JIMMY MOYAHA: We’re chatting now with Garth Klintworth. He’s the pinnacle of worldwide markets at Absa Corporate and Investment Banking [CIB]. Garth, thanks very a lot for making the time this night. Looking on the newest Absa Financial Markets Index report that was launched, do you wish to give us a greater thought of what this report is, and how precisely it advantages our customers?
GARTH KLINTWORTH: Absolutely. Good night, to your listeners as nicely. The index is important to helping coverage makers and buyers in assessing the state of economic market infrastructure, and to deploy capital in and out of those international locations.
Despite a really tough 12 months the place we’ve simply come out of Covid, we’ve seen enormous constraints round provide chains, we’ve seen points across the Ukraine/Russian battle. Despite that, the African international locations have continued to progress their market infrastructure and enhance it.
We’ve additionally seen fairly a number of international locations really attain in and wish to take part on this index, as a result of it’s such an unbelievable platform to benchmark your self and to study from and, in consequence, enhance your monetary system.
We’ve had new entrants – for instance, Zimbabwe, Democratic Republic of Congo and Madagascar have all entered the index. Now, they scored comparatively low in comparison with our different entrants in prior years. That’s not a foul factor; that’s very constructive as a result of, for these international locations, they are going to profit from the measurement of the index and enhance their infrastructure by way of time.
JIMMY MOYAHA: Which have been the most important movers on the index? Which have been the most important gainers, and which have been the most important losers alongside that index?
GARTH KLINTWORTH: A big gainer that we noticed from the prior 12 months was Kenya, which actually progressed additional in its sustainable finance. Despite the fiscal headwinds that Ghana is seeing, additionally they progressed from 2021, as a result of they really improved on another improvement areas of their markets.
Eswatini, considered one of our neighbours, improved liquidity and improved on the ESG (environmental, social and governance) pointers.
I feel one thing to level out, which could be very helpful, is that final 12 months, in 2021, we had I feel solely 5 international locations which had sustainable insurance policies. This 12 months we’ve 17 international locations which have improved on the sustainability facet. So Eswatini, our neighbour, for instance, spent quite a lot of higher work on that. Another space that additionally improved is Botswana. It improved on transparency and a few of its macro fundamentals.
So there was typically a broad-based improve throughout the completely different international locations. All 26 international locations actually labored laborious in progressing their market infrastructure to a degree of enchancment.
JIMMY MOYAHA: Absolutely. You talked about earlier that there have been international locations that improved sure issues, and the sustainability facet was an enormous focus. We know that that’s been an enormous focus, not simply from the monetary area or the market area however globally – whatever the firms, whatever the sectors. Loads has been emphasised round sustainability and all of that.
But did we see every other traits from the index, traits which will have been extra particular to sure areas, kind of East Africa versus West Africa – or was it simply normally a scenario the place the international locations which are listed on the index all had enhancements in the identical common path, in keeping with international targets.
GARTH KLINTWORTH: Different international locations are at completely different levels of their market infrastructure improvement. For instance, Ethiopia has some very basic items that they should do relative to a extra refined market like South Africa.
So, relying on the sophistication of the market infrastructure, we’ve seen progress in numerous areas by completely different international locations. It wouldn’t [do] to attempt and evaluate whether or not they all focused particular areas and achieved equivalents.
Given the completely different state of improvement of those international locations’ monetary markets, we’ve seen them give attention to bettering transparency, reporting, and a few of them have moved on particular infrastructure, for instance entry to market.
There’s been an enormous improvement in some international locations, for instance, in digital currencies and insurance policies round how we might use distributed ledger expertise.
So each nation must be checked out by itself deserves as to the place they particularly improved, or targeted their useful resource assets to enhance that infrastructure.
JIMMY MOYAHA: I hear you. From the digital infrastructure one, whereas all international locations world wide are trying in direction of the digital infrastructure facet of issues, do you suppose that we’d most likely find yourself seeing much more vital enhancements from Africa, on condition that there’s such an enormous focus in direction of digital property, in direction of issues like central financial institution digital currencies and engaged on blockchain networks – notably within the context of the truth that Africa has the necessity for different banks, different monetary constructions to help among the monetary constructions on the continent?
GARTH KLINTWORTH: Yes, completely. It’s fairly a singular place for Africa in that [its countries] can considerably leapfrog the extra analogue or bodily kinds of banking infrastructure. We are seeing numerous give attention to profiting from that leapfrog alternative.
At the tip of the day, specializing in digital developments in finance will completely enhance competitiveness and effectivity.
And throughout an enormous spectrum of various kinds of market infrastructure, whether or not it’s associated to the debt capital markets or the fairness capital markets within the completely different international locations, we’ve seen quite a lot of innovation happen. We have seen partnering happen with fintechs. So we’re seeing this enchancment. Regulation can be being promulgated to supply methods for us to try this.
For instance, the Kenya Capital Markets Authority developed a coverage framework on crypto property and tokenised securities. We’ve seen progress on the Nigeria Security and Exchange Commission, the place they’ve issued guidelines on the regulation of digital property.
We know that South Africa itself is engaged on a digital foreign money technique and has already some prototypes in place. Mauritius has launched the framework regulating digital property.
So quite a lot of work over the 2022 12 months [has been] spent specializing in growing the digital instruments to allow the person on the street [on] financing small enterprises to actually allow them to faucet the monetary sector extra effectively than earlier than.
JIMMY MOYAHA: Absolutely. I can’t allow you to go with out a little little bit of a brag. We know that on this explicit index, South Africa has defended its place on the very, very top, [having been] ranked first final 12 months and this 12 months.
Do you suppose that the current collaboration that was introduced by our Reserve Bank governor or by the central financial institution and the JSE, between the JSE and the New York Stock Exchange, will go a great distance in kind of boosting the attractiveness and the accessibility of South African and, in flip, African markets in the long term?
GARTH KLINTWORTH: South Africa will at all times be a outstanding participant on Africa and the disbursement in elevating of capital.
South Africa did lead, as you stated; so nicely performed to South Africa.
However, it did slip barely off its 2021 rating, and that was actually due to progress.
The JSE sadly had seen some delistings happen on its change, however that’s really a theme that we’ve seen world wide.
Therefore I feel additional consolidation partnershipping with gamers just like the New York Stock Exchange will simply add to effectivity the place exchange-raised capital is required, and it is going to completely profit the African continent and present an instance for others to catch as much as, or mimic, or collaborate for the advantage of the continent.
JIMMY MOYAHA: That’s very proper. We received’t let delistings deter us. Thanks very a lot, Garth.
That was Garth Klintworth, head of worldwide markets at Absa Corporate and Investment Banking, chatting to us about Absa’s Financial Markets Index that was launched earlier.