How the Minimum Standards of Online Investor Relations was formulated

By Published On: November 7th, 2020

What are the Minimum Standards of Online Investor Relations?

The minimum standards of online investor relations is a list of 16 voluntary standards to help listed companies apply good investor relations practices.

They deal with the practical, legal, and governance aspects. They help companies communicate with their audience in a way that benefits them. Commercially, and from a regulatory perspective.

The standards are designed to cover small, medium and large cap companies in Africa. They provide a framework on not only what to do, how to do it and where to do it, but also when and why.

The back story

Here’s how I formulated them.

I was fortunate to have been the first broker and Secretary of the Malawi Stock Exchange upon its establishment.

Thereafter I became a capital markets consultant, specialising in IPOs.

I saw the inefficiency of corporate communications of African listed companies. Particularly in IPOs (my area of speciality. I saw poor communications practices after listing. This was back in the 90s.

I thought that the lack of information could be an investment opportunity.

So I naively bought a portfolio of over 300 shares in African markets. Thinking that I could curate and sell the information the companies would send me as a shareholder.

Hardly any information arrived.

I sold the portfolio.

But along the way I had many conversations with influential people and market participants on the lack of information being published by listed companies. My area of focus was in our sub-Saharan markets.

The mainstay definition of “investor relations” from NIRI in the US (as amended).

“Investor relations is a strategic management responsibility that integrates finance, communication, marketing and securities law compliance to enable the most effective two-way communication between a company, the financial community, and other constituencies, which ultimately contributes to a company’s securities achieving fair valuation and improving its overall reputation.”

“Online investor relations” in the Africa context means the application of the above in the digital context. But amended for the African context.

I have referred to each word and concept of the above definition in the formulation of the Minimum Standards of Online Investor Relations.

Proactive online investor relations was, and is, still not on the agenda of most listed companies. The reasons I outline later, below.

The challenge for African stock market listed companies is to use digital tools to achieve the same outcomes as companies with many more resources.

The Minimum Standards seek to achieve the core outcomes of First world investor relations but at a much lower cost and effort. Using technology and clever systems.

The critical 3 things to note about “investor relations” from NIRI’s definition are

  1. A “strategic management responsibility” – in the US there is the “ongoing practice of investor relations” as a separate profession. In African markets, “investor relations” is typically a side activity. Outside of complying with the basics of market regulation.
  2. The “two way communication” – being able to own and control the narrative directly with communities online. In the modern digital age, particularly with the New Normal, this is the most exciting and rewarding aspect of “investor relations”. Particularly in African markets.
  3. The “financial and other constituencies” – broadly reaching out to many communities, not just shareholders. In the modern digital age, the relationship between companies and investors goes beyond that. They are stakeholders and potential customers. With the ability to support your brand, or trash it, at the click of a button.

As a generalisation, the 3 core pillars of communications governance above are not widely applied in African markets.

Let me back up and say that I know you are probably thinking that there is lots of information on companies out there. From :-

  • Stock exchange websites
  • Broker reports and broker websites
  • Information on listed company websites
  • Information in annual reports
  • Commercial data vendors on portals
  • Free information portals such as AfricanFinancials

It’s the depth and quality of content that is absent generally.

And telling a story.

Companies are not providing continuing narrative. They are not consistently providing insights into the inherent equity values of their companies. It’s the core executives responsibility. Core executives being the CEOs, Financial Directors and Company Secretaries.

Let me give you an example, one of many, on how listed companies are communicating (not choosing) in our African markets.

The investment story of Bamburi Cement and Lafarge Zambia

Bamburi Cement in Kenya and Lafarge Zambia are both listed cement companies and controlled by LafargeHolcim headquartered in Switzerland and listed on many exchanges.

Bamburi has operations in Kenya and Uganda and Lafarge Zambia solely in Zambia.

Bamburi Cement operations are split between Kenya (60%) and Uganda (40%). Kenya with 3.4m tonne capacity is profitable (2019 US$16m). Uganda with 2.4m tonne capacity has been loss making (2019 US$9m loss) for the past two years. This is on account of the closure of the
Rwanda / Uganda border as a result of a long-simmering row.

Lafarge Zambia has historically been profitable until small losses in 2019 and 2020. Lafarge Zambia has a 0.85m tonne cement plant near Lusaka and a 0.5m tonne plant at Ndola. In 2015 Dangote Cement began operating in Zambia in 2015 with the opening of its 1.5m tonnes capacity plant in Ndola.

Look at the + 20 year longer term share prices of these two organisations:-

Lafarge Zambia Share Price - 20 yearsBamburi cement share price - 20 years
Source Hartland-Peel Equities Research

Things have changed. Drastically. For the worse.

Both companies have suffered extensive long term declines in their share prices. The problem extends past the current 2020 challenges. Back to 2014 for Lafarge Zambia, and 2007 for Bamburi Cement.

So what is the context of the future of these companies from an investment perspective? Particularly given that these companies share prices are currently back to almost 1990s levels.

Do the current communications channels, especially the annual report, adequately contextualise the past and present and future investment cases for these companies? Is there a regular stream of published news? Are investor presentations online? Do social media channels provide us with organic info to enable us to formulate a story about how these companies will ride out these long term challenges?

Can an investor in the street, or internationally get an informed view of the strengths and long term prospects of these companies?

Before I answer the above. Let’s drill down into the current situation from a valuation perspective :-

Price/book (times) 0.30 0.20
Working capital US$40m US$19m
Long-term debt US$26m nil
Interest coverage Credit Negative
Market capitalisation US$80m US$15m
Mkt cap/tonne – capacity US$14 US$11
     – production US$26 US$16
Cement capacity (000 tonnes) 5,800 1,400
Attributable earnings – 2019 US$6.2m (US$3.4m)
     – H1 2020 US$6.3m (US$0.7)

I know that the growth in infrastructure investment in Mozambique and Zambia and DRC provides significant long term demand for cement. Dangote, competitors to Lafarge, would not have built a plant in Northern Zambia if there wasn’t.

Substantial discount to book value, strong market shares, low long-term debt, positive working capital and H1 2020 earnings (for Bamburi at least) suggest that the equity is hugely under-valued. For Lafarge in Zambia the story appears to be more complex: a longer term one.

Either way the valuations above look to be excessively low.

Are these companies adequately describing their investment cases?

Benjamin Graham is credited as being the father of value investing with the guiding principle of investing with a margin of safety. Graham would invest in stocks where the working capital, less long-term debt, was worth more than the total market cap of the company.

A variant on the Benjamin Graham principle of investing is buying stocks that are trading at a big discount to book value. They have good working capital ratios (current ratio), a satisfactory interest coverage ratio, a historically positive operating margin and that, going forward, there are reasonable grounds for the company’s future positive performance and its share price to rise.

Lafarge Zambia downloads section

Lafarge Zambia downloads section

Just like Bamburi Cement and Lafarge.

I think. But I am not sure.

The Bamburi Cement and Lafarge Zambia story should be told far more broadly on digital channels and consistently within the short, medium and long term timeline.

Lafarge Zambia does not have an investor relations website section. Neither does it have its own social media channels. It’s social channels point to LafargeHolcim. The download section has unnamed, undated downloads.

Are retail investors supposed to seek confidence in the fact that LafargeHolcim is the core shareholder?

Bamburi news section

Bamburi Kenya news section

Bamburi Cement has more investor information than Lafarge but only posts basic IR data.


Again the social media channels point to LafargeHolcim.

Bamburi’s news centre was last updated in 2016. No earnings presentations or conference call transcripts appear on the website.

LafargeHolcim is Headquartered in Switzerland and is listed on many exchanges. It’s online investor relations is World Class.

Are the directors’ core obligations of Lafarge Zambia and Bamburi Cement Kenya lesser than those of Lafarge Holcim?

Is it a coincidence that these two companies Bamburi and Lafarge Zambia have extremely low valuations, current challenges of 2020 aside?

There are many more examples of fragmented and disparate corporate communications programmes online that do not talk to the investor relations story.

What is my message to the Directors of Lafarge Zambia and Bamburi Cement?

If I were to rephrase what the Minimum Standards of Online Investor Relations is trying to motivate, I would say to Bamburi Cement and Lafarge Cement executives, say the following:-

  • “We’ve been operating in these markets for years. It’s tough. Times have changed.” We’re still here. This is why we will continue to be here: because of these pillars:-

The messaging arising from the above content pillars should permeate digital and social media and be mixed in with IR data (like the share price and dividend info).

Then I would tell them to say…

  • “Here’s a link to sign up to everything (publicly disclosable) that happens in our company. We know you are busy so we’ll send you the info as soon as it’s released”. The link would be to email alerts or a mobile IR App
  • “Here is all our news and data – everything you need to know – we update data daily. Form your own opinions. It’s everything above.”
  • “This is our story” to add context to the above. In the short, medium and long term. And this is why we are going to succeed. Why our share price is worth more, categorised by the sustainability reporting or integrated reporting guidelines”.

Those three pillars would be tied into a web of digital channels. With tactics and a strategy to ensure that at least the minimum raw data and news expected by investors is available.

How much does it cost a listed company to implement an online investor relations programme that meets the objectives above?

Less than the cost of a single marketing side-of-the-road billboard a month.

Less than the cost of a single page ad in the newspaper.

It’s not the cost of implementing more progressive communications online that is the issue.

It’s the executives’ awareness of what they should be doing in communicating their investment cases, why and most importantly how.

The Minimum Standards of Online Investor Relations I have released seeks to provide a framework of what, why and how. For large, medium and small market capitalisation companies.

Only a few of the Minimum Standards do not apply to larger or smaller market capitalisation companies.

Why is this more important now than ever?

  • Digital communications particularly in investor relations is far more pertinent now after the tsunami of Virtual AGMs this year. Meaningful investor content is being generated digitally. Companies should leverage it.
  • If companies are to take digital transformation seriously going forward, the Minimum Standards of Online Investor Relations will be a part of their bigger digital strategy. An integral one.
  • Costs are low, innovation is high. Positive impact is almost definitely high, negative impact is low. African stock market listed companies can quickly be up to speed with international best practices and more.
  • If it’s possible to connect daily with everyone connected with your organisation in any way: customers or investors, why wouldn’t you? Thousands are spent on advertising to get people’s attention but pre-qualified audiences exist. They are called investors. Conversely customers could be seen as potential investors.

This was not lost on Ford Motor Company when they first listed in 1950:-

shareholders, a captive market

Why is Africa so behind in these communications basics?

Let’s look at the challenges of digital communications in general. This is from a study of thousands of digital marketers globally:-

Most common barriers to success

I will quick fire go through the barriers above in the context of African companies applying online investor relations:-

  • 1st Inadequate budget – not applicable for almost every listed company in Africa. The innovation available and the low costs thereof is not significant enough to be a barrier.
  • 2nd Lack of internal skills – this is an issue. Knowing what to do is a challenge. Then implementing it. This is where The Minimum Standards of Online Investor Relations provides the framework.
  • 3rd Lack of an effective strategy – this is THE ISSUE. Knowing how best to achieve objectives within the individual context of a company’s listing is critical. Again, This is where The Minimum Standards of Online Investor Relations provides the framework.
  • 4th Inability to measure R.O.I – this is an important issue. Why should companies even think about online investor relations? This one is a bit more complex to implement because R.O.I. is objective and subjective.
  • 5th Inadequate reporting and analysis – this is an important issue and speaks to the practical aspects of knowing what is going on within an online investor relations programme.
  • 6th Lack of marketing technology – this talks to the ability to keep up with the innovative software tools available. Critical in saving time and money for the IR function.

My approach to structuring The Minimum Standards of Online Investor Relations has been company and investor focused. And based on my personal experience of trying to communicate the value add to executives for the past 10 years.

Executives don’t know that they do not know

Driven by executives because they are the ones that are directly accountable for the governance of their company.

Just as Mr Ralph Cordiner, chairman of the General Electric Company, pioneered effective investor relations in 1953, Africa needs champions to pioneer a pathway for effective investor relations in a world dominated by new and rapidly developing telecommunication technology. And a world whose equity valuations have been ravaged by the pandemic.

The African standards should be motivated by the Boards of Directors and senior executives: the Chairman, CEO, FD and Company Secretary.

They cannot be motivated by stock exchange rules, governance codes or legislation.

None of them had, or have, caught up with the huge developments and innovations in digital communications.

None of them can deal with the practical challenges experienced by digital marketers.

International influences

I did not reference any international standards on online investor relations.

I felt that the Minimum Standards should be based on my individual experiences of African markets.

I was however influenced by a number of impactful quotes and articles I came across over the years. They are a really good reminder of the core issues.

My efforts were underpinned by common law. Directors have an obligation to provide a listing so their shares can be traded.

Then they are obligated to ensure that the shareholders can get a fair price for their shares.

By providing information.

This first quote from the book Standard Boardroom Practice, prepared by the Institute of Directors, London, revised 1971 is still appropriate (or perhaps more appropriate) in modern times:

“Although the process of encouraging shareholders to take an interest in the affairs of the company may be a rather slow one, directors should not be discouraged. It is their duty to make the maximum use of the methods open to them of keeping the shareholders informed.”

The IOD was defining “investor relations” at a time when the concept was only just emerging.

Another influencing factor for me was how the retail investors in the USA ignited stock market investing post World War II.

I do believe that Africa’s population of 1.3bn people will transform our markets.

At some point.

Why this is not happening is for another post.

These general quotes from the King Code on Corporate Governance also influenced my thinking.

“Companies should ensure the equitable treatment
of shareholders knowing that the question is not
only about what is communicated to shareholders,
but also how well”

“Reputation adds value to the worth of a company.”

There is a negative side to digital communications governance. One that has the ability for companies to stand out amongst their listed peers.

Dominic Jones, a world leader in online investor relations, had this opinion in the 1990s about the trends in African markets regarding delinking the direct communications channel with shareholders (i.e. discontinuing the direct delivery of proxy voting material) without acceptable replacement distribution channels.

“Scrapping requirements for companies to mail printed disclosure documents to investors is a global trend, but it has exacerbated shareholder apathy in every jurisdiction where it has been implemented. This is largely because regulators have failed to replace printed disclosures with suitable standards of online disclosures. Apathy and an uninformed investing public is, to my mind, the single worst thing that can happen in any market. It ultimately will lead to market abuses.”

Companies should take seriously the delivery of proxy voting materials directly and responsibly for corporate reputation reasons, even if legislation or stock exchange rules do not.

By way of a simple example. In Kenya if a listed company publishes its annual report on its website, 24 hours later it is “deemed” to have been delivered to shareholders.


Whether it’s actually been delivered or not.

This would not be acceptable to the SEC in the USA.

More about our African markets.

Our African markets’ profile

There are 1,384 listed companies in Africa

There is a significant variability in the size of companies in African markets measured by market capitalisation.

Let’s look at the profile of 426 listed companies in 10 African stock markets, all of which are listed on under companies and cover Botswana, Ghana, Kenya, Mauritius, Malawi, Nigeria, Tanzania, Uganda, Zimbabwe, and Zambia.

The table below plots the number of listed companies tiered by market capitalisation.

African markets listing chart

The average market capitalisation of 78% of the 288 lower market cap listed companies above, is just US$20m on average.

Just 8 companies account for 50% of the total market capitalisation of USD79.9bn.

In these markets investor education and literacy awareness is generally low. Even though some markets have been around for a long time.

Shareholder activism is almost non-existent.

The legislative and regulatory environments are less stringent than international markets.

Many African markets are also over-brokered – too many brokers sharing too few resources and therefore lack the resources to reach out to investors’ information needs deeply.

There’s few legislation, stock exchange news or governance standards compelling advanced online investor relations practices. Particularly in the context of modern digital communications.

Add to this: many African stock market listed companies should not be listed at all. Their shares do not trade at all. Sometimes for months and or years. There is inadequate price discovery.

Valuations are at deep discounts to book value (I refer to my Bamburi Cement and Lafarge Cement Zambia).

Liquidity levels, as measured by the value of shares traded are tiny compared to international markets. Even by international standards the size of the top companies in Africa are miniscule compared with international markets.

Demand for increased depth of investor information is low as a result of nascent shareholder education.

All of these challenges have been taken into account in the formulation of the Minimum Standards.

Should our communications standards be lower?

Do all of these challenges negate the motivations of directors and executives to carry out World Class online investor relations. Most probably.

Do all of these challenges negate the obligations of directors and executives to carry out basic online investor relations practices to tell their story?

Probably not. If efforts to do so are low cost, high impact.

The Minimum Standards of Online Investor Relations is here to assist executives make more sense of the value of their work.

Executives that care that will drive improved African online investor relations

It is no mean feat that our African Boards and managements can navigate our extreme environments.

Sustainable relationships with Government and communities within our unique political and economic environments is a story worth telling.

African markets require more investor relations engagement: telling the investment thesis story more than First World markets, not less.

Directors and executives just need to know what to do, how to do it, at low cost and then tell their story organically (from their day to day operations) with a view on the short, medium and long term.

Shareholders will appreciate the value as a result. And so will executives with share option schemes.

It’s about doing the right thing. Knowing that it can be done highly effectively at low cost.

Minimum standards of online investor relations


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