Subsequent to the 2008 financial crisis, African governments have found it more difficult to obtain bank funding. As a result, bonds, both domestic and sovereign, are becoming increasingly interesting to African governments as an alternative method of raising capital to fund their domestic development requirements, particularly, in the area of capital intensive infrastructure projects.
The African bond market is growing rapidly although it is still underdeveloped in many African countries. This report examines the slow development of the African bond market, including the absence of a secondary market, in certain cases issues the primary market (the market where securities, either debt or equity, are created and sold, by companies, governments or public sector institutions, for the first time), lack of institutional investors and infrastructure and the lack of appropriate regulation to protect holders of debt securities.
The analysis only relates to those African countries that have both issued domestic central government marketable debt instruments (“Government Marketable Debt”) and a domestic stock exchange that is a member of the African Security Exchanges Association (“ASEA”).