When Flutterwave, Africa’s fintech darling, first hinted at going public, all eyes turned to the usual suspects: New York, London, and notably not Lagos. Why is it that even the continent’s brightest stars often look outside their borders to go public?

E-commerce giant Jumia and Egyptian mobility startup SWVL Holding are among African startups that pursued foreign listings, but later experienced the unforgiving nature of those markets.

The belief that a thriving IPO market is the gold standard of financial maturity has long shaped how we assess Africa’s capital markets. But this lens often overlooks the continent’s unique realities—and in some cases, it stunts the creative evolution of more suitable models. So, what’s really holding back African securities exchanges? And more importantly, what futures could we be building instead?

According to the African Securities Exchanges Association (ASEA), only fourteen IPOs took place across Africa in 2023, raising just $1.3 billion. That figure pales compared to emerging economies like India, which saw 57 IPOs raising over $7 billion in the same period.

The Nigerian Stock Exchange (NGX) has listed only a few new companies in the past decade. Over at the Nairobi Securities Exchange (NSE), the bourse has suffered an IPO drought, with Safaricom being the last significant listing 17 years ago. The inactivity at NSE is despite major tech success stories in Kenya. Although the Johannesburg Stock Exchange (JSE) is Africa’s most prominent, it has seen more delistings than listings in recent years. In the past two years alone, the JSE had around 12 delistings, with just three new listings.

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It doesn’t mean the exchanges are dormant; more innovation from regulators, telcos, and fintech could spur interest, just like mobile money revolutionised banking on the continent.

African companies, particularly in tech and high-growth sectors, are opting for alternative capital. Private equity, venture capital, and acquisitions could offer local firms more scalable and reliable options. The African Private Equity and Venture Capital Association (AVCA) data show that over 450 private capital deals were signed in 2023, totaling $7.2 billion in disclosed value. These investments include early-stage startups and mature companies, many of which now prefer to stay private or exit through M&A rather than IPOs.

There are several examples to consider. Andela, the tech talent accelerator that started in Nigeria, opted for a US-based structure and raised over $180 million before hitting unicorn status. Yoco, the South African fintech company, raised $83 million in its Series C round and continues to expand privately. The capital markets are not dormant in many ways—they’re just evolving beyond their traditional forms.

Like other sectors, fragmentation is another critical factor limiting the role of African exchanges. With over 30 independent stock exchanges across the continent, capital and expertise are stretched. From Lagos to Johannesburg, Nairobi to Casablanca, African exchanges have limited liquidity, small investor bases, and an unfriendly regulatory climate. The lack of integration of major bourses has created barriers to scale and discouraged foreign and regional investment.

However, efforts to reverse some of this damage are gaining momentum. The ASEA and African Development Bank-backed African Exchanges Linkage Project (AELP) is pushing for cross-border trading between key exchanges, including South Africa, Kenya, Nigeria, Morocco, and Egypt. The project will enable investors in one market to buy securities listed in another. In East Africa, the East African Community (EAC) Capital Markets Infrastructure Project is implementing a unified trading and clearing platform that will cover all the member countries. It could create a harmonized market of over 185 million people if successful.

Francophone West Africa offers a living example of what exchange integration could look like. Abidjan-based Bourse Regionale des Valeurs Mobilieres (BRVM) serves eight countries. Despite the challenges that individual economies like Burkina Faso, Mali, or Niger face, the platform has created efficiencies of scale and outperformed other exchanges. In 2023, BRVM surpassed its Anglophone counterparts, with its composite index– a weighted equity index that tracks the performance of the largest listed companies– rising by 13.5%. Capital markets could follow suit as more regional economic blocs pursue monetary and fiscal integration.

The next generation of African exchanges may not look like traditional trading floors. They might be mobile-first, blockchain-enabled, and run on AI-powered models. Platforms like Chipper Cash, Hisa, Bamboo, and Trove already give retail investors access to U.S. stocks from African soil. What if the same tech stack also enabled fractional ownership of local enterprises?

In 2024, Nigeria’s Trove began piloting fractional trading of local stocks–allowing users to invest with as little as 500 naira ($0.50). Micro-investing could open the doors to millions of small investors currently shut out of the capital market. In Kenya, for instance, the government’s M-Akiba allowed ordinary citizens to buy government securities through mobile money platform M-Pesa, raising over KES1 billion from first-time investors. Such platforms prove that with the right tech and user experience, participation in securities markets can be democratized.

Tokenised securities, smart contracts, and mobile KYC can bypass the red tape that bogs down IPO processes. It could allow local SMEs and startups to raise funds without needing full-fledged listings, bringing liquidity and trust to underserved sectors.

Blockchain technology could also reshape the infrastructure of African markets. In South Africa, firms like Revix are offering tokenized investment products. If applied to local equity or debt markets, blockchain could reduce settlement times, improve transparency, and cut costs. Imagine small and medium enterprises issuing tokenized bonds to raise capital from a pan-African investor base—without expensive and bureaucratic IPO procedures.

The structural challenges facing African exchanges remain. Retail participation in African markets is low compared to other regions. For instance, only 1.5 million people in Kenya–2.7% of the population–hold Central Depository System (CDS) accounts. This figure is even lower in Nigeria, where less than 0.2% of the population actively trades equities. In contrast, around 55% of Americans and 7% of Indians have active accounts in the capital markets. Education, trust, and access remain significant barriers.

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Wild swings of local currencies like the naira discourage foreign investors. In 2023, Nigeria floated the naira, which led to a 40% devaluation, which saw some foreign investors exit the NGX. The regulatory environment, even in some of the most advanced economies on the continent, presents hurdles. South Africa, it is estimated that the total cost of going public exceeds $200,000, which is unaffordable for most African startups or mid-sized firms.

Instead of replicating Wall Street or the London Stock Exchange, African countries should design capital markets that respond to their unique economic realities. One such solution is testing tiered exchanges that cater to businesses at different levels of growth. Kenya’s efforts to achieve this through the Growth Enterprise Market Segment (GEMS) was a step in the right direction but failed to attract enough interest due to red tape and limited investor appetite. A more flexible, tech-enabled version—combined with mentorship, investor education, and tax incentives—could be more effective.

An active capital market could boost retail participation. This must become a national priority. Like mobile money and banking, African exchanges can work with telcos and fintechs like Bamboo and Hisa to make trading as easy as sending money. M-Akiba’s success shows that ordinary people are willing to invest when given the chance. Regulations must evolve to support these innovations, particularly mobile KYC and investor protection.

To address forex risk, regional exchanges might explore dual-currency listing options and settlement in digital regional currencies under regional trade agreements like the AfCFTA. Meanwhile, better exit strategies, including active secondary markets and partnerships with development finance institutions, can support private equity and venture capital ecosystems.

The success of Africa’s capital markets shouldn’t be measured just by the number of IPOs. Success could just as well be measured by how many businesses raise funds to grow, how many jobs are created, or how many ordinary citizens are able to participate in wealth creation. It’s about inclusion, innovation, and impact—not simply imitation.

Adonijah Ndege

Senior Reporter, TechCabal

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