More recently, African emerging financial markets and institutions, have began receiving attention for internal structural reasons. There is an actual growing recognition of the role of the financial sector, and the region has undergone extensive economic and financial reforms of similar proportions as those countries in Latin America and East Asia. These reform measures seem to have begun yielding positive results in terms of economic performance and increased attention by international investors. According to the ADB statistics, the real GDP growth rate in Africa reached 3.0% in 1995, markedly higher than the year before (1.9%) and the average for the 1990-93 (less than 1%). At the disaggregate level, there are countries which have posted exceptional performance i.e Uganda, Ghana, Benin, Botswana, Mauritius, Cote d'Ivoire, Kenya, etc. A compelling case can be made for the development of capital markets in Africa. Well-functioning financial markets, along with well-designed institutions and regulatory systems, foster economic development through private initiative. The linkage between finance and economic development is of great interest to Africa, since it suggests an indirect linkage between financial sector development and poverty alleviation, along with employment creation. There is empirical evidence strongly suggesting that well- functioning capital markets promote long-run economic growth. In particular, Levine and Zervos (1995) find that indicators of stock market development i.e market liquidity, capitalization, turnover, efficiency of pricing of risk, etc are correlated with current and future economic growth, capital accumulation, and productivity improvements.
Therefore, our interest in this paper is to look into how investors are protected to meet up this challenge in the emerging stock markets and particularly, the African emerging markets. A case is made on the South African stock market and technically compares it wit...
