RisCura is proud to launch the RisCura Africa RealView Index (RARI), a pioneering benchmark designed to offer investors a transparent and reliable measure of African equity markets, excluding South Africa. As African markets continue to evolve, RARI addresses the need to accurately reflect their unique opportunities and challenges.

Meeting the need for a more accurate benchmark

Traditional indices, such as the MSCI EFM Africa ex-South Africa, often fall short of fully capturing the complexities of African markets. Many rely on official exchange rates, which can be misaligned with the realities investors face, particularly when repatriating capital. For instance, Nigeria was removed from the MSCI EFM Africa ex-South Africa index in 2024 due to ongoing repatriation difficulties despite being one of the largest African markets. RisCura has responded by developing the RARI, which incorporates these nuances to provide a more comprehensive and flexible solution for African equity investment.

The dual-rate approach: A tailored solution

The RisCura Africa RealView Index (RARI) is available in two versions, each catering to different investor needs:

1. Official Exchange Rate Index: This version uses official exchange rates for market performance, offering a transparent benchmark for those focused on standard valuations.
2. Realisable Exchange Rate Index: This version accounts for the practical challenges of repatriating capital from African markets using Alternative Repatriation Mechanisms (ARM). It provides a more accurate reflection of what investors may experience when moving funds.

These two approaches ensure that investors can select the index that best aligns with their strategy, whether they prioritise official rates or the practical realities of investment in Africa.

Methodology and construction: rigorous and transparent

The RisCura Africa RealView Index (RARI) is built on a robust and transparent methodology, leveraging RisCura’s deep expertise in benchmark construction and understanding of the African investment landscape, ensuring it reflects the true African equity landscape. Key steps in the construction include:

1. Country selection: Only countries meeting stringent economic and market criteria are included. The index focuses on accessible, stable markets across Africa.
2. Stock selection: Stocks are selected based on market capitalisation and liquidity, ensuring the index captures the market’s most significant stocks.
3. Global companies with African exposure: The index includes global companies with substantial revenue from Africa, acknowledging the continent’s interconnectedness with global markets.
4. Caps and limits: To mitigate concentration risk, the index limits stock, country, and sector weights, ensuring a balanced representation.
5. Phased country inclusion: New eligible countries are phased into the index, reducing the risk of sudden shifts in its composition.

Governance and transparency

To maintain the integrity of the RARI, RisCura has established a Valuation Committee (VC) that ensures transparency and fairness in the application of ARM rates. The VC meets regularly to make data-driven decisions, with input from independent sources including fund managers and market participants. An external review of the methodology takes place annually to ensure best practices in governance.

A Commitment to Innovation

The launch of the RisCura Africa RealView Index (RARI) is a significant step forward in providing investors with a trustworthy benchmark for African equity markets. With its dual-rate approach, rigorous methodology, and strong governance, RARI offers investors a robust tool for understanding the complexities of African investments.

A New Era for African Market Investment

By providing an accurate, flexible benchmark, RisCura empowers investors to make informed decisions in Africa’s dynamic markets. To learn more about the RisCura Africa RealView Index (RARI) and how it can benefit your investment strategy, visit Portfolio Analysis – RisCura

Contact for more information:
Ntandokazi Sisusa
Business Development & Relationship Manager
Email: NSisusa@riscura.com / BDAnalytics@riscura.com