Customs Street Advisors is a full service investor relations firm based in Lagos, Nigeria.

Vacuumistan: The State of Business and Financial Information in Africa

This week in Alrroya Aleqtissadiya, the United Arab Emirates (UAE) business and financial daily, I review the state of business news in Africa, with a focus on Nigeria. In recent years, the popular interest in investing has created a simultaneous demand for information, which has been filled by a jostling band of established media and enthusiast sites. In spite of their important contributions to raising awareness, there is still a long way to go before the available offerings can compare favourably with their peers in developed markets. But there are strong signs that a number of players are positioning themselves to fill in this potentially profitable niche.

Africa: Conquering The Last Frontier sounds like a befitting movie title to showcase the progress made on the continent’s capital markets in the last decade. New stock exchanges, more initial public offerings in the past decade than in the forty year period from 1960 to 2000, leap in interest among foreign investors, improved liquidity, greater investor protection, and the list goes on. While a lot of work remains to be done, the continent has come a long way. In countries like Nigeria, careers in stock broking and investment banking now enjoy the prestige that was once reserved for law, medicine, engineering and the officer corps, that is, the traditional nation-building professions.

This is sea change from the market skepticism that marked an older generation who grew up with the belief that the government should control key parts of the economy and saw the introduction of IMF-led economic reforms in the eighties as an assault on national sovereignty.

Feeding the frenzy has been a plethora of stock market and corporate news providers. Tens of websites have cropped up to serve up charts and tables of stock prices. Terms like ‘bears,’ ‘bulls,’ and ‘rally’ are permanent fixtures in the business section of every newspaper. Several blogs and online forums have thrived in response to the demand for stock market news and the ‘inside scoop’.

Like a thousand gold miners during the Gold Rush or wildcatters, these amateurish but enthusiastic information providers are in a haste to stake their claim to what will be the fastest growing market for business and financial information in this decade.

The appearance of so many sources of information can give the misleading impression that market information has matured or become a profitable venture. That is wrong. With weak business models and lack of scale, most of these websites will never grow beyond their hobbyist founders. Similarly, with the exception of a very limited crutch of business titles, the quality of financial journalism on the continent is still in its infancy. But there is one advantage these sites and newspapers enjoy: they have mass appeal to retail investors.

On the other side of the divide, a number of deep-pocketed, mainly foreign news organizations have pitched their tents on the turf. For example, Reuters, which has had a partnership with the Nigerian Stock Exchange for over twenty years, recently announced an agreement to provide real-time price feeds to the public at a nominal amount.

Other global business media houses like CNBC and Bloomberg are closely monitoring the continent’s stock markets and increased the size of their bureaus in key markets. While the international brand recognition they enjoy places them at an advantage over local sources for international audiences, the fact is that they are not quite in the same space of competition for market reporting, analysis and viewer-reader participation as the first group.

Between these two providers is a yawning gap for a provider with the financial muscle and reporting experience to extend and deepen the quality of coverage, while retaining its attraction to local readers; and a media brand that can build a reputation for high quality reporting which would enjoy the respect of foreign readers.

However, the desire for high quality business channels with guaranteed access to decision makers and economically influential demographic groups is not limited to readers and viewers alone. Increasingly, companies want dedicated and trusted channels for releasing their information and gaining visibility. With politics, sports and lifestyle issues ranking first, second and third, in that order, in general interest papers, business, in spite of its growing interest, is a poor cousin at fourth position.

Under these circumstances, business news hardly enjoys more than two pages of coverage while on TV business rarely gets more than an hour of coverage per day.

When one strips away the popular jargon and faddish clichés which now dominate business news on the continent, one sees that precious little progress has been made in comparison with the market growth. Likewise, the proliferation of websites covering stock markets is not all it seems. Their emphasis on charts, distribution of analyst research and occasional commentary supported by active visitor feedback leaves a lot of room for improvement. But without the resources to cover substantive events, entities or personalities in a predictive and in-depth manner, they may be hindered in their potential to scale.

Furthermore, on a continent where print and TV still firmly dominate, the web, while it continues to grow in importance among a younger audience, is still not the most popular channel for accessing news and that may not change anytime soon.

It would be interesting to see how this vacuum is filled in coming years. The economic volatility these countries experienced in the past two years has created a demand for higher level analysis over plain reporting.

Concurrently, a readership used to the fresh and engaging style of the FT, Les Echos and WSJ or viewership of CNBC, Bloomberg TV and Fox Business have started to wonder why the continent cannot enjoy the same. If a revolution could happen in the telecoms sector within the space of a few years, it is not impossible for another to happen in the business news segment. In fact, some may already be looking at this state of affairs and like Robert F. Kennedy, dreaming of things that never were and asking ‘why not?’

The original article can be read here on the Alrroya Aleqtissadiya website.

Related posts:

1. The Last Mile: Financial Journalism Brings it Home The delivery of company results to investors on the Nigerian...
2. Sir, please can we leave aside blame-gaming and name-shaming? Rewriting the NSE’s response to BusinessDay’s call for the resignation of Professor Ndi Okereke-Onyiuke and Musa al-Faki. In a presentation given in January 2009, Professor Charles Soludo,...
3. Lost in translation, apples and oranges, or tomahto to tomayto?: The need for companies on the Nigerian Stock Exchange to carry the investment community along in the transition to International Financial Reporting Standards (IFRS). On April Fool’s Day, First Bank, a foremost Nigerian bank,...
4. Looking into Transparency – Africa Investor Survey on Transparency and Shareholder Identification Africa is playing catch-up in the transparency and business reporting...
5. The Value Additive Content of Executive Media Interviews Most public company executives regard media interviews as a distraction....