What Is the African Exchanges Linkage Project (AELP)?

The African Exchanges Linkage Project (AELP) is an initiative designed to improve cross-border securities trading between African stock exchanges.

Developed by the African Securities Exchanges Association and the African Development Bank, the project aims to make it easier for investors to access listed securities across participating African markets.

Rather than creating a single continental stock exchange, AELP seeks to connect existing markets through trading infrastructure and brokerage partnerships.

Why Was AELP Created?

African stock exchanges have historically operated as separate financial systems.

Each market has its own regulations, currencies, settlement arrangements and trading infrastructure.

An investor based in Kenya seeking to purchase Nigerian shares may need intermediaries operating in both jurisdictions.

These requirements can increase transaction costs and complicate investment.

AELP aims to reduce some of these barriers by improving connectivity between participating exchanges.

Which African Exchanges Participate?

The first phase of the project included 7 exchanges:

1. Johannesburg Stock Exchange, South Africa
2. Nigerian Exchange, Nigeria
3. Nairobi Securities Exchange, Kenya
4. Egyptian Exchange, Egypt
5. Casablanca Stock Exchange, Morocco
6. Ghana Stock Exchange, Ghana
7. BRVM, serving 8 West African countries

These markets represent a substantial share of Africa’s listed equity capitalization.

The project also aims to expand connectivity to additional African exchanges.

How Does AELP Work?

The initiative uses a trading system known as the AELP Link Trading Platform.

Participating brokers can use the infrastructure to support order routing across connected markets.

However, the system does not eliminate national securities regulations, local custody requirements or foreign exchange rules.

Transactions remain subject to the laws and operating arrangements of the relevant markets.

How Large Is the Project?

At the launch of the trading platform in December 2022, the African Development Bank reported that the 7 participating exchanges represented approximately 2,000 listed companies and $1.5 trillion in combined market capitalization.

The initiative received financial support through a $980,000 grant from the Korea-Africa Economic Cooperation Trust Fund.

An additional $600,000 was allocated for the second phase, intended to expand participation to 11 exchanges.

These figures describe the project’s launch and expansion funding rather than its current trading volumes.

What Are the Benefits for Investors?

Greater connectivity may allow investors to research and access more companies across African markets.

Potential benefits include broader diversification, improved market visibility and greater competition among intermediaries.

Companies may also benefit from access to a wider pool of investors.

However, investors must still consider execution costs, currency movements, settlement requirements and differences in market liquidity.

How Can Investors Access African Markets?

Daba Finance provides access to supported African securities markets, including the NGX and BRVM.

Investors can review listed companies through Daba Capital Markets and explore investment research through Daba Pro.

The bottom line: AELP represents an important step toward connecting African stock exchanges. Its long-term success will depend on operational adoption, broker participation and improved cross-border trading activity.