SANDTON, 17 MAY 2002
Chairperson,
Distinguished Guests,
Ladies and Gentlemen:
It is a great pleasure for me to be here today to mark this important occasion of the fulfillment of the Johannesburg Stock Exchange and the London Stock Exchange technology agreement.
This is an important development and a critical partnership between our two stock exchanges. It is a partnership that I trust is of mutual benefit, and for us in South Africa will add the necessary impetus in our work of reconstructing and developing not only our country but the entire continent of Africa.
Strategic partnerships with a number of globally prominent companies have had the simultaneous impact of exposing the South African capital markets sector to the rest of the world, bringing world-class services and infrastructure to the JSE and entrenching the JSE in the mind of the international investor as the gateway into the Africa market. The event we are celebrating today is the result of only one such partnership.
Clearly, the partnership with the London Stock Exchange is important to us because it brings the infrastructure and technology of one of the world's leading exchanges to the South African marketplace. I am told that the system, SETS, besides being a quantum leap in the area of global technology, may offer a number of potential strategic benefits, including remote membership and primary dual listing opportunities, the possibility of which should decrease the exodus of blue chip South African companies to foreign exchanges.
We are also grateful that the JSE has entered into another important partnership with FTSE, a global index provider to many international exchanges. One of the benefits is the fact that FTSE and JSE will calculate and market the FTSE/JSE Africa index series to the global investment community. This will allow the JSE to provide enhanced, expanded and internationally recognised index products for the domestic, African and international markets.
Together with these partnerships, the JSE has reviewed and implemented a new trading model that governs trade rules and the way in which trade is conducted. This trading model serves to increase liquidity and enhance market integrity and transparency and has aligned the South African market with international best practices for similar markets.
The focus of all South Africans, and indeed all Africans, is the eradication of poverty and underdevelopment and setting our continent on a developmental path. To this end, as we are all aware, we have embarked on a comprehensive programme, The New Partnership for Africa's Development (Nepad).
One of the central objectives of this New Partnership is to increase private capital flows to Africa, as an essential component of a programme of ensuring economic growth and sustainable development.
Obviously, one of the challenges facing us is to address investors' perception of the continent as a 'high-risk' region, especially with regard to property rights, regulatory frameworks and markets. Most of the businesspeople who are doing business in many African countries will attest to the fact that these perceptions are in most instances exaggerated.
Nevertheless, we have, through the New Partnership, worked out some key elements that will help to address this perception. These include initiatives on peace and security, political and economic governance, infrastructure and poverty reduction. Interim measures for risk mitigation will also be put in place, including credit guarantee schemes and strong regulatory and legislative frameworks.
In addition, we will ensure the implementation of capacity-building programme of a Public-Private-Partnership, through the African Development Bank and other regional development institutions, to assist national and sub-national governments in structuring and regulating transactions in the provision of infrastructural and social services.
Furthermore, we will promote and build a strong base for financial markets within countries, as well as cross-border harmonization and integration, through a Financial Market Integration Task Force.
It is within the context of the goals of Nepad that the JSE Securities Exchange and its partnership with the London Stock Exchange should be seen.
We should ensure that the JSE work closely with us as we face this huge challenge of restructuring the economies of our countries and ensuring sustainable growth and development.
Clearly, the JSE, along with the other exchanges in Africa, has a fundamental role to play in the development of our individual countries as well as the entire continent. Through the development of your vision and the bold steps you have taken in a number of areas, the JSE has shown that they understand the importance of their impact to the whole society.
Investors in today's global economy have varied choices and opportunities for investment capital in both developed and developing markets. By strengthening ties across the continent and facilitating access to world-class systems, the JSE can compete for that capital, making a real and material contribution to the African Renaissance and the goals of Nepad. The JSE and the other African markets need to offer opportunities and incentives in terms of capital growth, and must be able to back these up with appropriate infrastructure and ethics of openness and transparency to truly encourage investment.
For Africa to grow economically, we must encourage, develop, and ensure the success of small businesses and entrepreneurs. We must provide access to capital and to information. The African stock exchanges have an enormously valuable role to play in this regard and it is to them that we look to assist us in facilitating the process of capital investment.
The JSE is the 17th largest exchange measured by market capitalization in the world. Due to the size and sophistication of South Africa's financial markets, the JSE should play an increasingly leading role in Africa. Already, you have demonstrated your commitment to the region by your willingness to share experiences, systems and technical expertise with our neighbours as has been the case with the Namibian Stock Exchange.
It is also encouraging to see that the JSE has signed Memoranda Of Understanding with stock exchanges in Namibia, Kenya, Ghana, Egypt, Nigeria, Tanzania, Uganda and Mauritius and plays an active role in the African Stock Exchanges Association (ASEA).
Since 1968, the JSE has been a member of the World Federation of Exchanges (WFE). Being a member of a federation that represents at least 97% of the world stock market capitalization means that the JSE has access to a forum where the sharing of ideas and knowledge is paramount and is part of an international network of trust and cooperation between nations. The World Federation of Exchanges also supplies the JSE with important benchmarks and standards against which it can measure itself to ensure it is meeting global standards.
The JSE has opened a world of possibility and opportunity, providing the potential to improve the quality of life of many Africans through increased capital flow in the region as a result of enhanced liquidity and investment in its products.
Improved investor protection is paramount to improving liquidity and attracting foreign investment. The JSE is responsible for ensuring a system of self-regulation and upholding market integrity at all times.
In this context, it is encouraging to note that the JSE has recently made a number of important changes, which include greater disclosure by listed companies in terms of directorship, share dealings, compliance regulations as well as compliance with Statements of Generally Accepted Accounting Practices (GAAP) and the King Code of Corporate Governance.
Another area in which investors are now protected is the area of potential settlement risk and fraud due to tainted scrip. Historically, this has been a source of concern for both local and international investors, but was finally put to rest by the movement of the last stocks onto Share Transactions Totally Electronic (STRATE), South Africa's Central Securities Depository, in January this year.
The STRATE system has brought South Africa in line with the rest of the global community in terms of settlement. The guaranteed delivery of shares and cash has greatly reduced the risk of trading in the South African market and has contributed to the reversal of the trend of international investors moving to other markets. Since November 2000, the JSE and STRATE boast a 100% settlement rate through the STRATE system. This tremendous achievement has provided a substantial boost for investor confidence.
I would like to urge that we strive to ensure that the JSE and the capital markets that it represents, becomes more and more relevant to all South Africans by engaging our nation on issues that the JSE deals with and accordingly educating all of us on the fundamentals of capital markets.
I am happy to learn that the JSE, together with an additional sponsor, redeveloped its Schools Challenge into the JSE Liberty Schools Challenge, a competition that seeks to create a platform to stimulate and sustain interest in capital markets and to educate pupils and teachers directly involved as well as the families related to the participants. I am also told that the inclusion of Liberty Foundation into the program has allowed the Challenge to reach into rural areas of South Africa where they have been unable to reach before.
I am sure that we will all agree, that we should ensure that the JSE becomes more active and visible in the black areas, both urban and rural. The JSE should lend a hand to the governments efforts of addressing the terrible legacy of our unfortunate past.
Indeed, through your Schools Challenge as well as the Seed Trust that you manage, which cater for disadvantaged and needy students who excel academically, together we can make an impact to those who are less fortunate than many of us here. Clearly, these programmes can and should help to develop a well-educated and committed workforce for the future whilst contributing to general social upliftment.
I am aware that a series of business dinners have also been hosted, the purpose of which have been to expose South African stakeholders to top class international businesspeople and to global trends within the industry, and these have proved to be popular. Again, I would like to urge that we should try a little harder to expose these very important interactions to a wider section of our South African society.
As we make our humble contribution to ensuring that this century become, in reality an African one, we should guard against a trend, even if it happens unconsciously, of empowering a small section of our society and excluding the overwhelming majority of our people.
This is important because the JSE has a responsibility to remain relevant to each and every South African and continue to serve the totality of the South African society.
The JSE has shown itself to be truly African. It is an organisation that can and must assist in the reconstruction and development of our communities. This will be further enhanced by strategic links that you have forged with global companies. Because of the strategic nature of the JSE it can become a catalyst for transformation of the entire South Africa society towards a new era in trading and capital markets.
Through the work that the JSE has done, this important institution of our country has taken a giant step towards helping the transformation of the continent and placing Africa on the global map. It is my dream that all our companies and all our people should take the same leap forward, transforming ourselves into agents of change and being confident in our ability to add to the development of our continent while demonstrating that we are "Proudly African".
I thank you.