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SecondSTAX, a Ghanaian fintech company that facilitates access to stock markets for institutional investors, has recently entered into an agreement with the African Securities Exchange Association (ASEA) with the aim of unifying Africa’s stock markets. Founded in 2020, SecondSTAX has secured $1.6 million in pre-seed funding from private investors and venture capital firms, including LoftyInc Capital, Orbit54, and STEMeIn. The funding supports the development of SecondSTAX’s technology, which provides access to debt and equity securities in the bond and equities markets of Accra and Nairobi.
SecondSTAX, under the leadership of CEO Eugene Tawiah, plans to expand its operations to Nigeria and Cote d’Ivoire in the near future. The company’s suite of investment tools includes an order management and execution routing system designed for brokerage firms and institutional investors. The platform also offers comprehensive access to data and company research from all participating exchanges within ASEA, which represents 32 exchanges across 37 African countries.
African stock markets, while crucial for businesses and governments as a source of capital, face challenges due to their relatively small size and inefficiency. This limitation leads many tech firms to pursue initial public offerings (IPOs) on larger global exchanges such as the London Stock Exchange, Nasdaq, or the New York Stock Exchange. The lack of market depth, timely information, and accessibility hinder institutional and foreign investors from fully exploring investment opportunities across the continent’s 30+ stock exchanges. Tshepo Magagane, a South African investment banker, highlighted the need for price discovery mechanisms and improved information availability to address these challenges.
A potential solution lies in connecting Africa’s markets to provide easy access and enhance investor discovery. The African Securities Exchange Association (ASEA) has been exploring this concept since 2019 through the African Exchanges Linkage Project (AELP), which aims to connect African stock exchanges similar to the successful model of the Mercado Integrado Latinoamericano (MILA) in Latin America. AELP, launched in late 2022 and led by ASEA with support from the African Development Bank (AfDB), has already connected seven exchanges through its trading platform, ALP Trading Link. This initial connection includes the Bourse Régionale des Valeurs Mobilières (BRVM), a regional stock exchange for eight West African countries. Currently, nine exchanges out of the 32 operating in Africa are interconnected through ALP Trading Link.
Africa.
The Johannesburg Stock Exchange (JSE) in South Africa holds the majority share of the continent’s market capitalization, accounting for 81 percent of the total. The NGX in Nigeria follows with a market capitalization of $66.7 billion. Other prominent exchanges include those in Casablanca, Egypt, and Nairobi. However, restrictive rules limiting investment from non-citizens or non-residents pose challenges for foreign investors.
SecondSTAX aims to address these challenges by streamlining the know-your-customer (KYC) process for institutional investors across different exchanges and incorporating the Pan-African Payment and Settlement System (PAPSS) into its foreign exchange (FX) marketplace, enabling trades in multiple currencies. The platform collaborates with Aza Finance, VertoFX, and Yellowcard in its FX marketplace. SecondSTAX focuses on serving institutional investors, while retail investment apps like Bamboo and Chaka can utilize SecondSTAX to offer retail investors access to public companies across Africa.
Institutional and sophisticated retail investors are actively seeking opportunities in African stock markets. By unifying these markets and providing greater accessibility, SecondSTAX and ASEA aim to enhance efficiency and liquidity, attracting a broader range of investors. The collaboration between SecondSTAX and ASEA represents a significant step toward transforming Africa’s stock markets and stimulating economic growth on the continent.
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