Making closer business ties with UK and Africa

Ibukun Adebayo is Co-head of Emerging Markets at London Stock Exchange Group
Ibukun Adebayo is Co-head of Emerging Markets at London Stock Exchange Group
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In January 2020, the UK Government hosted the first ever UK-Africa Investment Summit.

Attended by over 15 African heads of state, the summit’s primary objective was to promote investment, trade and partnership opportunities between the UK and the African continent.

As part of this, London Stock Exchange Group (LSEG) had the pleasure of welcoming some of these African heads of state, as well as a host of inspirational and dynamic African businesses, and delegates including UK and African government representatives, Africa-focused investors and trade groups. The broad range of guests underlines the importance of building bilateral relationships, supporting growing businesses and local capital markets, essential in developing skills, creating jobs, and ultimately, driving economic growth.

One year on from our ‘Companies to Inspire Africa’ 2019 report, PwC provided an in-depth analysis of the achievements of high-growth African businesses over the past year. PwC’s insights show that, of the 360 companies originally showcased, almost a quarter had grown or had undertaken steps to expand their business during 2019. The report also acted as a conduit for sharing best practices and exploring methods of addressing some of the barriers African companies face when embarking on their next stages of growth.

PwC’s report shows that the companies have gone on to expand in different ways, including entering new markets, and pursuing mergers and acquisitions. Four companies have also gone on to raise equity finance via international and African listing venues, including Helios Towers’ flotation in London.

It’s a strong signal that these companies are firmly on the path to transforming their local economies and establishing themselves as job creators, both now and in the future.

Another notable trend is the continued success of firms operating in the renewable energy space. This sector has one of the highest proportion of companies that expanded their business over the course of 2019. This underlines the growth of the ‘Green Economy’ in Africa.

On 20 January, Acorn Holdings listed its Kenyan Shilling green bond on London Stock Exchange with proceeds financing environmentally friendly accommodation for 5,000 university students in Nairobi. Acorn is the first Kenyan issuer to launch a green bond in the international market and the first African issuer to list on London’s Sustainable Bond Market.

The transaction marks another step forward in unlocking Africa’s local currency investment opportunity for international investors, as well as promoting sustainable finance across the

continent. There are 224 active bonds listed on London’s Sustainable Bond Market, having raised over £40bn. London Stock Exchange’s position at the heart of global financial markets means that we are ideally placed to support issuers and investors in the transition to a sustainable, low- carbon economy, mirroring the policy shifts taking place across Africa’s fossil fuel dependent economies.

Another landmark moment was the International Bank for Reconstruction and Development’s (IBRD) issuance of its first Rwandan Franc bond. The transaction will contribute to the development of Rwanda’s capital markets, providing a unique opportunity for international investors to access the country’s economic potential.

There are now 112 African companies listed in London – more than any other international stock exchange. Combined, their market capitalisation exceeds $160bn, and over $22bn in equity capital has been raised by these firms since 2008. Furthermore, London’s debt capital markets have over 50 active bonds listed from 15 African issuers, raising a total of $58bn in six different currencies.

The UK plays a key role in supporting the development of local capital markets, by working in partnership to build key market infrastructure and technology needed to create robust and efficient debt and equity markets. As part of our own partnerships announced alongside the UK-Africa Investment Summit, London Stock Exchange and the Ghana Stock Exchange signed a Memorandum of Understanding (MoU) to support Ghanaian businesses raising equity and debt capital both domestically and internationally.

Under a separate agreement, LSEG’s Academy will also deliver an Investor Readiness Programme to BODIVA, the Angolan stock exchange, to support the development of disclosure, transparency and governance standards for state-owned companies included in the government’s privatisation programme.

The development of efficient capital markets infrastructure is key to a countries’ long-term prosperity; enabling companies to access capital for growth and innovation, creating new jobs and ultimately drive economic prosperity.

LSEG is committed to working in partnership with policy makers and market participants in developed and emerging markets, to further enhance markets and support growing companies globally. Africa continues to be an inspiration.