The United Nations said on Tuesday it would help African countries develop their capital markets to accelerate economic development.
Sonia Essobmadje, head of the Innovative Finance and Capital Markets Section of the Private Sector Development and Finance Division of the United Nations Economic Commission for Africa (UNECA), told Xinhua in Kenya’s capital Nairobi , that the continent’s capital markets are underdeveloped. which limits the financing available for the private sector and public projects.
“Well-developed capital markets will also serve as a gateway for foreign capital seeking investment opportunities in Africa,” Essobmadje said on the sidelines of the conference on sustainable development of capital markets in Africa.
Essobmadje said vibrant domestic capital markets will reduce Africa’s reliance on external debt to fund development projects.
She revealed that less than 30 African countries have stock exchanges, most of them having few listed companies and low liquidity.
The UN official said ECA wants to increase the number of countries with stock exchanges so that African nations can raise capital by issuing debt and equity instruments.
Essobmadje observed that capital markets are a key catalyst for achieving the United Nations Sustainable Development Goals by channeling savings to fund development projects.
She revealed that local currency capital markets also help African countries reduce their dependence on external financial stocks.
According to Essobmadje, deep, liquid and efficient equity and debt markets are effective in mobilizing domestic and international capital and can help governments finance budget deficits.