As regionalism gathers steam around the globe and AfCFTA strives to establish a single market for trade and investment across Africa, platforms are emerging that enables equity investors to buy and trade stakes in listed companies across multiple countries around the continent. TOMA IMIRHE identifies the various types of platform, how they work and the advantages and disadvantages of each for equity investors
Africa’s capital markets are becoming increasingly interconnected. While most retail and institutional investors begin by investing in companies listed on their domestic stock exchange, growing numbers are seeking opportunities across the continent to gain access to sectors and companies that are unavailable in their home markets, diversify risk, and enhance long-term returns.
The continent now hosts more than two dozen stock exchanges, with the largest by market capitalization including South Africa’s Johannesburg Stock Exchange (JSE), Nigerian Exchange Group (NGX), Egyptian Exchange (EGX), Morocco’s Casablanca Stock Exchange, and several fast-growing frontier markets such as the Ghana Stock Exchange, Kenya’s Nairobi Securities Exchange and BRVM, the stock market that lists and trades in equities issued by companies from across Francophone West Africa..
For investors domiciled in one African country, there are several ways to invest elsewhere on the continent, each offering different combinations of accessibility, cost, liquidity, currency exposure and professional support.
Opening a Direct Brokerage Account
The most straightforward method is to open an account with a licensed stockbroker in the target country.
Many African exchanges now permit non-resident investors to own listed equities, provided they satisfy Know Your Customer (KYC), anti-money laundering and tax documentation requirements. Once approved, investors remit funds in the required currency and trade directly on that exchange. This enables an investor to have direct ownership of securities, access to the complete universe of listed companies, ability to participate in shareholder meetings, dividends and rights issues, and full control over portfolio decisions. As well as all these it ensures lower ongoing management fees than pooled funds
On the other hand, there are some drawbacks in using a Direct Brokerage Account. It requires lengthy account opening procedures, documentation may require notarization and investors would have to navigate different settlement systems and custody arrangements. Furthermore investors need to fully understand and accommodate foreign exchange conversions before investing and must understand local market regulations.
This approach suits experienced investors who actively manage their own portfolios.
Using cross-border regional brokerage firms
An increasing number of African investment banks and brokerage houses now operate across several jurisdictions.
Examples include firms with offices throughout East, West and Southern Africa that allow clients to trade on multiple exchanges through a single relationship.
Instead of maintaining several brokerage accounts, investors receive consolidated reporting while the broker executes transactions through its regional network.
This allows for a single relationship covering several markets, enabling simplified administration of the investor’s portfolio, professional execution of trades, easier tax reporting and better research coverage.
On the downside though, services may only cover selected exchanges, and brokerage commissions can be higher. There is limited availability for smaller retail investors as some firms impose relatively high minimum investment balances
Investing through African equity mutual funds
Many licensed asset managers offer pan-African equity funds. These funds pool investors’ money and purchase shares across numerous African exchanges according to a stated investment mandate.
Professional fund managers continuously rebalance portfolios as market conditions evolve. This allows cross border equity investors in Africa to benefit from immediate diversification, professional portfolio management and automatic portfolio rebalancing. Also the minimum investment amounts allowed are low and the investor’s need for market expertise is reduced.
Conversely though, the investor has to pay annual management fees, but has no control over individual stock selection and so returns depend on the manager’s performance. Besides this some funds have limited liquidity or redemption windows
This method is particularly suitable for first-time cross-border investors.
Exchange-Traded Funds (ETFs)
Several international asset managers offer Africa-focused ETFs listed on exchanges outside Africa, while a growing number of African exchanges have begun introducing domestic ETFs.
These funds track a basket of African companies or a regional stock index.
They are low cost, highly diversified, easy to trade, their asset holdings are transparent and they offer intra-day liquidity.
However the number of Africa-specific ETFs is limited and some of the ones there are exclude smaller African markets. Indeed, international ETFs often overweight South Africa.
International investment platforms
Global digital investment platforms increasingly provide access to African securities either directly or through depository receipts, ETFs and international funds.
Some multinational wealth managers also provide discretionary African equity portfolios.
These platforms deploy user-friendly technology that enable online account opening and integrated reporting. Just as importantly they allow for multi-currency accounts and provide access alongside global investments.
But they offer limited coverage of African exchanges, as some smaller African companies remain unavailable and there are regulatory restrictions in certain countries. Add to these, relatively higher platform fees.
Managing foreign exchange risk
Foreign currency conversion risk is one of the most important considerations in cross-border African investing.
An investor from Ghana purchasing Nigerian shares must convert Ghana cedis into naira. If the naira depreciates significantly against the cedi, investment gains can be partially—or completely—offset by currency losses.
Similarly, a Kenyan investor buying Egyptian shares faces exposure to movements in the Egyptian pound.
Foreign exchange risk therefore has two components: movements in the underlying share price; and movements in exchange rates.
For example, if a share appreciates by 20% but the investment currency depreciates by 15%, the investor’s effective return becomes much lower after conversion back into the home currency.
Conversely, currency appreciation can magnify investment returns.
Professional portfolio managers therefore monitor both corporate fundamentals and macroeconomic variables such as inflation, interest rates, foreign reserve levels, fiscal deficits and exchange-rate policy.
Building an African equity portfolio
Rather than concentrating investments in one country, advisers generally recommend diversification across sectors and regions.
A balanced African portfolio might include – for example – South African financial services and retailers as well as Nigerian banks and consumer goods companies; Egyptian industrial and construction firms alongside Moroccan infrastructure and manufacturing companies; Kenyan telecommunications firms along with Ghanaian banks and consumer businesses; all topped up with BRVM-listed regional companies serving francophone West Africa
Such diversification reduces exposure to political, regulatory and economic shocks affecting individual countries.
Successful investing requires periodic review rather than simply buying shares and holding them indefinitely.
Professional managers typically rebalance pan African equity portfolios when valuations become excessive, corporate earnings deteriorate or currencies become overvalued. Other factors they consider are changes in macroeconomic conditions, the emergence of new investment opportunities and the strategic targets set for allocation of investment capital to various countries.
Rebalancing helps maintain the desired balance between risk and expected return.
Choosing the right approach
Pan African equity investors have access to an increasingly sophisticated investment advisory ecosystem.
Licensed stockbrokers remain the primary source of investment execution and market research. Many publish regular reports covering earnings, valuations and sector outlooks.
Licensed fund managers provide discretionary portfolio management for investors preferring professional oversight. They assess clients’ investment objectives, risk tolerance, liquidity needs and investment horizons before constructing suitable portfolios.
Private banks and wealth management firms increasingly offer cross-border investment advisory services for affluent individuals, combining African equities with global fixed-income and alternative investments.
Institutional investors—including pension funds, insurance companies and endowments—often engage independent investment consultants to review portfolio strategy, evaluate managers and recommend asset allocation adjustments.
Increasingly, research published by investment banks, securities firms, ratings agencies and independent financial analysts is also available electronically, enabling investors to compare views before making investment decisions.
No single investment route suits every investor. Individuals seeking maximum control and willing to conduct their own research may prefer direct brokerage accounts. Those seeking convenience may benefit from regional brokers or digital investment platforms. Investors prioritizing diversification and professional management may find mutual funds, ETFs or discretionary wealth management services more appropriate.
As African capital markets continue to deepen, cross-border investing is likely to become progressively easier. Improved regional financial integration, greater regulatory cooperation, digital trading platforms and harmonized settlement systems should reduce transaction costs and widen investment opportunities. For investors prepared to diversify thoughtfully, African equity markets offer exposure to some of the continent’s fastest-growing companies while spreading risk across multiple economies, currencies and industries.
