Africa Must Deepen Domestic Financial Markets to Achieve Sustainable Development Goals

Gaborone, Botswana, 19 November 2024 (ECA) - Africa's journey towards meeting the Sustainable Development Goals (SDGs) hinges on developing effective domestic financial markets that provide affordable finance. This critical issue will take center stage at the 27th African Securities Exchanges Association (ASEA) Conference, hosted in Gaborone, Botswana from 26-27 November 2024.

Organized by the African Exchange Linkage Project (AELP), ASEA, the African Securities Dealers Association (ASSDA), and the Economic Commission for Africa (ECA), the two-day conference will explore the theme, "Enhancing Africa's Capital Markets Collaboration and Integration through the AELP."

The conference aims to unlock new opportunities to bolster Africa's economic growth through domestic capital markets development. Key discussions will focus on promoting investment opportunities across African exchanges, fostering cross-border investments, and facilitating collaboration between market participants, regulators, and investors across the continent.

Participants will explore ways to strengthen African capital markets through integration and cooperation, paving the way for increased liquidity and cross-border trading. Besides, the conference will provide a platform for African listed companies to engage with institutional investors, including pension funds, asset managers and brokers.

The conference will encourage networking among key stakeholders such as stock exchanges, regulators, central banks, clearinghouses, and high-net-worth individuals to foster professional relationships and actionable partnerships.

The call for deeper financial market development is urgent. Africa's reliance on foreign capital exposes economies to exchange rate risks and global financial shocks. Strengthening local financial systems will support long-term investments, enhance economic resilience, and safeguard economic sovereignty.

The AELP notes that the in-depth development of domestic financial markets can reduce dependency on foreign capital and the risks associated with exchange rate fluctuations.

By strengthening local financial systems, African countries can support long-term investments, improve economic resilience, and enhance economic sovereignty, according to the AELP which underscored that local currency financing is a buffer against global financial shocks, by reducing exposure to external debt obligations in foreign currencies.

"By developing domestic financial markets, African countries can reduce dependence on volatile foreign capital and manage capital flows more effectively."

The challenges are stark. According to the ECA, 24 out of 35 low-income African countries are at high risk of debt distress. The continent owes over USD 650 billion in external debt, with USD 69 billion in debt repayments due in 2024. High debt levels are diverting resources from critical SDG priorities like health, education, and water infrastructure.

The conference will also focus on building an enabling environment to support cross-border trading and enhance Africa's capital markets. With the right ecosystem, African exchanges can emerge as powerful platforms for capital-raising, bridging the continent's funding gap, and driving inclusive growth.

As Africa grapples with debt distress and limited access to conventional lending markets, the development of vibrant domestic financial markets has become an imperative. The Conference will serve as a catalyst for actionable strategies to strengthen Africa's financial markets and boost the continent's economic growth.

Issued by:
Communications Section
Economic Commission for Africa
PO Box 3001
Addis Ababa
Ethiopia
Tel: +251 11 551 5826
E-mail: [email protected]