The Trump administration’s tariffs are set to trigger volatility, compelling global investors to reduce their exposure to emerging and frontier markets.
This is the word from Sam Dahya, head of investor services, custody, and investment administration at Standard Bank Corporate and Investment Banking (CIB).
Speaking at The Network Forum’s (TNF) Africa meeting in London recently, she noted that investor flows into Africa have been healthy.
The World to Africa survey study by The Value Exchange in partnership with Standard Bank shows that 63% of allocators invested in Africa in 2024, up from 57% in 2021.
“Together with significant cross-border investment flows, Africa is also seeing a surge in allocations from North America and the Middle East, as well as from mid-sized asset managers and asset owners who are hungry for better yields and risk diversification.”
However, the continent faces challenges ahead, particularly recent uncertainty linked mainly to US tariffs,” she adds.
Sam Dahya, Head: Investor Services Custody and Investment Administration at Standard Bank Corporate and Investment Banking (CIB). Image: Supplied
Standardisation for growth
Dahya notes that standardisation is crucial for attracting foreign investment into Africa and protecting the continent from macroeconomic challenges.
From a custody perspective, there are significant opportunities for standardisation in Africa. Many markets, especially outside South Africa, use diverse technologies, regulations, and frameworks, complicating investments and making them costly.
Standardisation initiatives can also help align regulations and infrastructure, creating a unified system and facilitating operational efficiencies, says Dahya.
There has been notable progress with regional integration, such as the existence of organisations like the Economic Community of West African States (Ecowas), the East African Community (EAC), and the Southern African Development Community (SADC).
“They have made it, for example, easier for foreign investors to access local markets.”
Dahya notes regional stock exchange initiatives, such as the Africa Exchanges Linkage Project (AELP), which is helping markets attract much-needed liquidity.
The AELP includes stock exchanges from several African countries, such as Morocco, Egypt, South Africa, Kenya and Mauritius.
It aims to make cross-border investing, access to capital markets, and the launch of initial public offerings. Under the sponsored access model, investors can open brokerage accounts in other AELP markets and start trading on those exchanges.
A handful of African economies are also shortening trade settlement cycles, which helps shore up liquidity, while others are connecting to Swift, the international payments system, which enables seamless cross-border transactions.
There is still a need for integration between the participants, including central banks and central securities depositories.
“Account opening processes are still far from standardised. Without better post-trade harmonisation, liquidity will continue to be an issue across the region,” she notes.
Operational efficiencies
Digitalisation is making Africa more attractive for investors. By focusing on digital transformation, custodians can improve efficiency, reduce costs, and enhance service quality.
This can improve transparency and client satisfaction. New operating models and platforms will help providers scale, reduce bottlenecks, automate processes, and support client customisation.
African markets have made significant progress in standardisation and digital transformation, but there’s still work to be done. These efforts need to continue for growth and to handle global volatility, Dahya notes.
