A faster and deeper integration of capital markets is crucial if the West Africa sub-region is to recover from the double hits of the COVID-19 pandemic and the ongoing Russia-Ukraine conflict, Vice-President Mahamudu Bawumia has stated.
Speaking at the second edition of the biennial Conference of the West Africa Markets Conference (WACMaC), organized by the West Africa Securities Regulators Association (WASRA) in Accra on Tuesday May 24 2022 Bawumia said such integration would not only facilitate cross-border trade, but also help raise the needed capital for local development.
“A well-integrated West Africa Capital Market can accelerate the mobilization of resources for Sub-regional and continental infrastructure needs which is estimated by the African Development Bank (AfDB) to be about $130-$170 billion a year (AfDB, 2019 report). This can be supported or supplemented by funds raised across the region and the continent.
“An integrated capital market can also help to attract capital and stem the rapid tide of capital flight from Africa which has hit unprecedented proportions. In this case, capital will begin to work within the continent as bankable projects would be initiated locally,” he explained.
Among others, regional integration of capital markets in the West African Community should stimulate intraregional securities trade and investment, providing alternative sources of financing, and supplementing commercial banks, which dominate the regional financial sector with low competitiveness, Bawumia emphasised.
“Deeper and more liquid markets could support both foreign and local currency capital investments in physical and social infrastructure,” he remarked.
The Vice President warned, however, that the necessary regulatory measures must be put in place to ensure the growth and sustenance of the integrated capital market.
“To have a successful capital market integration there ought to be important technical regulatory acts that meet the need for consensus on sound prudential principles and practices. Importantly, there is a need to develop regulatory policies that protect investors, improve the efficiency of markets, and protect the markets from systemic risk.
“The development of regulatory policies at the system level should avoid regulatory arbitrage, facilitate risk-sharing, and encourage more competition that results in tangible outcomes.”
Nevertheless, “The benefits of economies of scale to be derived from the integration of the capital markets in West Africa cannot be overemphasized. The more we integrate and develop our capital markets, the more we will support a robust and uniform economic renaissance on the continent, along with the transition to a broader, more diversified, sustainable, and digitalized economy.
“The Government of His Excellency Nana Addo Dankwa Akufo-Addo, who also is the current chairman of ECOWAS, pledges our unflinching commitment to work in concert with the other Governments in the sub-region to support the integration agenda for the Capital markets in West Africa.”
