How Ghana’s SecondSTAX facilitates intra-continental African capital markets transactions
Ghanaian startup SecondSTAX has built a tech-driven smart order management and execution routing system for investment firms, aiming to facilitate intra-continental African capital markets transactions.
Founded by Eugene Tawiah and Duke Lartey in 2020, SecondSTAX is building solutions to enhance intra-Africa capital and investment flows, with an initial B2B focus – for example, broker-dealers, asset managers, and institutional investors.
“Starting with Ghana and Kenya, we are consolidating all debt and equity capital markets throughout Africa, making it easier to access opportunities in relevant markets. Our portal facilitates transactions by securely and efficiently routing orders onto existing mature capital markets infrastructure in complete compliance with local regulations,” Tawiah said.
“As a result, investment firms are empowered to do more for their clients and have the opportunity to earn more for themselves. Investors are also able to invest in their native currencies, making a wider range of assets and opportunities available to more Africans and creating an efficient route to increased wealth on the continent.”
Though founded in 2020, the SecondSTAX journey actually started from a conversation with investment professionals in Accra during the summer of 2018.
“We were inspired to create SecondSTAX after noticing the gaps in Africa’s capital markets that led to many missed opportunities,” said Tawiah.
“For example, during MTN Ghana’s IPO in 2018, unless you were in Accra, there was no way to access or buy into that IPO. Despite various institutional investors having funds to invest, limited access to markets outside the countries they are based means they are unable to take advantage of available opportunities. And so the concept we had in mind was, if I stayed in Lagos, Nairobi, or some other place outside of Accra, how do I get access to these offerings and be able to invest in them? That was how SecondSTAX started.”
This is a very relevant solution. Despite having some of the best-performing stocks and bonds globally, Africa’s exchanges are largely inaccessible to investors outside the jurisdictions where they have been listed. Over the last decade, African capital markets have raised more than US$246 billion in debt capital markets. More than US$87 billion has been raised in equity capital markets, and equity indices have peaked at over 50 percent growth across the major regional exchanges.
“However, the siloed nature of these exchanges as well as insufficient data on the risk profiles of assets has led to limited access to capital for markets and limited access to high-growth assets for investors,” said Tawiah.
SecondSTAX has raised US$1.6 million in pre-seed funding from private investors and venture capital firms, including LoftyInc Capital, Orbit54, and STEMeIn.
“We also recently announced two new partnerships with the Nairobi Securities Exchange (NSE) and the Ghana Stock Exchange (GSE) that will make it easier for institutional investors across Africa to directly invest into these exchanges, via brokerage partners Kestrel Capital Limited in Kenya and Databank Brokerage Limited in Ghana,” Tawiah said.
“Following the announcement, the client pipeline now includes 10 additional top-tier investment firms across Ghana and Kenya. This includes a large fund manager and a large pension fund.”
Launched in Ghana and Kenya in November 2022, the startup plans to move into other markets across Africa in the coming months.