AfDB Chief Economist Attends Forum on Capital Markets
The AfDB Chief Economist, Louis Kasekende, recently attended an All Africa Regional Forum on Capital Markets in Nairobi, Kenya. The ECA-organized forum, which ran from November 9-10, focused on the theme: "Is a Regional Approach to Capital Markets Development the Best Way forward for Africa?" The forum brought together senior policy-makers, researchers and practitioners with a view to contributing to concrete proposals for fostering regional and/or national capital markets development in Africa.
The Chief Economist addressed the meeting on "Regional Institutions for Financial Integration in Africa" where he pointed out that the thinness, smallness, illiquidity and inefficiency of African capital markets could be addressed by pooling their resources through regional integration. He stressed that the integration of capital and financial markets in Africa faced the same challenges that had limited overall integration on the continent, and these challenges include the structural characteristics of integrating economies, problems of design, multiple and overlapping regional economic communities; and lack of political will.
He however pointed to some successes, including the West African Economic and Monetary Union (WAEMU) with the Bourse Régionale des Valeurs Mobilières (BVRM) and the Southern African Customs Union (SACU) with the Common Monetary Area (CMA). He concluded by addressing AfDB’s role in promoting the development of capital markets in Africa. The development, he said, was structured around four pillars: knowledge sharing, advocacy and policy dialogue; flexible and responsive bond issuance activities; contributions to the development of capital markets and the building of financial infrastructure through loans and technical assistance; and, provision of direct loans in selected local currencies such as the South African Rand and guarantees to enable potential investors to source local currency funds where the Bank lends directly.