The financial crisis underscored the importance of strong local currency bond markets, which can provide countries with a cushion to keep funds flowing, particularly during periods of reduced bank lending and limited liquidity.
Countries with deeper and more active local bond markets can mobilize private funds from national savings and channel them to productive sectors of the economy in need of local currency financing. Inefficiencies in the institutional structure of these markets will not only leave most governments reliant on external debt, but will also severely limit private sector participation.
Efficient Securities Markets Institutional Development (ESMID) Africa is a joint IFC and World Bank program funded by the Swedish International Development Cooperation Agency (Sida) to develop well functioning securities markets to finance priority sectors such as infrastructure, housing and microfinance.
ESMID operates as a regional program in East Africa (covering Kenya, Uganda, Tanzania and Rwanda) and in Nigeria. ESMID adopts an innovative approach to bond market development that links efforts to strengthen the enabling environment (regulatory framework, market infrastructure, market participants, and regional integration) with supporting ‘demonstration’ bond transactions, which pave the way for more issues to come to market.
The Africa program has also recorded significant milestones since inception: