Africa: The AfDB Calls for Greater Mobilization of Stock Exchanges in Financing the Continent

At the invitation of the president of the pan-African institution, more than fifty representatives from regional and continental banks, as well as development finance institutions, gathered at the Bank Group's headquarters on November 18 and 19 for discussions deemed vital for the continent's future. President Ould Tah stated, "As architects of African capital markets, you are the guardians of financial institutions and the catalysts for our continent's future," during the opening session attended by leaders from stock exchanges, private equity funds, and African venture capital funds. This meeting, the first of its kind between the Bank Group and Africa's stock markets, aims to examine their role in long-term financing, with a particular focus on reforming capital mobilization in Africa. Félix Edoh Kossi Amenounve, the director general of the West African Regional Stock Exchange (BRVM), welcomed the meeting, highlighting the need for profound transformation. He noted, "There are gaps between financing needs and available resources, but we must consider the necessary reforms to capitalize African pension funds, which were originally created to finance governments." Key financial institutions represented at the meetings include the African Exchanges Linkage Project (AELP), stock exchanges from Rwanda, Mozambique, Cabo Verde, Nairobi, and Tunis, the BRVM, the regional director of the Central African Stock Exchange, and the stock exchanges of Casablanca and Ghana. "Capital markets are the foundation for sustainable and long-term economic growth," emphasized Ould Tah. He added, "By mobilizing patient capital, you provide our states and businesses with diversified funding sources while offering investors, particularly institutional investors, a broader range of opportunities." Since taking office in September, Ould Tah has focused on increasing access to predictable and affordable long-term financing. One of the key objectives of these consultations is to facilitate financial flows for private equity and venture capital by strengthening existing African investment funds and expanding their capacity to finance small and medium-sized enterprises (SMEs), mid-sized companies, and emerging industrial champions. SMEs, which represent nearly 90% of businesses and over 60% of jobs in Africa, continue to have limited access to venture capital. The promotion of sustainable finance, digitization of markets, attracting investment capital to African markets, and tailored programs for SMEs were among the issues discussed during the meeting. The development of financial education for youth was also highlighted as a priority for the continent's stock markets, along with increasing the use of digital tools and fintech to stimulate opportunities. Donald Waweru Wangunyu, non-executive director of the Nairobi Stock Exchange, stressed the need for regional coordination to achieve "scaling, policy coordination, and implementation of reforms; we have good projects, but obstacles remain." Sonia Ben Frej, chair of the board of the Tunis Stock Exchange, pointed out the issues of regulatory convergence and the need to update outdated regulations. The aim of these two days of meetings, through the engagement of fund managers, institutional investors, development finance institutions, and regulators, is to pave the way for mobilizing additional financing for Africa from financial institutions, without relying on public development aid as is currently the case. Ould Tah stated that the Bank would adopt a comprehensive approach to developing capital markets, focusing on three key pillars: supporting capital market regulatory authorities, exchanges, and other intermediaries through technical assistance, institutional support projects, and policy-based operations; diversifying savings mobilization and market actors to promote product liquidity and deepen markets for credit enhancement companies, institutional investors, and other financial institutions; and conducting research, training, and political dialogue to strengthen the capacities of capital market players in Africa. The development of capital markets across Africa is a critical priority and aligns with the strategic priorities of the Bank Group's Four Cardinal Points. Development finance institutions have a catalytic role to play. "We will build this together; it requires a collective effort from each of us," Ould Tah asserted. The meetings will continue on Wednesday for a second day with leaders from African development finance institutions. Distributed by APO Group for African Development Bank Group (AfDB).