The first cross- border securities trades on the African Exchanges Linkage Project (AELP) were executed as a demonstration in December in Abidjan.

Live on screen, a stockbroker at Finance Gestion Intermédiation (FGI) in Abidjan sent an order to Nairobi stockbroker Dyer and Blair to buy 10 Kenya Commercial Bank shares at (Kenyan shillings) KES37.00 each. D & B Equity Trader Elizabeth Njoroge entered the order through a few clicks into the Nairobi Securities Exchange for execution, and sent an order in return to Abidjan to buy Sonatel shares on the BRVM.

The AELP is an order- routing system linking 35 stockbrokers across seven securities exchanges and shares live market and order-book data. It was switched on in November following a beta testing period. African investors can access over 1,000 of Africa’s biggest and most promising companies, with nearly $1.4trn value of equities listed (market capitalisation).

The first phase of the AELP brings together the Nairobi Securities Exchange, the Egyptian Exchange, Bourse de Casablanca, the Nigerian Exchange, Johannesburg Stock Exchange, the Stock Exchange of Mauritius and Bourse Régionale des Valeurs Mobilières (BRVM), the regional exchange shared by Benin, Burkina Faso, Côte d’Ivoire, Guinea- Bissau, Mali, Niger, Senegal, and Togo.

Project Manager Lina Tonui said the link involves multiple regulatory processes in each market and thanked national regulators for their commitment to ensuring that cross-border trading goes ahead.

Edoh Kossi Amenounve (left), the BRVM’s Director- General and former President of the African Securities Exchanges Association, said: “With AELP, we are entering a new era of African capital markets where all our members will gradually transact cross-border trades from one African securities exchange to another. This project represents a great opportunity for investors and issuers across the continent.”

Ahmed Attout, the African Development Bank’s Manager for Capital Markets Development, said the AELP will help achieve “the African Continental Free Trade Agreement’s objective of establishing a liberalised market to aid the movement of capital, facilitate investments and deepen the continent’s economic integration.”

Botswana and Ghana stock exchanges are due to join in Phase 2 in 2023 and Tonui said the AELP will eventually extend to all 26 ASEA member exchanges. Anne Clayton, Head of Public Policy & Regulatory Affairs at the JSE, said they plan to expand functionality to include an integrated settlement and payment platform.

AELP is a joint initiative of the African Securities Exchanges Association (ASEA) and the African Development Bank. The bank is funding the roll- out of the project through a grant from the Korea-Africa Economic Cooperation (KOAFEC) Trust Fund. Technology firm DirectFN is deploying the system.

Botswana Stock Exchange CEO Thapelo Tsheole was elected the new President of ASEA in December, with Rwanda Stock Exchange CEO Pierre Célestin Rwabukumba as Vice-President.

(Interest disclosure: Our Capital Markets experts Tom Minney was AELP Project Manager until August 2021.)

‘Fantastic year’ for Nigerian Exchange

“It’s been a fantastic year for NGX, with a positive 19.98% return,” said Temi Popoola, CEO of the Nigerian Exchange. “We’ve also seen several landmark listings in equity and fixed income, including BUA Foods and Geregu Power, which have played a key role in driving growth in the market this year.”

He was speaking at a closing gong ceremony to mark the year’s trading. The NGX All-Share Index reached 51,251.06 points. However, the NGX 30 Index of the most capitalised stocks was only up 7%.

It was a seesaw year for the All-Share Index, with a strong gain in January, April and May to reach a 21% gain by end of June, then monthly declines from June to October including a 11% fall in October. However, the market soared in November and December. The top sector was NGX oil and gas up 35%, followed by NGX industrial up 20%. The index had climbed by 50% in 2020.

Total trading for the year was $5.2bn, up 22% on the previous year.

The value of shares listed for trading (market capitalisation) soared from N22.3trn ($49.3bn at January 2023 exchange rates) to N27.9trn ($61.7bn). It was boosted in part by the listings of BUA Foods in January and Geregu Power in October, adding $1.6bn and $576m respectively to market capitalisation.

The top-performing share was Wema Bank, giving investors a return of 442%, followed by Champion Breweries, up 134%. 

Foreign investors had been selling shares, worried about the build-up to general elections due on 25 February 2023. The Central Bank of Nigeria had been hiking interest rates, raising the Monetary Policy Rate from 11.5% in January to 13.0% in May, 14% in June, 15.5% in September (after August’s 20.5% inflation rate) and 16.5% in November. This encouraged investors to switch out of shares and into fixed income securities such as bonds, particularly in August, September and October.

The top ten stockbroking firms made up 66% of the value traded in the year. The top three by value were:

• Cardinalstone Securities, which traded shares worth $1.3bn, a big increase compared to 2021

• Stanbic IBTC dropped back into second place, and traded $400m-worth of securities

• APT Securities and

Funds also enjoyed a big increase in shares traded, up to $396m in value.

In April, the NGX launched a market for trading exchange-traded derivatives with an initial focus on equity index futures contracts on the NGX 30 and the NGX Pension indexes.

In December 2021, NG Clearing had launched a central clearing counterparty (CCP) to facilitate the clearing and settlement of derivatives and commodities traded. The first three broking firms to hold trading licences for derivatives were: CardinalStone Securities, Meristem Securities and APT Securities and Funds.

Economic crunch gives wings to Egyptian Exchange

The value of shares traded on the Egyptian Exchange (EGX) went past E£1trn for the first time during 2022 with an annual total of E£1,094bn ($37bn). There were 109,000 transactions in one day on the bourse, the highest recorded.

However, that record was passed on 4 January this year, after the currency devalued from E£24.75=$1 to E£27.22 and there were 115,600 transactions for a total value traded of $118.5m.

The pound has since devalued further, reaching E£31.95=$1 on 11 January before settling close to E£29.70. It is part of moves towards a more flexible exchange-rate policy under a $3bn support package from the International Monetary Fund. The Egyptian pound is down some 50% compared to the dollar over 10 months.

Ramy El-Dokani, executive chair of the EGX, said that market capitalisation also soared to E£961bn ($32.5bn) by 31 December, or 12.3% of the national economy measured by gross domestic product (GDP), up from E£765bn in 2021. The total number of transactions fell from 11.4m in 2021 to 11m last year.

In 2022, foreign transactions were up to 31% of total trading, with the share of trading by other Arab nationals, particularly from the UAE, doubled compared to 2021. Egyptian institutions made up 47% of the total trading and 175,000 new individual investors bought securities, up from 58,000 new individuals in 2021.

Over 2022, the Morgan Stanley-Egypt index increased by 26.2%, the benchmark EGX30 by 22.2% and the EGX 70 index for stocks in small and medium companies rose by 27.3%. The EGX30 index outperformed other Arab exchanges’ indexes.

The transport and freight services sector recorded the highest increase by 70.3%, followed by the basic resources sector, up 65.1%, and the trading and distributors sector, up 47.2%. Healthcare and medicine declined by 2.4%.

Market capitalisation continued to climb in the first two weeks of 2023, reaching $34.7bn by 15 January. The EGX30 index had also soared another 6.6% by 15 January, as exporting companies are boosted by the lower domestic currency. Investors see the exchange as a safe haven from inflation, which was officially reported at 21.9% in December, with food prices up 37.9%. State- run banks are offering savings certificates with 25% interest.

Steady exodus to Victoria Falls exchange

A growing number of companies are moving their shares for trading onto Zimbabwe’s Victoria Falls Stock Exchange (VFEX), which was set up in October 2020 for trading and capital- raising in US dollars.

The exchange, a subsidiary of the Zimbabwe Stock Exchange (ZSE), was the first step for an Offshore Financial Services Centre (OFSC), and set up in a special economic zone in Victoria Falls. The VFEX allows companies to hold capital offshore in approved banks and investors can settle trades offshore. Trading on the VFEX is conducted in US dollars, which may attract investors worried about FX rates or exchange control.

By January 2023 VFEX had seven listed companies. It offers lower trading costs and tax incentives compared to its parent ZSE.

In December, Karo Mining Holdings raised $31.8m by issuing a US dollar bond on the VFEX, which listed on 14 December. Karo Mining

Holdings is 70% owned by Tharisa, a mining company listed on the Johannesburg Stock Exchange, and 30% by Leto Settlement.

It wholly owns Karo Zimbabwe, owner of 85% of Karo Platinum, which has a 23,903ha concession area along the mineral-rich Great Dyke, some 80km southwest of Harare.

The first phase of the platinum mining project requires $391m which will be combined from several sources. So far, Tharisa has invested $205m directly and indirectly and has valued the asset at $770m in its financial statements.

The bond offers a 9.5% coupon yield, paid semi- annually. Tharisa acts as guarantor and its subsidiary Arxo has committed to subscribing for $10m of the notes.

Local investors have however complained they cannot invest into large mining projects owned by foreign companies including Zimplats, Implats, Anglo- American Platinum and Sibanye-Stillwater, which are listed outside Zimbabwe, mostly on the Australian and Johannesburg Stock Exchanges.

Another company on the VFEX is Simbisa Brands, which operates 567 quick- service restaurants in nine countries. It listed its shares for trading on VFEX on 2 December after delisting from the ZSE four days earlier.

It wants to attract capital in foreign currency from investors to help the business match its forex needs. Addington Chinake, non-executive chairman of Simbisa, said the offshore settlement options would allow investors to repatriate their dividends more efficiently and “would also eliminate the foreign currency risk of holding Simbisa shares as a foreign investor.”

According to the financial report to 30 June 2022, Simbisa grew its customer base by nearly 29% compared to the year before and served 52.3m buyers.

It employs 8,500 people and opened 86 new stores in the year to reach 200 in Kenya, claiming the crown of Kenya’s largest quick- service restaurant operator. It plans to spend $23m opening 45 more stores in Zimbabwe and 39 in Kenya in the current year, to be funded by the free cash flow generated from operations.

The financial results are complicated due to having to work out which exchange rates comply with international accounting standards, as the official rate has been described as “unpredictable”. According to inflation adjusted accounts, revenue was up 76% to (Zimbabwe dollars) ZWL72.9bn ($103.3m at the exchange rate published by the Reserve Bank of Zimbabwe at the time of writing), and profit before tax was up 156% to ZWL14.0bn. On the historical cost accounts, revenue was up 203% to ZWL51.7bn and profit before tax up 427% to ZWL10.9bn.

Nedbank Group, listed in Johannesburg, has listed on VFEX in the form of Zimbabwe depository receipts on 25 November. The depository receipts are issued by Corpserve Nominees, which in turn holds the underlying shares on the South African share register.

Financial services group GetBucks and milling giant National Foods Holdings are also expected to move from the ZSE to VFEX. The other listed companies on the Victoria Falls bourse are Padenga Holdings, Seed Co International, Caledonia and Bindura Nickel.

Orange IPO is Côte d’Ivoire biggest listing 

The telephone company Orange Côte d’Ivoire’s recent listing on the BRVM stock exchange in Abidjan, on 30 December, is the biggest capital raise in the bourse’s history.

The listing came after the government sold a 9.95% stake in the ownership of the telecom operator through an initial public offering (IPO) of 14,990,207 shares. The offer closed early after raising CFA141.0bn ($233m). Adama Coulibaly, Côte d’Ivoire’s Minister of Economy and Finance, chaired the listing ceremony.

BRVM DG Edoh Kossi Amenounvé said: “There is no happier event for a stock exchange than the listing of a new company, especially in a context where this type of operation is becoming increasingly rare.”

It is the second IPO on the BRVM in three years, following the IPO of aviation company NAS Ivoire Holding, also known as Menzies Aviation, which opened in November.

Amenounvé said earlier that the Orange IPO “will show other state-owned companies that it is important to come to the market. It is a privatisation by the Ivory Coast Government and that will be an example to the other countries in our region.”

He said between 80 and 100 state-owned companies in the region could be listed.

“Because of the situation our governments are facing in terms of raising capital on the international market, they may look now to the possibility of raising capital using privatisation. We have been expecting this IPO for many years.”

The government first announced in 2016 that it would sell part of its 14.95% share in Orange Côte d’Ivoire, which arose from a merger with land- line operator Côte d’Ivoire Telecom.

The first day of trading saw the price rise to CFA10,210, up from the IPO price which had been CFA9,500 ($15.70) per share, with a reduced price of CFA7,600 for employees.

This gave the company a total market capitalisation (value of shares listed) at CFA1.5trn ($2.5bn). This is very similar to the value of shares listed for SONATEL, another subsidiary of Orange, based in Senegal. The two telcos make up 40% of the total market capitalisation of the BRVM.

MTN was the biggest mobile operator in Côte d’Ivoire with 39% market share, while Orange Côte d’Ivoire had a 35.5% share and Onatel, local subsidiary of Moov Africa, had 25.5%.

Plenty of buzz around Vodacom Group

On 19 December, telecom firm Vodacom Group in South Africa offered to buy 124,608 shares or 0.05% of the shares in Vodacom Egypt at a price of €18.707 ($20.28) each, to be paid in Egyptian pounds at the official exchange rate, with the offer due to close on 15 January.

Earlier in December, Vodacom Group in South Africa announced it had completed a transaction first announced in November 2021, in which Vodafone Group Plc transferred 132m shares in Vodafone Egypt, or 55% of the total shareholding, to its South African subsidiary Vodacom Group in a block trade transaction on the EGX valued at $2.4bn.

Meanwhile Bloomberg reported that Emirates Telecommunications Group Co, previously called Etisalat and last year branded as e&, is studying whether to make an offer to buy all or some of Vodacom Group.

E& is already the largest shareholder, with 11%, and is headed by Egyptian Hatem Dowidar, who has extensive experience across Vodafone, including as CEO of Vodafone Egypt from 2009-2014. Vodacom operates in eight African markets: Democratic Republic of Congo, Egypt, Ethiopia, Kenya, Lesotho, Mozambique, South Africa and Tanzania.

Sovereign wealth fund Qatar Investment Authority and two other Arab sovereign wealth funds are also reported to be in talks over buying a 20% or 25% stake in Vodafone Egypt from national telco Telecom Egypt, which owns 45% of Vodafone Egypt, in a deal worth $1bn-$1.25bn. Vodafone Egypt has 43m customers and could gain from more use of Vodacom Group’s financial services.

Healthy listing for Moroccan clinic operator 

Private clinic operator Akdital listed its shares for trading on the Bourse de Casablanca after the exchange’s biggest capital raising effort since 2008. The 14 December listing was the Casablanca exchange’s third new company in 12 months and constituted the first listed private healthcare provider.

The offer, which opened on 21 November and closed on 6 December, was for MAD1.2bn ($119m) worth of shares and was 3.8x oversubscribed, with bids totalling MAD4.5bn.

The capital raised will go to finance the group’s development plan, which includes openings in new parts of the country such as medium-sized cities, and investing in specialised health establishments.

Kamal Mokdad, Chairman of the Board of Directors of the Casablanca Stock Exchange (below right), said: “We are proud of the success of this IPO, which will certainly have a positive impact not only on the economic level, but also, and above all, on the social level.”

The listing was a sale by private equity firm Mediterrania Capital Partners (MCP), which focuses on growth investments for small, medium and mid-cap businesses in North Africa and Sub-Saharan Africa.

MCP invested in Akdital in March 2020 via the MC III fund. It also gave financial, strategic and operational support to help Akdital grow.

Since then Akdital has expanded its network from five to 17 clinics and specialised health centres in Morocco and tripled capacity from 550 to 1,800 beds. The 2,700 employees (including 700 new jobs), provide healthcare services such as cardiology, cardiac surgery, 54% by 189 institutional investors and 42% by private retail investors, totalling 8,225 subscribers. The investors are from Morocco, Ireland, South Africa, Luxembourg, United Arab Emirates, France and Spain.

Saâd Bendidi, chairman and senior partner of MCP, and Hatim Ben Ahmed, managing partner of MCP, remain members of Akdital’s Board

of Directors. Dr Rochdi Talib, Chairman and CEO, founded Akdital in 2010.

Lafarge Zim suspends trading following US sanctions

The Zimbabwe Stock Exchange suspended trading in Lafarge Cement Zimbabwe Limited shares on 23 December and on 13 January confirmed a three-month suspension. This was done on a voluntary basis to give the cement giant time to deal with issues arising from its sale to a local consortium led by Obey Chimuka, CEO and Managing Director of mining companies in Zimbabwe.

This follows a notice on 12 December by the US Office of Foreign Assets Control (OFAC), part of the Department of Treasury, naming several individuals on a list of blocked entities under a Zimbabwe sanctions programme. The list includes Chimuka, and his company’s Fossil Agro and Fossil Contracting companies.

On 2 December 2022, Lafarge had finalised an agreement through which Zimbabwean firm Fossil Mines (Private) Limited, run by Chimuka, bought 76.45% of the shares from Associated International Cement, a subsidiary of Holcim Group of Switzerland. A binding agreement had been reached in June 2022. The sale was valued at $29.2m at the official exchange rate.

On 13 January, acting company secretary Arnold Chikazhe announced that Lafarge would rebrand as Khayah Cement and make board and management changes on 14 January.

However, in its notice, OFAC designated four Zimbabwean individuals and two Zimbabwean entities on a Specially Designated Nationals and Blocked Persons List. It said:

“The Zimbabwe sanctions program targets human rights abusers and those who undermine democratic processes or facilitate corruption.” OFAC also removed 17 people from the list.

The individuals named included Obey Chimuka, chief executive of Fossil Agro and Fossil Contracting, and these are the two entities. They are targeted for ties to Kudakwashe Tagwirei, CEO of Sakunda Holdings. Both Tagwierei and Sakunda Holdings were added to the list in August 2020. The US accused Tagwirei of using his high-level political connections to “rake in millions of US dollars”.

The sanctions block any entities directly or indirectly owned 50% or more by the blocked individuals. The US Treasury Notice says: “All transactions by US persons or within (or transiting) the US that involve any property or interests in property of blocked or designated persons are prohibited.”

On 29 December, secretary Chikazhe issued a statement to assure stakeholders that Lafarge Cement Zimbabwe did not anticipate disruption to operations because of the sanctions. It said it was “considering various courses of action with a view to protecting the business and the interests of all stakeholders.”

Last year Holcim had worked through South Africa’s ABSA Corporate and Investment Banking to request expressions of interest to buy the shares. The responses were evaluated in March 2022 and five companies were invited to participate in an auction. The bid by Fossil Mines was backed by local banks, pension funds, and wealth managers.

Lafarge Cement Zimbabwe had requested the 13 January share trading suspension and the Securities and Exchange Commission of Zimbabwe gave permission. ZSE Chief Executive Justin Bgoni said Lafarge Cement Zimbabwe would issue a statement on how they would address issues going forward and they would continue to comply with obligations to shareholders.

BRVM launches new trading boards

West Africa’s regional Bourse Régionale des Valeurs Mobilières (BRVM) has launched three market compartments and two new indices from 2 January.

The new equity market segments are:

• Prestige – companies with at least 10 years of activity, market capitalisation of at least CFA50bn ($82m), free float of at least 20% of the capital, regular and timely publication of all information for the last year and commitment to corporate social responsibility. It replaces the BRVM first tier.

• Principal – the board

for other main stocks, replaces the BRVM second tier.

• Croissance (growth) – intended to host small and medium-enterprises and companies with strong growth potential. The new stock market indices are BRVM 30 for the 30 most-traded stocks over the past three months, and BRVM Prestige for all stocks on the Prestige board, to be revised annually. The previous BRVM Composite index for all listed stocks continues. n

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