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How to Position Africa’s Stock Markets

Globally, emerging market stocks are back in vogue after a dismal 2022. Institutional investors are ploughing back into the asset class – but African equity markets rarely get a look in. From the perspective of Western investors, the catch-all term “emerging market equities” focuses mainly on Asia and South America. The MSCI Emerging Markets Index, one of the most popular global emerging market indices, includes companies from 24 emerging countries. Just two of these are in Africa: South Africa and Egypt. But it’s not just institutional investors who are missing out on good-quality and under-priced businesses. If African retail investors are going to build wealth over the long term, investing in African-listed companies could become part of their equation. But many middle-class Africans prefer tangible assets such as property and farmland. Today, there are over 30 stock exchanges across the continent. These include three regional exchanges: the Bourse Régionale des Valeurs Mobilières (BRVM), based in Côte d’Ivoire; the East Africa Exchange, based in Rwanda; and the Bourse des Valeurs Mobilières de l’Afrique Centrale (BVMAC) in Gabon. But the number of initial public offerings (IPOs) in Africa has been falling dramatically. PwC, a professional services firm, estimates that there were 28 IPOs in Africa in 2017, valued at about $3bn. That fell each successive year to 2021, when just eight were recorded, valued at $921m.