Did you know that the continent's oldest stock exchange is older than the Eiffel Tower? Africa's financial markets have a rich history that often goes unnoticed.
From Cairo to Cape Town, 29 stock exchanges dot the African landscape, each telling a unique story of economic ambition and national pride. Yet, these financial hubs remain a mystery to many, even as they play a crucial role in shaping the continent's economic future.
Take, for instance, the Zimbabwe Stock Exchange. It's where African billionaire Strive Masiyiwa, in his book How To Build A Business That Works, recounts listing his company to raise capital. This simple act opens a window into a world where dreams are traded daily, and fortunes are made or lost in the blink of an eye.
But what exactly is a stock exchange? At its core, it's a marketplace where shares of publicly traded companies change hands. It's where companies go to raise capital, and where investors seek to grow their wealth.
And while many stock exchanges across the continent are still growing, the potential is massive. The challenge? Politics, infrastructure, and investment. But the possibilities? Endless.
Today, let’s zoom in on one of Africa’s oldest and most significant exchanges: The Johannesburg Stock Exchange, born out of the gold rush that transformed Johannesburg from a mining town to the economic powerhouse it is today.
And who knows? This might just be the beginning of a deeper exploration into the intriguing world of African stock exchanges. The potential is vast, and the story is far from over.
The discovery of gold
The year is 1852. A minerologist from Wales known as John Henry Davis is surveying a small farm in Pardekraal, Krugersdrop, Western South Africa. In his endeavours, he successfully discovers traces of gold in the earth. These, he excavates and takes them to Andries Pretorius, the then-leader of the South African Republic (of the Boers).
Pretorius, wary of what would happen when people discover the presence of gold in the area, decides to keep it a secret. That includes doing away with Davis. At least not by killing him, as would’ve been the case today with African countries, but by exiling him.
So, the government, through the Transvaal Treasury, purchases the gold from Davis at £600. Then, with nothing of value to the country, they order him out. To ensure that he leaves, they escort him all the way to the border, and ensure that he heads over to the Cape Colony.
Exit Davis. Enter Marais.
The year is 1853. Another minerologist known as Pieter Jacob Marais is surveying the Jukskei river line for any mineral. In the process, he comes across numerous deposits of gold. Upon presenting them, Marais is warned that if he tells any foreign power about the presence of gold in the country, thus disrupting the calmness, he would be punished by death.
Seeing the level of imminent danger that awaited him, Marais decided to find a way out by himself. Therefore, 2 years later, he walked to the border of the colony, and left the republic, to the Cape Colony too.
Exit Marais. Enter Bantjes.
The year is 1884. Jan Gerrit Bantjes, an explorer and prospector, has been scouring around Witwatersrand in search of gold for at least four years now. As he was conducting his operations at the Vogelstruisfontein farm, he found a huge gold reef.
He presented his findings to the Struben brothers, who ran a gold-mining operation at the time. It was at their premises that Bantjes’ gold was crushed in order to make useful products. A few months later, on their own vocation, the Struben brothers, too, set out to look for gold, and gold they did find at the Wilgespruit farm.
These two discoveries caused excitement over gold prospects. The news spread far and wide, till it got to Cecil Rhodes and Robinson, up north in Kimberley. Curious by the prospects, they rode for over 400km to Bantjes’ camp in order to check out the gold. There, they spent two nights together, and Rhodes finally bought the first batch of gold from Bantjes for £3000.
Exit Bantjes. Enter the whole world
Remember what Pretorius was wary about some 30 years before? About what would happen when people discovered gold in the area? Yes. It came to be.
News reached the rest of the world, and prospectors started arriving in masses from all corners of the earth; as close as Australia to as far as the United States of America. The entry of foreigners was okay, but after a number of years, the then-president of the South African Republic, Paul Kruger, feared that the foreigners would outnumber the Boers. Therefore, he had to institute measures in order to stop this.
The first measure was to place heavy taxes on the sale of dynamite to the foreigners. This dynamite was used as an explosive in the mining of the gold, therefore, if it retailed at a higher cost, it would put off the foreigners from the mining of gold. This, of course, agitated the miners, but they carried on with their activity nonetheless.
A village? A town? Maybe even a city
The numerous miners who had arrived in the region ended up settling in one area, set up by a Boer adventurer known as Colonel Ignatius Ferreira. The farm, known as Ferreira’s Camp, was crowded with tents and wagons from across Southern Africa within a week. Within one month, it had a population of 300 people.
Kruger, upon seeing this exponential growth, sent out a team of government officials to survey the area around the camp and see how it can be developed into a camp. The surveyors sent were known as Christian Johannes Joubert and Johann Rissik, and it is they who are attributed to the naming of the city that sprouted out from their surveys – Johannes-burg. Coincidentally, the first government official in the area was known as Johannes Meyer, so we can never figure out who among the three came up with the idea (maybe it was a consensus).
Then-president of the South African Republic, Paul Kruger, didn’t think that the gold rush would last for long, and so, he only mapped out a small piece of land for the plots to be constructed. This is the reason why the streets in Johannesburg’s CBD are so narrow.
The first building to be constructed was a hotel. Then a barbershop. Then a bar, a pub and a brothel. Of course, there had to be a circus too, to entertain the locals. Oh, let’s not forget the bank! From then on, growth became exponential.
The birth of the stock exchange
The opening of the bank meant that there was a lot of money in circulation in the economy. The gold-mining operations had proved to be a booming business, and thus, more and more investors wanted to get into the game. This time, not as the miners themselves, but as business shareholders.
It was a businessman who had landed from London known as Benjamin Minors Wollan, who saw this niche, and thus, established the Johannesburg Exchange & Chambers Company. At first, the trading used to take place in a rustic canvas tent in Johannesburg, specifically on Sundays, since this was the only day when mining was not allowed.
Then it moved on to a house at the corner of Commissioner Street and Simmonds Street. This, officially, birthed the Johannesburg Stock Exchange as it is known today. Listing of companies for quotation was very easy and cheap, and thus, there was a huge wave of initial registrations, with 68 companies being listed within just a month, and 300 others being listed by the end of three months.
By the third month, the trading hall had become too small, and thus, the building had to be re-built. Still, it was too small, and thus, the traders preferred conducting their activities on the streets. The mining commissioner would close off the street on both sides using chains, and allow trading to happen. That explains why, for many years thereafter, the heading on the stock exchange price list in The Star newspaper was ‘between the chains’.
In 1903, another building was constructed for the JSE along Hollard Street, and took up an entire city block, but this one, too, was inadequate. Another one had to be constructed in 1961, and after this, the JSE moved offices again twice.
In 1963, the JSE was admitted to the World Federation of Exchanges, and in 1993, it became a founding member of the African Stock Exchanges Associations (ASEA), whose headquarters are in Nairobi. Its aim is to provide a formal framework for the cooperation of African securities exchanges.
In 1996, the ‘open outcry trading floor’ was changed to an electronic system. The open outcry trading system was simply a system whereby communication between professionals on a stock exchange was made through shouting and hand signals in order to transfer information about buy and sell orders. Auctions, bids and offers were made out in the open, thus giving all participants a chance to compete for the order with the best price. Currently, through the electronic trading system, buying and selling of financial instruments is carried out online.
Conclusion
Currently, the Johannesburg Stock Exchange is the largest stock exchange in Africa, with more than 473 listed companies, and a market capitalization of US$1.36 trillion.
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