East African Stockmarkets 'Most Expensive in Africa'

Oct 05, 2018 | The EastAfrican; All Africa

East African countries are running the most expensive stockmarkets on the continent, a development blamed for the drop in trading volumes and the reduction in investor appetite.

A new survey by global financial and investment advisor RisCura shows that Tanzania has the most expensive stockmarket on the entire continent due to high brokerage fees, clearing and settlement fees, and other charges. It is followed closely by Uganda, Rwanda, Zimbabwe, BRVM (West African stock exchange) Botswana, Zambia, Kenya, Nigeria and Mauritius.

Cheaper stockmarkets are attractive to investors. The cost of trading shares on African exchanges is considerably higher than in developed markets, with a significant portion of trading costs being made up of brokerage commissions. The report shows that the lion's share of the total cost of investing in a share in Africa is taken up by stockbrokers, who are now struggling to cover their operating costs due to reduced trading volumes.

Other fees go towards settlement and clearing of transactions, among other statutory charges. According to the report, African countries have far too few stockbrokers, making it difficult for investors to switch to more affordable competitors. "The low volume of trades on these exchanges means that brokers charge more on each trade to cover their costs," says the report.

In Tanzania, fees take up about 2.2 per cent of the total transaction cost of investing in a share, with brokerage fees accounting for 1.5 per cent. According to the report, Bright Africa 2018, which was released in August, Mozambique has the lowest cost of trading in shares, followed by South Africa, Seychelles, Egypt and Tunisia. In Mozambique, fees make up just 0.3 per cent of the transaction. Read more on All Africa.

 

Source: All Africa