Africa Notes: Africa's Emerging Stock Markets - November 1996
November 1, 1996
A new trend has recently emerged in the financing of sub-Saharan Africa's economic development: the national stock exchange. Not long ago, few observers would have believed that Africa could establish, sustain, and develop a significant equity market sector, much less attract foreign investors. Yet today there are 12 operating stock markets in sub-Saharan Africa with a total capitalization of over 8291 billion. Although this dollar amount is small compared to the 86.9 trillion U S market and less than Hong Kong's 8304 billion, the emergence and expansion of stock markets in sub-Saharan Africa will help attract private investment and represents a significant step toward integration into the global financial marketplace. Many of these markets are offering dramatic returns for investors. Cote d'Jvoire's stock price index shot up more than 140 percent in 1995, making it the world's best performer that year. Although sub-Saharan stock markets are relatively new (nearly half have opened in the past seven years), there are still some trends that can be discerned and implications examined for both Africa and foreign investors.