From Financial News

A burgeoning middle class and recent rule changes that make it easier to sell foreign financial products are increasing Africa’s attraction as a market for exchange-traded funds.

The middle class has grown from 115 million in 1980 to 326 million and could exceed China’s by 2035, according to the African Development Bank. And the workforce is young by global standards. So the market is growing, but what made it more accessible to foreign exchange-traded funds and mutual funds was rule changes issued in December in South Africa, the continent’s financial powerhouse.

The country is seen as an attractive financial market, with $236 billion in pension assets at the end of last year – the 10th largest pension market in the world, according to Towers Watson.

Until recently it was not possible to market most foreign ETFs or mutual funds in South Africa as its rules on collective investment schemes require a structure where a trustee provides fiduciary control, acts as the custodian and must be independent of the fund manager, which provides fund administration and marketing but usually outsources the investment decisions to an asset management company. This is not the typical ETF structure elsewhere.

Under the guidance from South Africa’s Financial Services Board on foreign collective investment schemes implemented early this year, the FSB is willing to consider foreign schemes not by their structure, but by whether their country of origin has regulation “of similar standing” to South Africa’s.

The guidance says the FSB’s registrar of collective investment schemes “is not averse” to investments in schemes that comply with the EU Undertakings for the Collective Investment in Transferable Securities (Ucits) directive, because they are intended for retail investors.

Read more at Financial News