Maturity Analysis of Stock Exchanges in Africa: Prepandemic Sustainability Perspective

Abstract

This paper focuses on the economic dimension of sustainability by examining the stock exchange interface of financial markets, the influence of capital market stakeholders, and the instruments that contribute to a supportive fiscal framework. Only mature stock exchanges are present in sustainability indices; hence, comparative assessment of stock exchanges is limited and contributes to the complexity of conducting such a study. Utilizing multivariate analysis, this study investigates the potential for African stock exchanges to support sustainability. An empirical study was conducted on a selected sample of 15 African stock exchanges at the end of 2020 using collected 5-year interval data from Q1 of 2021. A total of 22 variables were selected based on their legitimacy to support sustainability. Using exploratory factor analysis, two key sustainability drivers of differentiation and classified exchanges were identified, i.e., hard and soft. K-means classification method verified the results and found that of the four identified homogeneous groups, one—the Johannesburg Stock Exchange, Nigerian Stock Exchange, and the Egyptian Exchange—emerged on top. Two smaller groups had the potential to be strengthened, and the majority group lagged behind. The research demonstrated the importance of identifying key sustainability drivers and examined the materiality of the drivers within an African context.