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Updated Apr 28, 2020

The cost of trading on African stock exchanges is significantly higher than in developed market, particularly in sub-Saharan Africa, according to the 2019 Bright Africa report by RisCura, a South African investment advisory and financial analytics firm. The annual report provides a broad analysis of the investment landscape in Africa.

A substantial portion of trading fees are made up of brokerage commissions. Low trade volumes on some African exchanges mean that brokers have to charge more for each trade to cover their costs, and because they don’t have much competition there is no incentive for them to lower their fees.


Uganda had the highest brokerage commissions at 3.28 percent.


Costs Differ Across Regions

The costs vary across the regions. Here are some of the details from the 2019 Bright Africa report:

•  Mozambique had the lowest trading costs, and Zimbabwe the highest.

•  South Africa had the lowest brokerage commissions at 0.18 percent, and Uganda the highest at 3.28 percent.

•  Exchange fees also make up part of stock-trading costs. Malawi, Zambia, and Mauritius had the highest exchange fees at 1 percent.

•  South Africa also has securities transfer tax—levied on every share in a company or member’s interest in a close corporation at the rate of 0.25 percent—which is not charged in most developed markets.


A general view of Johannesburg Stock Exchange (JSE), the oldest existing and largest stock exchange in Africa, in Sandton on December 18, 2019. Emmanuel Croset / AFP
The Johannesburg Stock Exchange (JSE) is the oldest existing and largest stock exchange in Africa. (Emmanuel Croset / AFP)


The African Continental Free Trade Area in Limbo

Attempts have been made to improve links between African stock exchanges and increase cross-border investment. The East African Community also seeks to integrate its stock exchanges, with the goal of standardizing regulations and costs to make investment in the region more appealing, a key feature of the African Continental Free Trade Area (AfCFTA).

The AfCFTA was initially meant to be formally implemented in July 2020, but the COVID-19 pandemic has pushed back the timetable for implementation, which leaves it up to regional blocs like the East African Community to take up integration efforts in the meantime.

With East African countries forced to contend with the viral outbreak as well as an unprecedented locust plague, amending the region’s stock markets for easier trading could encourage greater foreign direct investment, which is desperately needed to head off the oncoming pandemic-induced economic contraction.

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