AFKI Market Journal: Africa’s 5 Fastest-Growing Stock Markets

Written by Ryan Hoover

It seems that IPO fever has hit African stock exchanges one again.

After what has been an exceptionally long phase of relative dormancy since the onset of the global financial crisis in 2009, CEOs across the continent have been emboldened by African markets’ fantastic 2013 performances. Now they’re thinking seriously about taking their companies public.

Two Senegalese companies have announced their intention to list on the Bourse Regionale des Valeurs Mobilieres. The Ivorian government plans to offload stakes of 15 parastatals on the same market. Nigeria has seen two market debuts in the past month. Mauritius expects 15 IPOs in 2014. The Nairobi Securities Exchange guesses it will welcome five.

This should be exciting news to more people than market geeks like me. Why? Because it shows that Africa’s capital markets are maturing. No longer mere symbols of national sovereignty, stock exchanges are now an important part of how the continent does business.

All the IPO talk got me to wondering which African stock markets have grown most rapidly in recent years.

So, I did a little digging and came up with a list of five exchanges that, in my view, have done the best overall job of attracting and retaining new listings, increasing liquidity, and market size. In other words, which African stock markets are growing up the fastest?

5. Botswana Stock Exchange

This little bourse on the edge of the Kalahari desert netted seven additional listings since 2005. These included real estate firms like New African Properties, eco-tourism outfits like Wilderness Holdings, and even a funeral services company. The key addition, however, was Choppies, a leading supermarket operator. Its IPO was the BSE’s largest ever. Investors applied for fives times as many shares as the company put on offer! It’s now the fourth largest company on the market.

The exchange’s management has done a fantastic job of growing trade volume. Two years ago, an average week saw roughly $1.7 million worth of shares trade hands. Today, that figure is well over $6 million.

4. Nairobi Securities Exchange

The NSE welcomed some truly massive companies to its roll during the past ten years. Innovative lender Equity Bank came to the market in 2006. Its fast-growing rival Cooperative Bank of Kenya followed suit in 2008. And who can forget the stories of investors selling chickens in order to collect enough cash to participate in the gigantic Safaricom IPO.

The primary market has rested on its laurels a bit since then. Only one company, Home Afrika, listed this past year. But with market capitalization up 130% over the past 24 months, we should see the NSE’s roster of 54 companies expand very soon.

3. Namibian Stock Exchange

This southern African market may seem a little sleepy, but there’s more to it than meets the eye. Some 27 South African companies choose to be cross-listed on the NSX due to the large pool of liquidity there.

While there are currently just eight local listings, almost all of them will trade in any given week. Two years ago, the market rarely saw shares of more than four stocks exchange hands. Value traded at the exchange is up roughly 150% since 2011.

What’s more, this year’s flotation of Bank Windhoek shares was among the largest in Africa.

2. Uganda Securities Exchange

Recognizing the vitality of neighboring Kenya’s stock market, the USE has opted to build market participation by enticing some of the Nairobi Securities Exchange’s most recognizable names to cross-list in Kampala.

The strategy paid dividends. No other exchange has grown its listings faster than the USE has over the past eight years. Meanwhile, the value of shares traded on the exchange has quadrupled over the past 24 months.

The steadily increasing liquidity gave the local electricity distribution company, Umeme, the confidence to float shares this year and became the first Ugandan company to cross list on the Nairobi bourse. Word has it that a long-awaited Crane Bank IPO is slated for the first quarter of 2014.

1. Dar es Salaam Stock Exchange

It has a lot of growing yet to do, but the DSE is a completely different animal today than it was in 2005. Four big IPOs (Tanzania Breweries, NMB Bank, CRDB Bank, and Precision Air) brought lots of new investors to the market.

Investor participation has exploded in the past two years. Average weekly trade volumes have sky-rocketed from just $600,000 at the end of 2011 to more than $8 million today and total market capitalization has expanded faster than any other market over the past two years.

What’s on the horizon for the Dar exchange? Two IPOs (Maendeleo Bank and Swala Energy) plus a possible rule change that would relax restrictions on foreign ownership of Tanzanian stocks.

Your turn

Would you like to make a case for an African stock exchange that wasn’t included here? Let’s hear it in the comments.

Ryan Hoover is an investment analyst with Africa Capital Group and the founder of Contact him at