New partnership targets stronger capital markets in Africa
The African Development Bank
(AfDB) and the
African Securities Exchanges Association
(ASEA) have entered into a strategic partnership, bringing two of Africa’s leading financial institutions together to strengthen the continent’s financial markets. African Development Bank’s president Dr. Akinwumi Adesina and Mr. Oscar Onyema, CEO of the Nigerian Stock Exchange and President of ASEA, signed a five-year Memorandum of Understanding (MoU) on 11th July 2016 sealing the collaboration. The two organisations will begin work on introducing new financial products and services to the African market to boost liquidity. Dr. Adesina said that if the AfDB leverages the pools of capital available in sovereign wealth funds, pensions and insurance, it can significantly help power, feed, industrialise, and integrate the African continent. These goals come under the bank’s High 5 Priorities, which it aims to achieve by 2025. He also called for “increased mobilisation of domestic pools of savings and support for small and medium enterprises, adding that these markets “constitute the bulk of Africa’s private sector”. The bank and association have previously collaborated on the
African Exchanges Linkage Project
(AELP), which was launched in 2015 to link up the African capital markets in order to improve liquidity and foster investment and trading across markets. At the signing of the MoU, Adesina commended the bank for courting financial markets through the issuance of local currency bonds in countries such as Uganda, Nigeria, and South Africa. He also noted the bank’s steps toward developing Africa’s domestic bond markets through the African Financial Markets Initiative, as well as a programme called the African Domestic Bond Fund, the launch of which has yet to be announced. These projects are intended to build on the success of the
AfDB Bloomberg African Bond Index
, which comprises a set of indices in the local currencies of South Africa, Egypt, Nigeria and Kenya. While Adesina acknowledged that capital market development still requires further attention, Onyema said working with the AfDB will complement the association’s obligation to promote the activities of its members and the African capital markets.
By Adam Pitt
Photo: African Development Bank