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Liquid, diverse and well-regulated local capital markets are an essential source of local-currency financing for the government, financial sector participants, and end users such as small businesses.
Capital markets in Africa have the potential to support the financing of priority activities in vital development sectors such as housing, infrastructure, agribusiness, and small businesses. However, many African markets are still at a nascent stage. Equity markets are small, with low liquidity and few listed securities. Bond markets suffer from limited benchmarks for pricing securities, low liquidity, rigid regulatory frameworks, and inefficient infrastructure.
To address these challenges, IFC works through initiatives aimed at improving overall efficiency of capital markets in Africa and creating a solid enabling environment for crowding in private sector finance into key sectors for economic development.
Transaction support is also provided to issuers to develop and bring to market a series of new and replicable issuances.
IFC supports capital market development in Africa through:
- advice and capacity building of key market actors
- issuing local currency bonds
- helping first-time issuers access capital markets
IFC invests in securities that facilitate access to capital markets for existing and prospective clients, including anchor investments, credit enhancements, and warehousing of securities.
IFC issues local currency bonds in local markets to create catalytic impact for future corporate bonds and facilitate financing through demonstration and signaling effect.
IFC connects clients to international capital markets through anchor investments in Eurobonds, or indirectly through IFC’s local currency offshore issuances.
