Too few listings, too little liquidity: AS THE trading bell rings, a handful of brokers, in crisp scarlet jackets, gather around a whiteboard at the Rwanda Stock Exchange in Kigali.

But Celestin Rwabukumba, its chief executive, is excited for the future. But sub-Saharan Africa has many small exchanges, lots of them created in the s to help privatise state enterprises. Most struggle to attract new issues.

Seven of the eight domestic listings on the Uganda Securities Exchange came from government divestments. Older exchanges, in Kenya and Nigeria, are dominated by big firms: Stock-exchange leaders were in Kigali this week for the annual conference of the African Securities Exchanges Association. Much of the talk was about coaxing smaller, family-owned businesses to list. But many owners are loth to cede control or open their books to scrutiny, not least from the taxman.

So privatisation remains the staple. Botswana sold off its national telecoms company this year, the biggest-ever new offering there. Another source of listings is local units of multinationals. MTN, a South African telecoms giant, is preparing to list in Nigeria, part of a settlement with authorities after breaking SIM-card rules. Liquidity is an even bigger challenge.

African Stock Exchanges

Shares rarely change hands: In Nairobi, which relaxed rules on foreign ownership last year, foreign investors accounted for three-quarters of trading in the three months to September. Some hope to stir up interest with new products.

Nigeria has eight exchange-traded funds ETFs , which track market benchmarks.

Nairobi will roll out a host of derivatives next year. Even little Swaziland has its eye on ETF trades. Regional integration can also help, pooling listings and liquidity into larger markets. East African exchanges are working on a common trading platform. But governments view stockmarkets as national symbols. New regional exchanges are unlikely. Nigeria and Kenya have the heft to forge ahead, but smaller exchanges could struggle.

In a new paper, economists from Erasmus University, Rotterdam, and City University, London, examine 59 nascent stock exchanges around the world. They find that those which start out small, with few listings and low turnover, tend to remain so.

Strong banks and growing savings increase the chances of success. In short, exchanges must wait for economies developed enough to sustain them. Eventually investors may see the stockmarket as an exit strategy.

Stock Exchange Market Capitalization | Caproasia Online

Back at the Rwanda Stock Exchange, Mr Rwabukumba is playing the long game: Media Audio edition Economist Films Economist Radio The Economist apps.

Other Publications Magazine The World In The World If. Media Audio edition Economist Films Economist Radio. From The Economist Group Events Jobs Board Which MBA Executive Education Navigator Online GMAT prep Online GRE prep Learning.

Register now Activate your digital subscription Manage your subscription Renew your subscription. Latest updates Leaders Briefing United States The Americas Asia China Middle East and Africa Europe Britain International Business Finance and economics Science and technology Books and arts Obituary Special report Technology Quarterly Debates.

The Economist apps Espresso Global Business Review World in Figures Events Jobs Board Which MBA Executive Education Navigator Online GMAT prep Online GRE prep Learning. Another victim The outrageous death of Otto Warmbier A travel ban for American citizens to North Korea may be in the offing.

Northern pilot Finland tests an unconditional basic income.

African Securities Exchanges Association | The Premier Association of 27 Securities Exchange in Africa

Trade policy How Chinese overcapacity hits American workers. The Economist explains What do election observers do?

Tell us what you think of Economist. Need assistance with your subscription? Subscribe Contact us Help. Keep updated facebook icon twitter icon googleplus icon linkedin icon tumblr icon instagram icon youtube icon rss icon mail icon Subscribe to The Economist newsletters. Advertise Reprints Careers Media Centre. Terms of Use Privacy Cookies Accessibility Modern Slavery Statement.