Africa’s capital markets: Performance review

In a recent interview on CNBC Africa, Alice Tomdio, Director at PWC’s Capital Markets Service Group, discussed the performance of African Capital Markets in 2018 and shared insights on the outlook for 2019. According to PWC's analysis, last year witnessed a drop in overall equity capital markets activity in Africa compared to 2017. The climate was characterized by political uncertainty, weakening fundamentals, and volatility across financial markets. South Africa, a key player in driving capital markets activity in the region, faced challenges such as entering into a technical recession after nine years and undergoing significant political changes which led to investor apprehension. While South Africa saw a decline in activity, North Africa, particularly Egypt, experienced consistent growth in the number of IPOs and further offers. Looking ahead to 2019, Tomdio expressed cautious optimism, mentioning the global trend of unicorn companies planning to list and highlighting the potential for significant IPOs in Africa. However, she remained apprehensive about the overall volume of IPOs in the region, citing ongoing uncertainties. The discussion also touched on the subject of capital market regulation in Africa. The debate around the reasons for the lack of IPO activity includes concerns about valuation, resistance to public scrutiny, and the availability of alternative financing methods such as private equity and development finance. Tomdio emphasized the advantages of going public, including the ability to access financing through rights issues and further offers, as demonstrated by the active further offer market in Nigeria. The topic of dual listings across Africa was also addressed, with examples like Vivo Energy and Seplat listing on both African and international exchanges. Tomdio suggested that regulators should focus on driving more integration and encouraging additional dual listings across the continent. Overall, the discussion highlighted the challenges and opportunities facing African capital markets and the need for continued regulatory efforts and investor education to stimulate IPO activity and enhance market integration.