While investment apps have done much to democratize the process of buying and selling securities, they typically operate in silos and only give access to exchanges within a single country.
Even internationally focused platforms like eToro only give access to the most well-known exchanges and have a limited offering on the least popular ones. To give just one example, of the 118 companies listed on the Oslo Stock Exchange, only 24 are available to trade on eToro.
What’s more, because any brokerage needs to gain a license from the relevant authority within each country it services, many trading apps are only available in one country.
For emerging markets especially, the lack of cross-border opportunities means that investment apps have failed to deliver on the vision of making investing in securities easy and accessible to all.
To tackle this problem, in Nigeria, companies like Bamboo, Chaka, and Trove have emerged in recent years to help users trade and invest in foreign markets, mostly in U.S. stocks and funds although Trove also lists some Chinese companies.
Earlier this month, Bamboo expanded into Ghana, making it the first trans-national west-African brokerage app. Through a partnership with 10th Capital Investments, a licensed Ghanaian firm, the more than 50,000 users on Bamboo Ghana’s waiting list will now be able to buy and invest in a range of U.S. stocks available on the platform.
When Bamboo raised a $15 million series A round in January, Richmond Bassey, the company’s CEO and co-founder, also stated that as well as helping Africans invest outside of the continent, Bamboo would eventually like to facilitate foreign investment into Africa.
“We also want to make it seamless for African investors in the diaspora to discover the best investment opportunities on the continent” he said at the time.
Connecting African Stock Markets
While there has yet to be any movement from Bamboo to enable non-U.S. stocks to be bought on the platform, one Ghanaian FinTech is looking to address the challenge of Africa’s fragmented capital markets and allow anyone to invest and trade on multiple African stock exchanges.
SecondSTAX, which this month raised $1.6 million in pre-seed funding, has just launched its online portal that gives asset managers, broker-dealers, and institutional investors access to pan-African investment opportunities by connecting to otherwise segregated stock markets.
At present, the platform connects Ghanaian and Kenyan capital markets through sponsored broker relationships but SecondSTAX has eyes on Nigeria, South Africa, Morocco and Egypt next.
In a press release announcing the launch, the company stated that the long-term goal is to interconnect debt and capital markets throughout Africa.
While the typical user of apps like Bamboo are individual investors, SecondSTAX’s B2B model means the firm has a chance to facilitate much larger transactions and promote cross-border capital investments at scale.
Significantly, the company is targeting both African and international clients, presenting an opportunity for investment firms that haven’t previously had the necessary tools to invest in businesses listed in Africa to expose their portfolios to the continent’s growing economies.
The fact that it lists broker-dealers as potential users of the technology also suggests that further down the line the platform could integrate with existing investment apps like Bamboo to help connect them to more markets.
Who knows? Perhaps one-day SecondSTAX will even provide the infrastructure that allows eToro users to invest in businesses listed in Ghana, Kenya or Morocco.
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