The African Exchanges Linkages Project (AELP) is leading efforts to integrate the continent’s capital markets, aiming to transform Africa’s financial landscape.
Lina Tonui, AELP’s Project Manager, shared this vision recently at the 27th annual African Securities Exchanges Association (ASEA) Conference. Tonui outlined the project’s progress in connecting stock exchanges, investors, brokers, and market participants across Africa.
This flagship initiative of ASEA, in partnership with the African Development Bank, seeks to facilitate cross-border investment flows by enabling the trading of securities across participating exchanges. Its broader goals include enhancing Pan-African investment by linking exchanges, harmonising infrastructure, promoting diverse investment products, and improving market depth and liquidity across the continent.
Tonui addressed long-standing challenges facing African capital markets, such as fragmentation, insufficient liquidity, and regulatory hurdles. These obstacles have resulted in high trading costs and limited investor confidence. Smaller exchanges, in particular, face difficulties in attracting local and foreign investments, exacerbating disparities in market growth and accessibility. The lack of harmonised regulations and currency convertibility further hinders seamless cross-border investments.
Highlighting the anticipated outcomes, Tonui emphasised the project’s focus on mobilising Africa’s long-term savings and retail investors to finance development across the continent by opening cross-border capital flows and improving the investment climate.
“We aim to provide investors with access to over 25 linked stock exchanges, representing a combined market capitalisation exceeding $1.2 trillion, once the integration is fully realised. This will encompass 1,500 listed securities, offering investors an unparalleled opportunity to diversify their portfolios by exploring investment products available in other markets that may not exist on their own,” she said.
The initiative is expected to drive business expansion for investors by creating access to larger, interconnected markets and enhancing liquidity. In the long term, the AELP aims to facilitate cross-border capital raising and initial public offerings (IPOs), fostering a more robust and integrated African capital market.
The AELP has made significant progress, supported by partnerships with the African Development Bank and Korea-Africa Economic Cooperation, which provided a grant for its implementation.
“We have collaborated with DirectFN as our technical partner to streamline payments and fund movements across the continent, alongside the Pan-African Payment and Settlement System (PAPPS), which we expect will simplify fund transfers,” Tonui explained.
She noted that the project aligns with Africa’s broader integration goals and has established partnerships with the African Union (AU) and the United Nations Economic Commission for Africa. To date, 11 exchanges have been connected through the project, including the Casablanca Stock Exchange, Botswana Stock Exchange (BSE), Bourse Régionale des Valeurs Mobilières (BRVM), The Egyptian Exchange, Ghana Stock Exchange, Johannesburg Stock Exchange (JSE), Nairobi Securities Exchange (NSE), Nigerian Exchange (NGX), Uganda Securities Exchange, Stock Exchange of Mauritius, and the recently added Eswatini Exchange.
The project operates within the framework of existing exchanges and their respective rules. “Currently, securities remain listed on their host exchanges, and brokers access them through sponsored access. Live market data is shared via the AELP Link trading terminal, enabling brokers to view and interact with multiple markets of interest. Aggregated market data within the terminal enhances visibility and accessibility to other exchanges,” Tonui said.
Clearing and settlement processes continue to adhere to host exchange regulations, while discussions with PAPPS aim to further streamline payment processes.
The AELP Link trading terminal, a cornerstone of the project, connects seven stock exchanges and features market data aggregation capabilities. Phase 1 of the platform went live in November 2022, enabling live trades. Since its launch, 33 brokers have joined the system, with plans to onboard 15 more brokers and additional exchanges in Phase 2.
The platform is designed for adaptability, allowing brokers to connect via order management systems or an online link. It currently operates in English, French, and Arabic, with provisions to include more languages as new exchanges join. This multilingual approach underscores the project’s commitment to inclusivity and accessibility.
Tonui reiterated that the AELP’s ultimate vision is to establish a fully integrated African capital market. “We have adopted a phased strategy, beginning with seven exchanges in Phase 1 as a pilot. Phase 2 focuses on expanding participation by onboarding more exchanges, and the next critical step will be regulatory harmonisation. We do have a regulatory framework right now that takes into consideration the different legal and regulatory requirements within the participating exchanges, which is collated by the AELP legal committee,” she explained.
She also emphasised the importance of research in driving market growth. “There have been extensive discussions on the need for better research on African-listed companies,” Tonui noted. To address this, the AELP plans to launch a dedicated research hub to aggregate market data and disseminate insights on investment opportunities across the continent. The long-term objective is to facilitate Pan-African capital raising and IPOs, reinforcing the project’s commitment to deepening market engagement and investment.
Tonui called for broad participation to ensure the success of the AELP, highlighting the need for collaboration among stockbrokers, regulators, and Central Depositories, as well as partnerships with Pan-African entities like PAPPS to reduce costs and improve cross-border trading efficiency.
“We call upon listed companies and research aggregators to work with us to build an efficient African capital market. There is immense potential and high expectations for the AELP, and as joint stewards of this project, we urge African exchanges to come together to ensure the integration of our capital markets, ultimately improving market depth and liquidity,” Tonui concluded.