African Capital Markets Reimagined: Building a Platform to Trade Debt and Equity Securities Across African Markets With Eugene Tawiah

[00:00:00] You're listening to the Unlocking Africa podcast. My training was in computer science and math, so I've been a technologist from day one. Today we have in addition to the trading platform itself, a view into all of the major online sources.

[00:00:18] If you had your assets in Naira from the beginning of the year, the currency had dropped something like 40 percent. The partners that we looked to engage in and we continue to look out for them and engage to be able to get to our goal of one platform,

[00:00:35] servicing all of the African continent in terms of capital markets, activity markets. Stay tuned as we bring you inspiring people who are unlocking Africa's economic potential. You're listening to the Unlocking Africa podcast with your host, Terser Adamu. Welcome to the Unlocking Africa podcast

[00:00:58] where we find amazing people who are doing amazing things to unlock Africa's economic potential. Today, we have another special guest. We have Eugene Tawiah, who is co-founder of Second Stacks, which is a platform and gateway to access and trade all debt and equity securities

[00:01:18] across multiple African bond and stock exchanges. Welcome, welcome, welcome to the podcast. Eugene, how are you? Thanks, Terser. I'm doing well. How are you doing? I'm very, very good. Thank you. Just jump straight off the train to have our conversation. I've been looking forward to it.

[00:01:37] Excellent. Good to be here. Looking forward to a very lively conversation. Me too. Me too. It's a pleasure to have you on the podcast. So as you know, I usually like to start from the beginning so I was hoping you could introduce yourself

[00:01:50] and tell us a bit more about Eugene Tawiah. Yes. So my name is Eugene Tawiah. Born and raised in Ghana, spent some time in the US for my studies and ended up working on Wall Street for a number of years.

[00:02:06] Fast forward, 2018, I was back in Ghana speaking with some folks in the capital market space who are dealing with the IPO for MTN. MTN is our largest telecom provider here. And as part of their spectrum needs, they had to commit to floating some of their shares

[00:02:30] for local shareholders to participate in. What had happened was as they were going through the book running, they struggled to get the fully subscription-based clients from Ghana. And what it meant was, in fact, to me they didn't make all of the 25% that they were looking for.

[00:02:51] So in those conversations, the question that came up was, would it be great if other people in other jurisdictions, whether you are sitting in Kenya, whether you are sitting in Nigeria, whether you're sitting in London for that matter, could participate in this IPO,

[00:03:08] which was something that was a marquee one for the Ghana market. We took this feedback, we consulted with other brokers in a number of different jurisdictions and we recognized the fact that for investment processes, technology hadn't really played a transformation there,

[00:03:28] as you would see sort of what the Flutter Wave and Paystacks had done for payments. So that was the charge for us. How do we build this interconnectivity so that all of these African capital markets can participate in new issues

[00:03:43] and more importantly, can trade in all of the other markets when there was an opportunity there. It solved the problem of integration, it solved the problem of diversification and we expect that as we continue to grow into more jurisdictions, we can start to see the volumes that track

[00:04:02] and match the type of potential the continent is. So that's a nutshell and a journey of second stacks in the making and today we are in Ghana, we are in Kenya and more recently, we turned on second stacks from Nigeria.

[00:04:16] Fantastic. So you've given us great insights into your experience or your personal history and professional experience in terms of born and raised in Ghana, spent time in US working on Wall Street. So you've told us about your background in the financial sector.

[00:04:32] So I was wondering if you can elaborate on the point where your financial experience intersected with the technology side of what you're currently doing? What I feel to mention was my training was in computer science and maths so I've been a technologist from day one.

[00:04:47] I still remember having a gap year between high school and going to college. I was one of a team of three that wanted to build the first car marks of the world. We were talking to our local car dealers and trying to put them online.

[00:05:04] So I've always had technology as part of my training. I think some of what Wall Street did for me as opposed to having gone to a Microsoft or an IBM after graduating college was the fact that I was able to use my technology, understanding and skills

[00:05:22] to solve problems that dealt directly with economics and the way countries and companies worked in terms of their output. It gave me a better sense of what business people were trying to do and being able to translate that into how you solve those problems.

[00:05:42] And that has basically been the guiding post for me in terms of building solutions that work well for the type of problems that we have. And especially given the fact that we needed a localized solution, being able to translate the pain points

[00:05:59] that these broker dealers, these asset managers had into a system that worked for them was part of what my training really brought in terms of getting us to where we are for second stacks. Fantastic, fantastic. So earlier on you kind of alluded

[00:06:16] in terms of what inspired you to co-found second stacks. If we could look specifically in terms of what gap in the African market specifically were you trying to address through the platform? Right. So ensuring that I've been part of what research was highlighted

[00:06:34] was the fact that if you went across the continent and PWC has some great reports that they do the African capital markets watch, it showed you the fact that each of these jurisdictions over the course of the period, something like almost $90 billion had come in

[00:06:52] on the equity side and almost $250 billion on the fixed income side. And these are massive numbers, but it only makes sense when you are looking at it in aggregate. When you were in Ghana and you had just that as your universe,

[00:07:09] you were looking at the market cap of somewhere between $6 and $10 billion, depending on what year you were looking at that. And so you started to see why that fractured nature, that siloed nature of capital markets on the continent was really the limiting factor

[00:07:27] in terms of being able to access and really invest and drive a lot of growth opportunity there. So for us, the first thing was since each ecosystem was basically trading independently, how do you then bridge this gap?

[00:07:43] So now you have access to all of that capital market exposure in one place. So for us, that was the leading part of the strategy in terms of bridging the gap between these various capital markets across the continent and providing a one-stop shop to the client,

[00:08:01] whether you are an institutional investor and down the line a retail investor to really trade across Africa seamlessly. Brilliant, brilliant. So as you mentioned, it was about identifying or seeing a fractured nature of capital markets in the continent and trying to bridge the gap

[00:08:19] and providing a one-stop shop, which Second Stacks do. So if we can go into the details in terms of how Second Stacks works as a gateway to access and trade debt and equity securities across the continent. So there's a couple of things to note.

[00:08:36] So we are effectively an aggregated layer on top of the existing market infrastructure that is being used in the various jurisdictions. So today, like I mentioned, we are in Ghana, we are in Kenya, we are in Nigeria. Second Stacks connects to each of the exchanges under the hood.

[00:08:57] We have direct market access, so you can see price levels, you can model your order and have it executed and then effectively the entire lifecycle operates as if you are in that jurisdiction. But on the Second Stacks platform, it's very seamless. You can see all of this happening

[00:09:16] in a very functional, a very simplified workflow that tracks against what you do as an investment manager. The way we've built this is through our local brokerage partner network, we have access to the exchanges. That serves as a way where we can meet

[00:09:35] the regulatory requirements of having a licensed dealing member providing us access to the market. And then it's important to note that these licensed dealing members are the ones who are responsible for effectively doing things like KYC, making sure all compliance rules and requirements

[00:09:56] around anti-money laundering and terrorist financing checked and ensured that the system is clean. And then also when a transaction is executed, they take care of the settlement aspects of things and making sure you have your shares, you are able to pay for those shares as well

[00:10:17] and basically maintain the book of record for you. So Second Stacks acts as this streamlined workflow that the clients will interface with. And then under the hood, we have the technology frameworks that connect directly to the existing exchanges to be able to execute those orders on your behalf.

[00:10:39] Brilliant. So you're handling huge volumes of transactions and sensitive information. So how does the platform ensure the security and also the compliant transaction of this process for clients? Right. So there's a number of things that we've done, obviously in this space which is highly regulated,

[00:10:59] we've gone through a very detailed set of steps to get certified by the exchanges that the links are secure. They are able to fail over if there is a disaster scenario and we have disaster recovery. And more importantly, over the period that we've been in existence,

[00:11:19] we do regular security checks where we have external parties probe our system to ensure that there are no gaps in our security protocols. So that has been part of what we do in terms of certifying with each exchange before that connection goes live

[00:11:36] to ensure that the system is secure and nothing untoward is happening on it as part of us providing access to our clients. Secondly, within each jurisdiction, there's a set of rules that governs the exchange in terms of things around trading.

[00:11:53] So everything from the fact that you cannot put a price for security outside of the 10% up or down marker that the exchange requires, things like ensuring that you have the cash available to settle the transaction before the execution happens.

[00:12:13] And more importantly, if you are selling out of a position, you actually have the securities that you are selling. So some of these checks, we have built it into our process based on what has been prescribed by the market and the exchange.

[00:12:27] And these checks are done every single time an order is modeled. So we make sure that we are in direct compliance with the rules that are on the books for each trade. So on the one hand, we're creating a secure system,

[00:12:42] having smokes and ensuring that security measures are in place and we continue to test the security profile. And then for every single transaction, we also run a battery of compliance and risk checks to ensure that they meet the requirements of the exchange before those are executed.

[00:12:58] That's how we will continue to operate in our role. So you've detailed the compliance, the regulatory and security checks that you have put in place. I was wondering if you could share some insights into specifically the technology infrastructure behind second stocks?

[00:13:17] Sure. So I mean, for lack of not borrowing a client, I mean, I'll give you a high level view. I mean, it's a cloud-based platform. So you just need a modern browser and internet connection and you are ready to go in terms of being able to access it.

[00:13:36] What we've done has been sort of driven by the fact that remote work from the time of COVID has become a real thing. So we don't want to have any situation where any client, depending on where they are operating from, has to have any specialized equipment

[00:13:52] to be able to operate this platform. It's cloud-based. You can access everything from a browser and for those who need integrations, we are working on APIs that then give you certain workflows and data points that you can integrate into your own in-house systems.

[00:14:08] It works in a hub and spoke like I mentioned where all of the processing is happening centrally and that's where you interact with the stock markets, look at news, look at research. And then once you model and order, we have a secure connection through VPN to the exchange

[00:14:27] where we send that order out, get the market information and able to display all of that in real time. So there's a lot of low latency functionality that we've built in to ensure that you are seeing the markets in real time.

[00:14:43] You are able to operate as if you are sitting right next to the person in that local market that you are trading in. And we've made a lot of that possible through our web frameworks that then allow users whether they are in the office, working from home,

[00:15:01] no matter where they are, have access to it once they provide their credentials and they are two factor authentication checks pass, they are well on their way to executing trades on second stocks. You detailed out it's a cloud-based platform which is hugely technology driven with certain data points.

[00:15:19] If we could look at the data, what role do data analytics play in the services offered by second stocks? Right, so today we have in addition to the trading platform itself a view into all of the major online sources that provide market information, economics news

[00:15:40] and real time current affairs that drive market sentiment. So we are collecting all of that and presented it in such a way that our clients can really see what is moving each market up until that particular minute as news comes in.

[00:15:55] Right alongside that, we also have deep and detailed research from all of our brokerage partners who have research that are looking at macro, micro, detailed level analysis and also covering the various stocks and bonds that exist in that local market.

[00:16:14] And then in addition to those two pieces of information, we are getting real time feeds from the various exchanges as well as end of day reports that give us the true market to market numbers for the trading for that day.

[00:16:30] So now we're able to take all these three pieces together plus some of the trading data, some of the positions that we have and provide a way for someone to really get a sense of what is happening in that market,

[00:16:46] be able to have insights and then generate trading ideas based off of that. So all of this is part of the framework of tools that we've built that support the trading portion of the platform in terms of coming up with a trading idea

[00:17:00] and being able to execute it with a few clicks. Thank you for that insight. We know that collecting data is often a challenge in Africa. So what challenges did you face establishing second stacks and trying to set up the data infrastructure

[00:17:16] and databases that you currently have in place? Right. So I mean, a lot of it started with research, obviously. Some of it had to do with being able to come up with standards of how the sort of classification of all the data points were going to look.

[00:17:31] So we needed to be able to say a financial stock is the same in terms of its structures, whether you're in Ghana, whether you're in Kenya, whether you're in Nigeria. And then as part of the platform, obviously, we are collecting take information.

[00:17:47] So as soon as there is any transaction that gets published to us, we can snapshot that so we're able to show you trending over time so that you can see how some of these symbols that you are interested in performing

[00:18:01] so you can get directionally a view into whether it makes sense for your investment or not. And there's also a sense that now that we are sitting in the middle of all of this activity, we can also help with some of the questions

[00:18:16] that our clients, the broker dealers, the asset managers, the investment firms have in terms of understanding how to group things, how to analyze things and then generate the type of reports that they need to back what they are doing.

[00:18:31] We have a mandate to keep a lot of data, obviously, as you can imagine so people can do historical analysis of their own transactions, look at market sentiment and be able to really use that to plan out what performance type metrics they want to see

[00:18:49] and be able to guide their trading infrastructure. So a lot of this, obviously, you can imagine took a lot of work, research, speaking to the various exchanges and clients, you really understand those gaps that were in the system and then through our chief economist office

[00:19:08] and some of our data practices internally, we were able to come up with a data model that then supported what we need for now and will be able to grow with us going forward as we continue to add more markets to second stocks. Fantastic work.

[00:19:22] So if we move from the data to the services that are supported by this data, you service both B2B and B2C markets. So can you discuss the significance of providing both B2B and B2C solutions for what you do in terms of trading African securities?

[00:19:42] Right. So I think our common date has been building infrastructure that provides connectivity. So a lot of the focus had always been looking at the large investment firms and making sure the tool sets that a vast majority of their transaction flow goes through is serviced.

[00:20:03] On each firm, they do have retail customers. So the first iteration for us was how do we build the same level of sophistication in the tooling so that they can effectively service those retail customers well?

[00:20:17] So it's actually a B2B2C where we are providing them tools in terms of APIs and a wide-labeled application for them to then effectively extend it to their clients. The one thing we wanted to make sure we drew a distinction on is the fact that

[00:20:34] these brokers, whether they are traditional brokers or some of the digital ones like your Shakers, your Bamboo's, etc., really have a better hold and a better understanding of their customer base than we will ever do as second stacks.

[00:20:52] And because they are already established brands and are well trusted, it made sense for us to be in this position where we are providing them the tools and infrastructure and they deploy that the way they see best for their clients.

[00:21:05] So in as much as we have the ability to really drive that retail conversation, we are still leveraging on the fact that they are the front of second stacks to their clients. And in terms of providing them the best tools,

[00:21:22] we can sort of normalize and standardize the way they have access to the exchange infrastructure that we've built. So that's where we are. I think going forward, some of what we want to be able to see is

[00:21:35] think of a world where now we have Ghana, Kenya, and Nigeria very soon will be in the Francophone West Africa zone as well, where now you can take a little bit of Safari come in Kenya,

[00:21:49] a little bit of MTN in Ghana, a little bit of Airtel in Nigeria, a little bit of Orange Cote d'Ivoire, put this into a fund, an electronic penetrated fund. And that's where your retail investors can come in.

[00:22:05] So now the infrastructure there for you to model a product like that, which allows someone to put in their 100 CDs or 100 Naira or 100 Shillings or 100 Sefa, then allows you to build products that are more suited to your retail investors.

[00:22:21] Whereas today they will have to go through and try and understand what ratio they need to apply to their various markets to be able to get the best returns there. So that's sort of what we want to be able to drive and we continue to work with

[00:22:37] institutional clients to be able to service those needs. Thank you for that. You slightly alluded to this in terms of servicing investment firms. I just wanted a bit more clarification in terms of typically who are your clients?

[00:22:52] Right. So typically we are looking at your broker dealer. So these are licensed members of each exchange in each jurisdiction. They play the role of finding liquidity or providing liquidity for whoever is buying or selling within that market. So that's a big constituent of second stacks.

[00:23:13] Secondly, we look at asset managers. So these are the guys who will run either a pension fund or a mutual fund. And they take assets from various client types and then they invest on their

[00:23:26] behalf and effectively end some returns for that type of work that they do. And then we also looking at the large commercial banks who have investment apps. So here we're talking about your stand bags, your abscess, your stand charts who need ways to provide more options for their

[00:23:47] local investor base whilst looking more broadly at the African continent as a place to invest. So these are our main constituents. The others which I mentioned who have digital brokerage licenses in the various jurisdictions also have the need because for us whether you

[00:24:06] are a traditional broker dealer or a digital one, you still need their first tractor to connect through second stacks to have access to all of the markets that we are in to be able to drive the flows in terms of trading.

[00:24:19] Beautiful. So you've given clarification on who your typical clients are. So I was wondering in terms of your experience, what are some key factors that investors should consider when they are trying to trade African securities?

[00:24:34] Right. I mean, I think it comes down to doing a lot of detailed research and that's part of the reason why having these types of clients that I mentioned is key. They have the expertise,

[00:24:45] they can go through the data on a macro level at a very high level and they can go into the weeds at the micro level to understand what is there and really advise you in terms of the type of

[00:24:58] assets that you should be investing in for the risk profile that you have. If you are someone who just entered the workforce, you probably have a longer horizon to retirement. So you could be heavily in equities, which tends to have a higher return

[00:25:19] profile for the risk that you are taking. But if you are closer to retirement and you are looking for steady income, then maybe bonds are a better asset class for you because they pay

[00:25:31] on a regular basis and you can get those coupons as the income that you see. So a lot of it starts from research and understanding the markets and then based on the type of investor

[00:25:42] you are and your horizon for your investment timeline, the right assets can be earmarked for your investment portfolio. In terms of doing this across the continent, obviously in each jurisdiction there are certain things that are doing well versus not. We were recently

[00:26:04] Nigeria, one of our local partners there, Fremves had mentioned the fact that if you had your assets in Naira from the beginning of the year, the currency had dropped something like 40%. But if

[00:26:16] you look at Kenya and Ghana, that drop was only about 10 to 20% in real terms. So if you were able to park some of your assets, the same assets that you had, if you had for instance,

[00:26:30] MTN Nigeria, you could have bought MTN Ghana and then that would have balanced out to something net positive for you based on the return profile versus if you were sitting there with all of your

[00:26:42] assets priced in Naira. So now you have the opportunity with SecondStats to really diversify across the various jurisdictions where the currencies are moving in their own pace but you don't have that heavy concentration risk that comes with only investing in your

[00:27:02] local jurisdiction. So some of these are now possible with the tools and the processes that we have developed. Now, the capability for an investor to be able to navigate these and build the best type of portfolio they need for their investment risk profile.

[00:27:18] You mentioned that the clients have the expertise to go through the data at a macro and micro level. So given your experience and expertise and this place, how do you think the landscape of African investment has evolved since you've been involved?

[00:27:34] Right. So I mean, I see a shift now away from fixed income as the sort of largest portion of people's portfolios to something where there's a little bit more balance in terms of

[00:27:51] the mix of equities and fixed income. Some of the reasons why I can point to the more recent bond restriction exercise that happened in Ghana where the risk-free perceived government bonds have now been disconnected and the fact that they're going through this exercise then gives people

[00:28:14] a different way to look at that asset class in terms of if the government, as the borrower is not able to meet its obligations, you're better off putting your money in that

[00:28:24] private institution that continues to grow and will be providing you dividends. So at the end of the day, you are swapping your heavy dependency on coupons to now having some of that come from

[00:28:37] the dividends that an MTN or the Ghana commercial bank will be paying to you to balance out. So there's definitely a marked shift in terms of the way these institutions are invested,

[00:28:49] where in the past it was really heavily focused on fixed income to now starting to look at the equity markets for growth. There is also a new sort of trend which we are seeing where a lot of infrastructure bonds are being listed in Nigeria in particular whereby

[00:29:08] the institutions are working with development partners who are doing bridges roads etc and providing that as another way to end some stable earnings by listing these products and attracting the type of capital to fund these projects upfront but also be able to get the benefit of

[00:29:28] as these projects are going, whether it's toll roads, whether it's ports etc. They have a share in that and that becomes an opportunity for growth in terms of investment. We are looking to

[00:29:40] see if some of this speculates into other areas as you know real estate is one of those places on the continent that has grown over time but most developers sort of do that on a one-off basis.

[00:29:53] Now if you think about having the opportunity to do real estate investment trusts where each of these projects get funded by public capital, whether it's coming from pension funds, whether it's coming from high-network individuals or actually retail investors,

[00:30:10] they can invest in that reach that then becomes the sponsoring agent for that building or community or apartment block that is being developed. So some of these things we are starting to see becoming possible as people start to see the capital markets as a way to grow their

[00:30:30] excess capital and invest for the long term in terms of their plans. You detailed that there's been a marked shift in how these institutions are investing so during this period do you think the regulatory environment in African countries has evolved at

[00:30:46] the same pace? Yes I mean I think the regulatory frameworks have kept pace. We definitely see a lot of in addition to their monitoring and making sure the ecosystem is safe and is protecting the customers, the investors they are also working hard on market developments seeing how

[00:31:11] they can be more friendly to investors, be able to grow their markets, bring a lot of capital that is sitting on the sidelines in to really power the growth infrastructure needs that each of these ecosystems has. So the regulators have actually kept pace. I think some

[00:31:30] of the new entrants like us and some of the other startups that are showing up that will ultimately want to have exits and looking for an opportunity to have local participation happen then makes for a good partnership in terms of the regulators following the growth story,

[00:31:51] making sure they are putting in place the right types of enabling environments to then support some of these growth stories. I think if we do our jobs right and second start is able to be

[00:32:04] the platform on which like a flatter wave does the IPO. We don't have that story where Jumiya which does tons and tons of business on the African continent and COVID period especially was delivering food and clothing and medication is listed on a US stock exchange and so the

[00:32:24] clients base, the shareholders don't really benefit from the fact that they are customers of these entities. So that's where the shift is going and yes indeed the regulatory framework, both the exchanges and the securities and exchange commissions are encouraging more of

[00:32:41] that local participation so that the organic growth and shared wealth story happens on the continent for its citizens. You slightly touched on this with regards to infrastructure investment. What potential do you see in the African market for global capital to fund project

[00:33:00] investment and how can platforms like second stacks facilitate this process? Right so I mean I'm sure you've seen a lot of press around China's belt and roads initiatives. I think that had become sort of the way to fulfill some of these needs but if you think

[00:33:21] about the cost of capital and the fact that you are servicing these loans in hard currency US dollars or GBP or U.R. for that matter if you think about the fact that your pension fund this

[00:33:36] each month collecting a ton of money in cities or shillings or Naira and it can go to finance these types of infrastructure projects, you have two things happening. The underlying owners, the beneficial owners, the people who are the investment professionals are the ones that are

[00:33:57] getting into the weeds during the due diligence and understanding what the opportunities are. So you're creating more opportunity for them to put money to work and more importantly the folks whose deductions are going into these schemes are then benefiting from the fact that

[00:34:17] once they retire they have capital that will meet those commitments over time. So now that's the shift in terms of being able to use second stacks to really bring all the capital on the sidelines into the ecosystem to fund your roads, your bridges,

[00:34:35] your railway lines and the same economics that like a China belt and roads initiatives will be doing now takes hold locally. What also happens with second stacks which I mentioned before because we are providing a lot of the detailed data and the research that goes with it

[00:34:56] through our platform now foreign investors who have genuine patient capital can do that assessment for themselves to find the right type of investments and use the platform to effectively invest in them and that way we are building trust, we are creating an avenue for

[00:35:16] people to have better insights to where the right type of investments exist and really encouraging the rest of the world to look at Africa as truly the destination for investment for the long term. This is what we have now where if there are certain geographic or geopolitical

[00:35:38] risks that come to bear there's a lot of flights to safety that happens which doesn't necessarily reflect what is truly happening on the ground because there's not enough of that information that is driving the decision to keep your funds here on the continent versus going elsewhere. I

[00:35:53] mean if you think about the fact that Ghana even with all the struggles with the debt market has still done better than 25% year to date on the exchange, think about the fact that if

[00:36:04] you just waited this out you would have been able to get the benefit of all of that investment that you started out with this year versus somewhere else in the US or Europe etc but

[00:36:15] that data that deep-seated price discovery is not there and with second stacks we are able to establish that and build trust in the ecosystem for our investors no matter where they reside. Brilliant brilliant brilliant so it's clear the collaboration is key to what you do so I was

[00:36:33] hoping you could share some insights into the collaborative effort between second stacks and existing mature capital markets in Africa. Right yes I mean what we are doing is obviously quite ambitious in terms of connecting the whole capital markets ecosystem on one platform so we

[00:36:55] have to rely heavily on our key stakeholders amongst them the broker dealers themselves those people who are the clients of the system making sure we are listening to their pain points

[00:37:08] and building solutions that work for them in as much as we have our own product roadmap that we are pushing and driving. The exchanges obviously are key stakeholders they are where executions

[00:37:20] will happen and because what we are doing becomes net positive for them in terms of growing the volumes that come to the exchange they are really excited and want to partner with us to really solve these problems in the best way possible so now their exchanges are available

[00:37:37] everywhere versus what they have today which is the siloed nature. I mentioned a little bit before about the Securities and Exchange Commissions doing certain things in our ecosystem that allow them to be able to monitor transactions in real time ensure that the KYC process know your customer

[00:37:56] know your business is happening in such a way where they can be able to sort of track the movement of capital through the ecosystem because it's all digitized and be able to manage the risks to

[00:38:11] the ecosystem in a more proactive manner versus the paper-based systems that most of them deal with today. And then more importantly I think for us it's being a driver for change and that next evolution of the capital market so speaking to other ecosystem players whether they are

[00:38:30] companies that have developed brokerage some of the central banks in terms of thinking about our system like PAPS from AFRIXM can really be the infrastructure that allows you to exchange local currency across the African continent without ever touching hard currency USD for any

[00:38:49] particular reason and then also really bringing the right type of foreign direct investment in means that we continue to stay in touch with brokerages in other markets that have an African mandate and showing them the tools that we are building for them to be able to leverage that

[00:39:07] to continue to invest. So some of these are the partners that we look to engage in and we continue to look out for them and engage to be able to get to our goal of one platform servicing all of the African continent in terms of capital markets activity.

[00:39:24] You mentioned that what you're doing is ambitious, you listen to your client's pain points and build solutions which obviously keeps you locked into any trends in the market and continents. So which trends are you seeing in Africa's capital markets

[00:39:40] based that you're currently excited about? Right, I mean I think quite frankly the last five years or so where venture capital has flown into the continent in a big way up until last year I think that the number was excess of five billion dollars. All of these new

[00:40:02] companies continue to grow continue to need capital and so they are real candidates for coming on to either the public exchanges or raising money through syndicates through the investment firms that I talked about before to continue to grow and solve the problems that they

[00:40:23] are focused on in each of these jurisdictions that they are in. So that's quite an exciting time to see new businesses showing up that will become sort of the next MTNs or the next access banks

[00:40:36] of the continent. I think there's definitely a lot more focus now through various projects on looking at Africa as a collective market versus what we've done in the past where everything has been siloed. So I speak about the Africa free trade area which is really

[00:40:59] the thing that is going to drive the largest trading block anywhere in the world for that matter and make sure that in terms of people and commerce Africa begins to trade more efficiently

[00:41:14] with their own citizens. I think that is starting to spare a lot of other things that we see in terms of cross-border payments, rails, people doing commodities and being able to show that growth where if someone in Kenya has tea and somebody in Ghana needs to

[00:41:33] furnish their tea factory they now have the type of links that are there. They are creating business processes that will support these. So some of these trends which really are bringing closer commercial relationships and trade between the African countries before we sort of look

[00:41:51] external is definitely interesting and highlights that shift where now Africa can build the type of capacity that we need to really grow into the potential that we've talked about for many years

[00:42:05] up until this point. Thank you for that. So if we move from trends to the future of Africa, where do you see African capital markets in the next say five years? Right so I mean I think

[00:42:19] with some of what we are doing we obviously want to move the moniker of Africa being a frontier market to an emerging or a developing market and in five years I think we are well on the way

[00:42:31] to be able to do that. There is still that 1.5 billion plus people that we expect within this time frame to be growing up and looking for ways to impact locally and across the continent and

[00:42:48] this is going to be a population that has a lot of capacity to spend and are looking for the type of services that make sense for them locally and so businesses that are coming up

[00:43:01] will be investing in these jurisdictions to really grow with that. Africa is a destination for a lot of commerce, a lot of travel, a lot of entertainment is starting to show already in terms of being

[00:43:17] on the map and we can start to see some of these large conferences whether it's the IMF at the World Bank now coming to the continent and actually having the meetings here, things like that

[00:43:30] for us is testament to the fact that Africa stops being the destination where you just had an extractive industry that was doing mining or a break for exports but being a hub

[00:43:42] for commerce in many ways that supports the rest of the global ecosystem so we see us moving into a more vibrant space, one that is no longer frontier marketing in many ways than none but using

[00:43:58] the capital that is available to us to really develop and get to a place where now we really compete on a global scale for the type of resources that we need to grow and thrive.

[00:44:10] Great insight and great vision. If we look closer to home, where do you see yourself in second stacks in five years time? What role do you see second stacks playing and shaping the

[00:44:22] future of African capital markets? Right, so I mean I think apart from the fact that we want to connect up all of the exchanges and there's 27 of them covering all the 35 countries that have

[00:44:35] them but we want to be able to see that investments in any one of our 54 countries is possible and that local capital is going into the right type of businesses that continue to grow

[00:44:50] and serve as the needs of African citizens on the continent. We also have a powerful diaspora in terms of ways to drive foreign direct investment that we want to be able to provide

[00:45:02] these tools to them to be able to invest back at home and really drive the impact of some of what their states are doing in terms of growth and opportunities there. Africa has a big portion

[00:45:16] of that conversation about climate change and the green economy serves as a place where you can start to see green bonds or renewable energy projects being serviced and we see second stacks

[00:45:31] as a way to drive the right type of capital to these areas and making sure that the investor base can benefit from carbon credits and things like that over time. We also see a world where there are

[00:45:45] various asset classes that are available on the platform so outside of stocks and bonds we want to focus on commodities be able to see that type of price discovery that we have on the equities market or the fixed income market come to everything from maize to rice,

[00:46:01] soybeans etc that we then can trade locally as well as for the export markets and really retain a lot of that value here on the continent and quite frankly I think if we have the next unicorn or

[00:46:17] unicorns listed within second stacks on the continent so that their shareholders are actually their customers that is the holy grail for us where now every citizen of the continent is a stakeholder in its growth and can benefit directly in terms of that financial inclusion story that

[00:46:37] we've been seeing talked about over the years. Thank you for that Eugene as we're coming to the end of today's conversation there's a question that I ask each guest it's a bit different to the other questions. As people we often have quotes mantras, proverbs or affirmations that

[00:46:55] keep us going when times are challenging or when times are good do you have one that you can share with us today? Well I mean I think in my view the one that should underpin all of this is

[00:47:10] africans solving problems for Africa. I think we've emerged from a world where a lot of what we've done has been driven by external players but now we have a vibrant base in terms of a young

[00:47:25] population, a growing population increasingly being technical. We want to empower them to solve the problems that they have in their own jurisdiction so that Africa can grow with locally grown solutions to the problems that we have so Africa should solve african problems. I love that one

[00:47:45] and I agree 100%. We've come to the end of today's great conversation. I was wondering if you had any closing remarks or final calls to action for people who are interested in african capital markets or the work that you're doing at Second Stacks? Right so visit our website

[00:48:10] there's a lot of information there about what we are developing which markets we are in our press page shows you a lot of the the laurels that we've been able to achieve over time but more

[00:48:22] importantly that gives you a place to reference to call your broker who may not be on the platform already to say hey now Second Stacks is available. We are here to support them, we are here to

[00:48:35] support them, support you better and we think this is the next wave of innovation that is coming to the african capital markets near you. Thank you thank you Eugene for sharing your invaluable insights into the world of african capital markets and financial technology.

[00:48:54] My pleasure Tesla, this was a great conversation looking forward to being back when we have more news to share in the future. Me too so it's been a great conversation and looking forward to

[00:49:07] keeping up to date in terms of your development and progress with Second Stacks. Excellent looking forward to that as well have a good one. Speak soon speak soon take care. Cheers take care bye bye.

[00:49:20] Thank you to everyone who has listened and stayed tuned to the podcast if you've enjoyed this episode please subscribe share or tell a friend about it you can also rate with yours in

[00:49:30] Apple podcast or wherever you download your podcast thank you and see you next week for the Unlocking Africa podcast