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Capacity-building for the promotion of capital markets in Africa


The project has been designed in the context of Africa’s transition from public sector-led development to a private sector-driven partnership, in which the public sector enables and supports an environment conducive to non-speculative private investment for sustained poverty reduction. Sustained poverty reduction requires that African economies grow at rates of at least 6 to 8 per cent per annum, rates not previously attained in the region. A complete overhaul of the region’s production structures and a massive infusion of resources are required to achieve and sustain such growth rates.

Given the declining trends in official development assistance (ODA), an early improvement in the institutional and policy environment to increase resource flows from private domestic and foreign sources in support of Africa’s development investment and poverty reduction strategy is urgently needed.


Promote capital market development in Africa at national and regional levels, including support to building capacity of Member States related to the adoption of policies and establishment of the necessary regulatory framework and institutions for sustained development of capital markets

Expected accomplishments:

  • Strengthened public confidence and awareness: the strengthening of regulatory institutions, protection of property rights through the stock markets, judicial enforcement of private contracts and transparent and internationally accepted accounting procedures and legal standards to promote investor confidence;
  • Enhanced portfolio choices for small savers and investors: small investors need to be properly protected through strict enforcement of securities laws and regulations. The project will assist African stock markets to harmonize laws and regulations with international standards;
  • Enhanced capital market-based privatization: capital market-based privatization allows for fair pricing of an enterprise and hence serves as an important means of depoliticizing the privatization process. In addition, privatization through local capital markets allows for local investor participation and enhanced diversity of ownership of the economic resources;
  • Increased regionalization of capital markets: the project will address the thinness and illiquidity of African capital markets by enabling various countries to pool resources for regional cooperation and capital market development. Regionalization of African stock markets should enhance mobilization of both domestic and global financial resources to fund regional companies, while injecting more liquidity into the markets;
  • Enhanced working partnership with international and regional agencies with an established track record in capital markets development, on the various activities of the project resulting in considerable cost-reduction and improved coordination among the various programmes that are simultaneously being implemented by partners .

Effects and Impact:

During 2004, a workshop for North Africa was held in Cairo, with an aim to foster capacity building for emerging capital markets of the sub-region, and to contribute to the development of institutions, mechanisms and human resources of the existing capital markets. The workshop also sought to raise awareness in those countries of the role of capital markets in their economic development, as well as to enhance capacity to identify policy options to promote the development of North African capital markets, including how to strengthen the regulatory environment, increase liquidity, develop new financial products, and increase participation of both domestic and foreign companies in North African capital markets and strengthen risk management and bond markets. Due to unforeseen developments, it became necessary to revise the project design, thus delaying the overall project implementation. The project document was reformulated with updated activities and a new implementation plan in December 2004.