Well-functioning securities markets – where bonds and equities are issued and traded -- are vital for helping mobilize the large amounts of long-term capital necessary for financing major infrastructure projects, such as roads, ports, power stations, and housing.
Infrastructure needs are particularly severe in Africa, where billions of dollars in sustained investment is necessary in the coming years to keep pace with demand from growing populations, and to help modernize African economies. The ongoing financial crisis has made securing funding for large projects even more difficult.
Through its Efficient Securities Market Institutional Development (ESMID) Program, The World Bank Group and IFC are supporting the development of securities markets – especially bond markets -- in several countries in East Africa, helping mobilize private capital so it can be channeled to places where it is most needed.
ESMID Training in Action
|Sara Gitahi, a 36-year-old financial planner from Nairobi, Kenya, has broadened her knowledge of business and is expanding her services, thanks to an intensive training course offered by IFC’s ESMID Program.
Although she has worked as a financial advisor for six years, and founded her own company, Sara is mostly self taught, learning the intricacies of business and markets largely through correspondence courses taken online.
She said that ESMID’S Fundamental Securities Course offered an excellent overview of both African and international markets, giving her new knowledge and the confidence needed to grow her business.
“Because of the ESMID course I have now expanded the services I offer, and am advising clients how to safely invest in the stock market,” Sara said. “The course was structured in an easy to follow but thorough way, and it used good examples from newspapers about which stories might impact the markets.”
The one-week course covers a wide range of topics, including understanding economic terms, evaluating shareholder performance, the legal aspects of securities markets, investment management, sources of funding, and East Africa as an emerging market.
The course, one of three ESMID helped develop, was piloted in Uganda in 2008, and is also running in Kenya, Tanzania, and Rwanda.
Following her ESMID training, Sara is now advising clients how to purchase and sell shares:
“I have a much better understanding of how capital and stock markets operate, and my business and clients are benefitting because of this,” she said.
The World Bank Group's ESMID works with governments, the private sector, and other stakeholders to help design effective legal and regulatory environments that will allow securities markets to thrive. IFC is also training market participants, including brokers, investment advisers, and traders, and is helping potential issuers bring transactions to the market.
Developing Regional Markets
The small size of economies in East Africa also poses a challenge. The World Bank Group is supporting efforts of local players to create regional markets for bonds and securities that will benefit both investors and issuers by drawing together larger pools of capital.
To this end, The World Bank Group and IFC are working with central banks, capital market regulators, and stock exchanges to create a legal and regulatory framework for a regional securities market.
The World Bank Group is also supporting moves to simplify the process and lower the cost of issuing bonds in Kenya, Tanzania, and Uganda. Kenya, for example, listed only eight corporate bonds in 2007, with a combined value of $77 million, a mere 0.3 percent of GDP.
ESMID Project Manager, Evans Osano,said: "ESMID aims to deepen local securities markets with a goal of supporting key economic and social developmental needs, including infrastructure and housing development, private sector access to finance, investments for institutional investors, and financial crisis management."
The ESMID Program is active in Kenya, Nigeria, Rwanda, Tanzania, and Uganda, and is supported by the Swedish International Development Cooperation Agency (Sida).
For more information contact:
Johannesburg, South Africa
Phone: +27 11 731 3120