Pace of demutualisation slow in Africa – Abimbola

By Nkiruka Nnorom

The first Vice President of the Nigerian Stock Exchange, NSE, Mr. Abimbola Ogubajo, has said that there is an uneven pace of stock exchange demutualisation between developed and emerging markets, with exchanges in Africa lagging behind.

He spoke at the 2017 edition of the Building African Financial Markets (BAFM) capacity building seminar in Casablanca, saying that 21 stock exchanges in developed market have successfully demutulaised in the last 10 years following the first demutualisation by the Stockholm Stock Exchange.

He, however, said that only five out of 76 exchanges in emerging market jurisdictions have demutualized within the same period of time.

“In Africa specifically, out of the 27 exchanges which are members of ASEA, seven namely: the Johannesburg, Nairobi, Mauritius, Seychelles, Rwandan, Casablanca stock exchanges and BRVM are demutualized with several others including the NSE in the process of demutualizing or considering taking on this initiative,” he said.

He observed that of the 66 World Federation of Exchanges, WEF, only 10 are currently mutual.

He added that the number of stock exchanges that are still member owned dropped from 49 per cent in 1999 to 15 per cent in 2016, while the number of demutualized stock exchanges increased from 10 per cent in 1999 to 85 per cent in 2016.

According to him, research on the effect of demutualization on the financial performance of 20 demutualized exchanges between 1996 and 2008, suggests that the return on equity increased by an average five per cent to 20 per cent with the average net profit margin increasing by 14 per cent to 30 per cent.

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