The Cape Town Stock Exchange, Africa’s latest exchange has opened for business, and has already set its eyes on Nigeria, South Africa’s most prominent business rival in the continent. Nigeria and South Africa have both the biggest economies and stock exchanges in Africa. Though the Nigerian economy is larger, the 132-year-old Johannesburg Stock Exchange towers the continent with a market capitalization of $1.14 trillion. The Nigerian Exchange sits at $43.92 billion.
While a wave of initial public offerings has swept across the world, firms in the continent’s most-industrialized nation have been de-listing from South Africa’s main exchange in recent years due to cost and regulatory compliance issues. Cape Town Stock Exchange and other rivals have been using technology to cut listing costs in a bid to lure business.
According to Chief Executive Officer Eugene Booysen, “the new Cape Town Stock Exchange will reduce the cost, risk, time, and complexity for companies looking to list. This will enable us to target small and medium firms and offer debt trading.”
Rising investment in renewable energy worldwide should also bode well for South African firms, which could benefit from a new government policy allowing more private power generation. Such companies may sell equity to raise funds providing the new exchange with business.
Eyes on Nigeria and the falling Naira.
The Cape Town Stock Exchange is also in talks with other African bourses to share its technology offering and work on a revenue share basis. Nigeria will be the top target given the size of its economy and financial sector.
The Cape Town Stock Exchange would like to become the Nasdaq of Africa, able to attract companies looking to raise capital in Kenya, Nigeria, Ghana, and others. The Exchange will provide a platform for existing funders to gain exposure to quality assets as well as enhanced investment opportunities.
The main challenge the Exchange will have in Nigeria is the naira fall. The dollar exchange rate has been on a steady fall in the last three years.
The Nigerian naira  hit a record low of N573 against the dollar on the black market on Monday, shrugging off news of the country’s Eurobond sale, meant to boost its currency reserves, traders said, weighed by a recent clampdown on retail forex operators.
Businesses in Nigeria are perplexed at the currency’s free fall. The dollar exchange rate has now hit 580. Before you flip to the next page, the rate would probably have changed.