JSE plans to list TOP 100 Afrian firms on one platform

The Johannesburg Stock Exchange (JSE) has unveiled an ambitious plan to list top performing African companies on a common platform to be known as the African Board.

The proposed board will consist of major African blue-chip companies with market capitalisation between $33 million (Sh2 billion) and $21.9 billion (Sh1.4 trillion).

The JSE plans to start off the ambitious project with a dual listing of companies at home and the bourse’s main board before migrating willing companies to the African Board.

Executive Head of Africa, Ms Maureen Dlamini, told journalists touring the JSE that they had identified 44 companies in Kenya, Nigeria, Ghana, Zambia, Morocco and Zimbabwe.
Safaricom, which starts trading at the Nairobi Stock Exchange on June 9, with a market capitalisation of Sh40 billion, is widely expected to be among the Kenyan qualifiers.

"The dual listing of stocks on home countries and on the JSE/Africa Board would improve liquidity and increase exposure," said Dlamini.

The project is the result of three months’ research on Africa. It is a secondary step to the consideration of Africa’s top 200 companies with minimum market capitalisation of $681 million, but which are not listed on any exchange.

The interest in African stock markets stems from the fact that African economies have recorded four consecutive years of growth of five per cent and is experiencing a commodity boom fuelled by demand by some of the emerging economies like China, India, Brazil, Russia and Middle East.
Last year, return in US$ percentage was highest in Mauritius (110 per cent) followed by Nigeria (91.3 per cent), Morocco (47.2 per cent), Egypt (56.4 per cent), Botswana 34.1 (per cent), Tunisia (28.4 per cent), Ghana (26.9 per cent) and Kenya (5.5 per cent).

JSE will focus on quality African stocks to be listed on an African exchange. The stocks targeted are required to have solid profit histories, in good business models and countries with sound macro economic policies.

These would culminate in the creation of Africa Board Index for those on the board and the Pan-Africa Index for all listed companies in Africa.

To maintain integrity of Africa Board, listing requirements will be similar to Main Board Listing.
African issuer with no home listing and hence not dual listed will be expected to comply with Africa Board requirements.

The first step for such companies, Dlamini said, would be to encourage them to list on their home countries before migrating to the Africa Board.

The African issue will be expected to appoint a South African sponsor for the JSE listing to ensure compliance to all requirements and legislation.

"Listing fees will be charged. The aim is not to make these a disincentive but maintain integrity of board," explained Dlamini.

JSE is likely to experience setbacks largely because most stock exchanges across Africa would like to remain independent.

Strong growth in Africa's gross domestic product

Strong growth in Africa's gross domestic product is expected to continue in 2008 and 2009, according to Louis Kasekende, the chief economist at the African Development Bank (ADB).

He was speaking in Maputo at the launch on Sunday of the seventh edition of the "African Economic Outlook", a report on the health of the continent's economy compiled by the ADB, the United Nations Economic Commission for Africa (ECA), and the Organisation for Economic Cooperation and Development (OECD). The launch was one of the preparatory events prior to the ADB Group's annual meetings scheduled for Wednesday and Thursday in the Mozambican capital.

Kasekende put Africa's overall growth rate at 5.7 per cent in 2007, and predicted that it would rise to 5.9 per cent this year, a rate that would remain steady in 2009.
It was particularly encouraging that growth in 31 African countries is expected to be higher than five per cent this year, compared with 25 countries where GDP grew by more than five per cent in 2007. Last year, 13 countries had growth rates of between three and five per cent, and in 2008 that figure is predicted to reach 16.
In a masterpiece of understatement, the report remarks that some countries "continue to face serious problems, including the humanitarian catastrophe in the Darfur region of Sudan, economic collapse in Zimbabwe, conflicts and political unrest in Chad, Kenya and Somalia, which are likely to dampen their growth prospects".
Kasekende noted that rises in the price of oil and other commodities have brought "windfall gains" to those African countries who are net exporters of these goods, while net importers "have suffered".

Indeed the report originally took a complacent attitude to oil prices. The assumptions on which its forecasts are based included a prediction that oil prices would stabilize at around 90 US dollars a barrel. This assumption was so out of line with reality that an Addendum to the report had to be hastily published admitting that its assumptions were "plausible but optimistic" and "subject to significant downside risk".

The most ominous such risk is the soaring price of oil and grain, leading to "increased inflationary pressure, which is threatening fiscal stability and worsening the balance of payments in food importing countries". Bad news for consumers might be good news for African food producers - but the Addendum warns that "for persistently higher commodity prices to translate into increased output and contribute to GDP growth, agricultural reforms need to be accelerated".

Could Africa also suffer from the "sub-prime crisis" in the United States (the euphemism economists use for the deranged lending polices which have wrecked the US housing market, and whose effects are rippling through the international finance system)?
Here the report's authors claim that Africa "appears to have been largely cushioned from the first round effects of the financial market turbulence due to the limited integration of African economies in the global financial markets". Furthermore, Africa was now less vulnerable to a banking liquidity squeeze, because debt levels have fallen sharply, and most countries now have their exchange rates "set at more realistic levels".
Barfour Osei, the ADB's Chief Research Economist, pointed out that when the continent's forecast growth is broken down by region, the southern African growth rate is likely to decline in 2008, when compared with 2007. This is largely because of an expected slowdown in the South African and Angolan growth rates. (Angola has been growing at an average of 11.8 per cent a year between 2000 and 2007, and so a slowdown is hardly surprising). The Mozambican growth rate (7.2 per cent in 2007) is expected to hold steady.

An obvious cleavage is between net oil exporters and net oil importers. The oil exporters had an average growth rate of 6.4 per cent in 2007, expected to rise to 6.8 per cent in 2008. The average growth rate for the net importers, however, is predicted at five per cent. The problem with the oil exporters is that their economies tend to be excessively dependent on oil - the ten least diversified economies in Africa in 2007 were all oil exporters.

Osei noted that Africa had seen record foreign direct investment of 836 billion US dollars in 2007. But while investment has risen sharply, foreign aid has not, despite all the promises made at successive summits of the G8 group of most industrialised nations.
Osei pointed out that since 2004 some 70 per cent of the rise in aid to Africa has been either humanitarian aid or debt relief. Development aid has not risen in line with the speeches made by western leaders