The Namibian Stock Exchange (NSX) boast to be the third largest exchange on the African continent after the A2X market, reaching a market capitalisation of N$ 1,8 trillion in 2021.
Despite the local bourse impressive continental ranking, the exchange is still marred by low trading volumes, lack of deepening, less liquidity, strict regulations, smaller market size with fewer market participants, low listings, lack of public knowledge of capital markets and many other hosts of issues.
In the same vein, the Namibian market has four registered stockbrokers, which are the go-to brokerage firms if one wants to trade on the NSX.
However, the income threshold requirements by stockbrokers is just too high for ordinary Namibian residents to engage in trading and investing. The above-mentioned challenges can thus be solved by launching a tech-enabled democratisation of the exchange.
Democratisation
Stock market democratisation in essence refers to low-commission trading and investing platforms, that allow individuals to purchase a whole share and/or Fractional Share Rights (FSRs). This allows for investors (retail) who do not have enough money to be a participant of the stock market.
When one think of successful democratisation of exchanges, we lean on South Africa’s EasyEquities and USA’s Robinhood platforms. These are fintech products that let individuals, ordinary Shilunga’s or Sara’s, to trade in fractional shares that costs as low as N$ 0,50 a share. Already, a handful number of Namibians actively trade South Africa’s JSE and global stocks on the EasyEquities and other similar platforms.
Additionally, Kenya’s government this year will relaunch the subscription of its bonds via its M-AKIBA platform, allowing ordinary Kenyan residents to directly own government bonds, thus enabling the democratisation of the bond market. These success stories in Africa and beyond, are indicative of the possibility of a democratized Namibian capital market and its stock exchange.
Opportunity for Namibians
The democratization of the NSX and overall capital markets will allow the Namibian residents to earn passive income by actively taking part in trading and investing. Furthermore, this is opportune for them to invest and own shareholding of Namibian enterprises at IPO.
Moreover, this democratisation will also allow Namibians to subscribe to the lucrative government bond market. With Bank of Namibia’s Fintech Innovation Framework, we hope that Namibian fintech startups and perhaps forward-thinking brokerage firms can peddle the democratization of Namibia’s capital markets to make it accessible to retail investors.
In conclusion, online forex trading by the youth and NSX Scholars’ Investment Challenge has shown us how interested and keen Namibians are in trading and investing in financial instruments. Let democratisation realise the deepening and expansion of our stock markets. The growth of the stock markets, will essentially drive the economic growth and development of our economy.
Enos Kamutukwata, is an economist, policy researcher and development finance scholar. These views are his own. He can be reached on Twitter: @EnosMcManni.
