FinTech platforms help connect African stock markets
While investment apps have done much to democratize the process of buying and selling securities, they typically operate in silos and only provide access to exchanges within a single country.
Even internationally focused platforms such as eToro only provide access to the most well-known exchanges and have a limited offer on the least popular ones. To give just one example, of the 118 companies listed on the Oslo Stock Exchange, only 24 are available for trading on eToro.
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Also, because any brokerage needs to obtain a license from the relevant authority in each country it serves, many trading apps are only available in one country.
Especially for emerging markets, the lack of cross-border opportunities means that investment apps have failed to deliver on the vision of making investing in securities easy and accessible to everyone.
To tackle this problem, in Nigeria, companies such as Bamboo, Chaka and Trove have emerged in recent years to help users trade and invest in foreign markets, mostly in US stocks and mutual funds, although Trove also lists some Chinese companies.
Earlier this month, Bamboo expanded into Ghana, making it the first transnational West African brokerage app. Through a partnership with 10th Capital Investments, a licensed Ghanaian firm, the more than 50,000 users on Bamboo Ghana’s waiting list will now be able to buy and invest in a range of US stocks available on the platform.
Related: Nigerian FinTech Brokerage App Bamboo Notches $15M Series A
When Bamboo raised a $15 million Series A round in January, Richmond Bassey, the company’s CEO and co-founder, also stated that in addition to helping Africans invest outside the continent, Bamboo would eventually like to facilitate foreign investment in Africa.
“We also want to make it seamless for African investors in the diaspora to discover the best investment opportunities on the continent,” he said at the time.
Connecting African stock markets
While there has yet to be any move by Bamboo to make it possible to buy non-US stocks on the platform, a Ghanaian FinTech is looking to address the challenge of Africa’s fragmented capital markets and allow anyone to invest and trade on multiple African exchanges .
SecondSTAX, which this month raised $1.6 million in pre-funding, has just launched its online portal that gives asset managers, broker-dealers and institutional investors access to pan-African investment opportunities by connecting to otherwise segregated equity markets.
Currently, the platform connects Ghanaian and Kenyan capital markets through sponsored brokerage relationships, but SecondSTAX has its eyes on Nigeria, South Africa, Morocco and Egypt.
In a press release announcement launch, the company stated that its long-term goal is to connect debt and capital markets across Africa.
While the typical user of apps like Bamboo are individual investors, SecondSTAX’s B2B model means the firm has a chance to facilitate much larger transactions and promote large-scale cross-border capital investment.
Significantly, the company targets both African and international clients, presenting an opportunity for investment firms that have not previously had the necessary tools to invest in businesses listed in Africa to expose their portfolios to the continent’s growing economies.
The fact that it lists broker-dealers as potential users of the technology also suggests that further down the line the platform could integrate with existing investment apps like Bamboo to help connect them to more markets.
Who knows? Perhaps the one-day SecondSTAX will even provide the infrastructure that allows eToro users to invest in businesses listed in Ghana, Kenya or Morocco.
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