A Pan-African Marketplace for Small Firms

Across Africa, millions of entrepreneurs run “mom-and-pop” businesses without access to formal capital. Traditional banks and lenders have largely overlooked these micro- and small-business owners. Meanwhile, Africa’s diaspora – an estimated 200 million people worldwide – sends home over $95 billion a year in remittances, roughly matching the continent’s total foreign investment. Placing even a fraction of that wealth into local firms could be transformative. That is why we envisage a Pan-African Diaspora SME Growth Market: a new continental stock exchange (or linkage of exchanges) focused on startups and small businesses. By pooling Africa-wide savings and skills, such a market could unlock equity financing for the firms that actually create jobs and spur innovation.

A unified African exchange would connect existing national markets into one broader platform. In industry terms, it means “a more extensive, deeper, and more liquid market” spanning multiple countries. The African Securities Exchanges Association (ASEA) has already piloted this idea – its African Exchanges Linkage Project lets investors trade in seven bourses (about 2,400 companies and $1.6 trillion in aggregate value) over a single electronic platform. Experts argue that truly integrated capital markets would let companies tap a larger pool of investors and hedge against local downturns. For ordinary businesses, that means more ways to sell shares or bonds outside their home country. In practical terms, the gains could be large: a continental exchange would offer deeper liquidity (more buyers and sellers), a wider pool of capital, and cheaper trading. It would also spread risk – shrinking the impact if one country’s economy stumbles – and give small firms multiple venues (e.g. Accra, Lagos, Nairobi, Casablanca) to raise funds. Over time, wider equity financing could boost employment and incomes. ASEA notes that greater intra-African trade (facilitated by such capital flows) tends to raise jobs per capita and even pull people out of poverty.

• Deeper markets & liquidity: A united African exchange “create[s] a more extensive, deeper, and more liquid market” by pooling investors continent-wide.
• Lower costs & risk: By standardizing rules, transaction fees fall and investors can diversify across borders, cutting portfolio risk.
• Easier fundraising: Small firms could list regionally; they’d no longer be confined to tiny local markets. More listings attract more analysts and analysts, improving price discovery.
• Economic uplift: Research shows that rising trade and investment raise jobs and incomes – a pathway to reducing poverty.

These advantages are already hinted at by current pilots. For example, Rwanda’s stock exchange recently opened an SME market segment. The first issuer was Mahwi Grain Millers, a small food processor, which raised 5 billion Rwandan francs via a corporate bond issue on the RSE. The CEO described how the company revamped its corporate governance through an “investment clinic” to become investor-ready. Mahwi plans to use the proceeds to expand supply chains and exports to Congo, Europe and the U.S.. This case shows the learning curve: small firms must improve transparency to tap capital markets, but the payoff is a new source of funding for growth (Similar SME-listing programs are underway in other countries; for instance Ghana, Nigeria and South Africa each have junior boards for smaller enterprises.)

A Regulatory and Technical Blueprint

Crafting a continental market will require careful policy work. African leaders have already enshrined the goal at the highest level: the AU’s Agenda 2063 explicitly targets an “integrated African capital market” and even a Pan-African Stock Exchange by 2030. That means governments must harmonize laws and oversight so that a share transaction in Accra works under rules similar to one in Dakar or Nairobi. ASEA analysts stress three pillars for success: (1) Interoperable payments and settlements – linking African central banks so dividends and trades clear across borders; (2) Information and education – giving brokers and regulators data to assess companies continent-wide; and (3) Legal harmonization – aligning corporate and securities law so that investors have confidence in any market. Put plainly, the exchange needs cross-border governance by design. Many experts suggest building it under AfCFTA or an AU financial commission, with oversight from participating exchanges. Nairobi, Lagos and other major bourses would feed listings into the new platform, which in turn would have its own board of trustees or regulator.

• Regulatory harmonization: Draft unified listing and disclosure rules (possibly through AfCFTA frameworks) so companies can dual-list in multiple African markets.
• Infrastructure: Build a secure, cloud-based trading system – accessible via phones and computers – that connects national exchanges. (For example, the Johannesburg Stock Exchange recently partnered with Nasdaq/AWS on a modernization “blueprint” to make its market globally accessible.)
• Payment systems: Ensure settlement across currencies or use stable common units so investors anywhere receive funds promptly.
• Capacity building: Launch education campaigns, training SMEs on “how to IPO” and teaching diaspora investors about African markets. (Diaspora-led fintechs like Daba already run investment clubs in London, Montreal and elsewhere, showing the model.)

In short, the project would unfold in phases: first set up the governance framework and technical architecture, then list pilot companies (for example in each region) and finally market it to issuers and investors worldwide. The Africa Diaspora SME Growth Market could even be branded jointly with a major global exchange (e.g. Nairobi’s bourse and Nasdaq) to provide credibility and technical know-how.

We envision a digital-first exchange platform – for example, a cloud-based system like the JSE’s new Nasdaq/AWS-backed trading engine. Such a platform would allow an investor in Johannesburg or London to click through to a Nairobi company’s offering via a smartphone app. Behind the scenes, the system would enforce unified rules and transparently share company data across the region. Over time, it would aggregate thousands of small listings, giving venture firms and pension funds a deep pool of emerging-African investments.

Diaspora as Investors and Advocates

Critical to this vision is the African diaspora itself. Africans abroad are eager to invest back home – and have the means and networks to do so. The diaspora numbered roughly 200 million in 2020. They often have higher incomes abroad (for instance, the Black community’s spending power in the U.S. is now $1.7 trillion). Importantly, diaspora remittances to Africa now exceed $95 billion a year, more than most aid budgets. Policymakers note that engaging this capital is key: Agenda 2063 calls diaspora the “key drivers” of change, strengthening Africa’s economies through investment and expertise. Tech-savvy diaspora professionals also bring knowledge: many left Africa and gained skills in finance, tech or marketing, which they can channel into new businesses at home.

• Diaspora-led funds: Across the world, African diaspora groups have formed informal “investment clubs” pooling money to buy African stocks, bonds and startups. For example, Daba Finance reports clubs in London, Paris and Atlanta where members vet deals and co-invest in Senegalese or Ivorian SMEs.
• Digital bridges: Fintechs are lowering barriers. Platforms like Daba now let someone in New York invest in Côte d’Ivoire without a local bank account. More broadly, mobile banking and stablecoins can move funds cheaply across borders.
• Policy support: Some governments have begun issuing diaspora bonds (Ethiopia, Nigeria, etc.) and organizing investment summits to attract diaspora capital. A Pan-African exchange would give these savers more direct stakes in growth – effectively a giant, diversified diaspora bond market of thousands of private companies.

In practice, outreach to diaspora investors will be crucial. Advertising in African diaspora media, hosting roadshows in hub cities (London, Dubai, New York), and even listing the exchange alongside a global bourse (as some African companies have on London) can all draw eyeballs.

Innovation, AI and Data

Data and technology will underpin the whole system – in particular, artificial intelligence tools that help match investors to viable SMEs. One recent academic study developed a machine-learning model to score African startups on risk and “investment readiness.” It found AI can predict a young company’s risk level with near-perfect accuracy and highlight the key factors (financial, operational, strategic, etc.) that drive success. In other words, AI-powered analysis could flag which small firms are sound candidates for equity and which need more support. Such tools would serve accelerators, funds and even the exchange itself by de-risking allocations and guiding technical assistance. For example, an investor might use an AI dashboard to compare hundreds of Ghanaian fintech startups by credit profile or team strength before putting money into one.

AI is also improving SMEs’ own readiness. In South Africa, a startup dubbed “FinanceGPT” is using models like GPT-4 to automate financial reporting for small businesses, generating understandable dashboards and forecasts in local languages. Machine translation of business documents, automated credit scoring from alternative data, and algorithmic due diligence could drastically reduce the work needed to prep a small firm for listing. As African governments push for digitalization, leveraging data and analytics will make the new market more efficient. (McKinsey estimates that broader AI adoption could unlock tens of billions in economic value for Africa – partly by making enterprises more transparent and bankable.)

• AI risk assessment: Sophisticated ML models can evaluate a startup’s five domains (finance, ops, tech, etc.) and predict viability with high recall (i.e. flag high-risk firms reliably). This means investors see fewer surprises, and coaches can target the weakest areas of an SME.
• Automated compliance: Digital platforms can automatically check issuer documentation against pan-African regulatory templates, smoothing cross-border IPOs.
• Data pooling: The exchange could aggregate credit data, transaction records and market benchmarks for SMEs – turning fragmented info into a clear picture. This is exactly the kind of data advantage that successful African fintechs (e.g. Wasoko in Kenya) use to underwrite loans, but here it would be institutionalized across the continent.

Africa already trades with the world in commodities and services; a unified market would do the same for African capital. In concrete terms, an SME listing network would link Lagos to Lagos (the Lagos in Nigeria and the Lagos in Lisbon, i.e. diaspora hubs) and Nairobi to New York. Major African exchanges – from Cairo to Johannesburg – would contribute orders and shares, while a common platform (run by a joint African/global consortium) ensures everything settles smoothly.

In sum, creating an Africa Diaspora SME Stock Market is ambitious but aligns with both continental strategy and market realities. It would fold the invisible diaspora balance of $100 billion-plus into visible investment, while giving thousands of small firms a runway to grow. Experts stress that such a market must be built on solid governance and advanced tech, but the pieces are falling into place. If successful, this could be as transformative for African enterprise as mobile payments have been for finance: a new infrastructure unlocking value, jobs and innovation across borders.