Using SA’s capital markets to help build Africa


As Africa experiences some of the highest growth rates seen in the world at present, many SA companies are looking to do business with the rest of the continent, while foreign corporates are eager to be part of the success story too.

The JSE, Africa’s biggest and most diversified exchange, is perfectly positioned to help both SA and foreign-domiciled companies benefit from a listing. Tamsin Freemantle, the JSE’s Business Development Manager: Issuer and Investor Relations, highlights some of the advantages: ‘If the company is South African, then it can take advantage of the Reserve Bank’s HoldCo dispensation. This allows listed companies the opportunity to move up to R2 billion a year into the continent for business purposes without prior exchange approval, provided the company is a SA taxpayer and is incorporated in and run out of SA.’

She says non-SA companies benefit as they are able to raise large amounts of capital on the JSE, which is then freely transferable out of the country. This capital can then be used to fund operations and expansion in the rest of the continent, as well as to diversify their investor base to include SA institutional funds and the large amount of foreign investor funds that trade on the JSE.

‘From the perspective of SA institutions, foreign-domiciled companies with a listing on the JSE are treated as domestic for trading purposes, therefore these investors don’t need to utilise their prudential allowances to trade.’ Freemantle says a JSE listing gives companies the chance to be included in JSE indices, provided the company meets the criteria. The JSE is keen to work with other key African exchanges to promote dual listings on both the equity and debt markets and structured products such as exchange traded funds.

‘The investor bases on the JSE and other African key markets are complimentary ones, not competitive ones. This means companies that choose to dual list have the opportunity to access a much larger and more diverse investor base than if they listed only on their home exchange. Also, the SA government has given institutional investors an additional 5%, over and above their prudential limits, to invest in inward listed instruments [except equities] on the JSE,’ she says.


‘Companies that choose to dual list have the opportunity to access a much larger and more diverse investor base’


A secondary listing on the JSE for foreign businesses wishing to do business on the continent is also beneficial. ‘A company is classified as African if it is domiciled in Africa outside of SA or has the majority of its assets geographically located in Africa, outside of SA,’ says Freemantle. 

Many companies from other African countries are currently under-leveraged, and make use of short-term debt finance. This means there is a chance for these corporates to tap the SA debt markets for long-term finance. Helping companies with regard to corporate debt is something the JSE is well positioned to do, according to Freemantle.

‘In 2012 and 2013 we were the fourth-largest World Federation of Exchanges member bond market in the world by value traded. We have a large cohort of foreign investors on our bond market, and together with our local institutional investors, allow corporates access to a deep pool of debt capital. Many countries on the continent are increasing the capital requirements of their banks to comply with the Basel Convention, and this means that short-term debt finance for corporates will become less available. The debt markets are an alternative source of funding.

‘As with the equity markets, the JSE is keen to work with other African exchanges on dual debt issuances as, in addition to capital raising, this will also allow for the transfer of skills. It does the JSE no good to develop our market at the expense of other key markets, as we need to ensure that the investor interest in the continent is translated into long-term development in Africa,’ she says. And it’s not only corporates that can gain – Freemantle says the exchange also wants to partner with African countries to provide an additional capital-raising platform for sovereign debt.

‘We already have Namibian sovereign debt listed on our market and would like to profile the JSE as a platform for other African countries to list sovereign debt. Capital requirements on the continent are enormous, and need to be funded to facilitate economic growth. Many countries issue debt offshore in euros and dollars and we would like to capture some of this issuance, while also looking at doing this on a dual issuance basis with the local market. We would like to contribute to the growth of our continent in raising the capital we need, for Africa, in Africa,’ she says.

By John Rossouw
Image: Fredrik Broden/