Relations (NIRI) link in the USA is a parallel organisation that has similar objectives to ASEA but within the investor relations field. The organisation in its early years pondered at great length on how to structure its membership, what to charge and what to do in order that it had as broader support as possible. It worked and the organisation now has over 4,300 members worldwide and is a leading organisation in participating in the interface between regulators and market practitioners and listed companies. ASEA has over 22 African stock exchanges, over 300 brokers and over 1,300 listed companies from which to solicit funds in exchange for investment into activities for the benefit of its members and markets as a whole.
I can think of more than a few products that ASEA could offer listed companies, brokers and exchanges in Africa in exchange for some nominal funding or “membership fee”. Let’s look at some numbers:-
If Africa’s 22 stock exchanges each donated US$20,000 per annum (on average – with the smaller markets paying a lot less) and if 50% of Africa’s + / – 400 brokers paid, on average US$750 a year, and say 50% of Africa’s 1,300 listed companies paid, on average, US$1,000 a year then ASEA could raise US$980,000 per annum for market development and improvement initiatives. These initiatives could have, as their beneficiaries, those organisations that subscribed to ASEA.
Add to the above revenues from advertising to the dedicated stakeholder base that would result from the progressive products ASEA would offer.
ASEA’s activities should be outsourced to the private sector. I will give you an example of why. A topic on the agenda at the Abuja meeting is addressing the illiquidity of Africa’s capital markets.
So all of the regulators and market officials, the ones responsible for perpetuating high levels of illiquidity, are tasked with the responsibility of addressing illiquidity in Africa’s markets. Those responsible for the status quo are asked to debate the way forward. In a single sitting. In Abuja. There is no evidence of active dialogue with the listed companies themselves, investors or capital market practitioners prior to the conference. Or at the event for that matter – the conference does not attract a broad base of stakeholders. The meeting is not an accumulation of the views and professional opinions of the dialogue of hundreds of stakeholders over the year. It’s an event where the most likely outcome will be rhetorical and clichéd calls for promotion of a greater number of listings to increase “liquidity”.
This is what the ASEA should do. Sort out their website and make it truly interactive. Adopt say three annual themes. Get member exchanges to provide meaningful data, which aggregated, is attractive to a broader range of stakeholders. Get those stakeholders commenting on the three annual themes. Use the feedback to have a round table discussion at the annual conference and then set concrete and achievable goals for ASEA to pursue.
It’s simple but ASEA can’t achieve this because the organisation is poorly structured and no-one is applying their mind to what ASEA should be doing to have a meaningful impact.
OK say that you think that it’s not possible to co-ordinate African markets through the ASEA. Say it’s just not doable. Fair enough. Then disband ASEA and take a regional approach but you can’t have it both ways.