8 ideas to improve African capital markets:-
IDEA 1 Obtain a private sector research grant to monitor the reporting of African stock exchanges and compare their standards of performance to those required by them of their listed company clients and or of international stock exchanges or international organisations of stock exchanges. Who should do this? A private sector organisation sponsored by a grant from a development finance agency.
IDEA 2 Make an appraisal of the Institutes of Directors in those markets that have stock exchanges and ask some qualitative and quantitative questions about the impact of those IODs in each market. The IODs that are immaterial by impact should be part of an initiative to align them with the South African IOD. The IODSA should actively engage its African peers by making more efforts to put its products and services online and to increase awareness. The IODSA should not get hung up about being seen to be in African markets and should enable local IODs to brand these initiatives with a domestic identity. Who should do this? The IODSA.
IDEA 3 Use the JSE SENS service as a disclosure platform for all African markets. But brand it according to each market so that the South African face of the product does not put noses out of joint politically. The platform should be made available for a nominal sum by the JSE as a gesture to counter its perceived arrogance of the JSE by other African markets. The study into rent seeking in idea 8 will set the parameters under which this initiative may be implemented. Who should do this? The JSE through the African Stock Exchanges Association.
IDEA 4 Provide a one year notice of the intention to de-list or demote those listed companies with low free floats (ones below prescribed limits) to a second tier board. Within this year consider the undertakings by those listed companies to restructure their shareholdings or de-list. Accentuate quality of listing rather than quantity to the regulators. The African Stock Exchanges Association or regional associations should set the lead in determining the standards. It may be important to agree the fundamental principles through which companies will be appraised.
IDEA 5 Implement a comprehensive market-wide survey of all listed company executives, asking them whether the stock exchanges that serve them are delivering value to the country and their company. Use the Internet to do this. Make submissions secure but anonymous. Issue a guideline on the things that the CEOs should consider given that they may not know what to expect of stock exchanges. The African Stock Exchanges Association or regional associations should set the lead. It’s important that the questions asked are standardised across markets. Who should do this? A private sector organisation financed by grant funding.
IDEA 6 African stock exchanges should engage the IODSA with a view to adopting the GAI (the core governance modules) in African markets for all listed companies. The IODSA should offer a significant discount for this. The stock exchanges should merely be a facilitator and not get involved. Make compliance mandatory and governance disclosures in annual reports aligned to the results of these initiatives. The African Stock Exchanges Association or regional associations to set the lead.
IDEA 7 Come up with minimum standards of online disclosure – just the basics – and ensure that they are enforced by the directors of listed companies. Do not allow the publication of any annual report without a statement by the directors as to whether the minimum standards have been complied with – just yes or no statements of compliance. Who should do this? The African Stock Exchanges Association or regional associations to set the lead.
IDEA 8 – perform a basic review of which stock exchanges are rent seeking equities investment data and NOT conforming to the core objectives of ensuring that investment information is available in a broad, non-exclusive and immediate manner. Who should do this? A private sector organisation sponsored by a grant from a development finance agency.
Unfortunately the African Stock Exchanges Association appears to be a talk shop that appears to have little influence over its members but my points are nevertheless made. There is nothing to stop individual stock exchanges from pursuing these ideas separately.