Pan-African stock exchange planned

By Rodney Smith BBC World Service business reporter

JSE accounts for about 80% of the value of all African shares

Africa's biggest stock market, the JSE Securities Exchange in Johannesburg, is planning to create a pan-African exchange.

Initially, the exchange would enable investors to trade in shares in companies from Ghana, Namibia, Zimbabwe and Zambia.

But over time, it would aim to expand to cover most of the African continent.

The hope would be that a pan-African stock market would help attract more foreign investment to the continent and to slow the oft-seen capital flight out of these countries when their economies suffer knocks.

Modern system

The Johannesburg bourse is Africa's most modern stock market.

JSE says it is not aiming to make a profit from the new market

It uses the same settlement system as the London Stock Exchange.

This makes it easier for the exchange to ensure that the most important backroom part of share trading, such as the paying of bills, issuing of invoices and seeing that they are paid, is carried out properly.

The Johannesburg exchange's cutting edge settlement system would be made available to the new exchange.

Dominant actor

However there could be many complications.

The Johannesburg exchange admits that it will have to avoid swamping the new exchange with South African companies.

It already accounts for about 80% of the value of all African shares.

Furthermore, other African countries operate exchange controls that would make settlement difficult.

And the South African trading house would also have to overcome some residual distrust of the power of Johannesburg as a white financial centre.

On the other hand, this may be countered by the appeal of a purely African market.

African solution

The Johannesburg stock market operator says its aim is not to make a profit from this new venture.

Instead, the exchange insists, it is developing the new market out of principle.

But it is also responding to an initiative by president Thabo Mbeki, who has appealed to South African business to find an African solution to African problems.