Absence of privatizations, timid interest from the private sector and competition from major world stock exchanges: what can African markets still do to support the development of the continent?

Almost all of the economic policies recently adopted by emerging or developing countries to accelerate their growth give priority to improving the mobilization of long-term resources, which are generally found in the capital markets.

Africa currently has 32 stock exchanges, with about 2,000 listed companies, compared to 5,899 in China, for a market capitalization of 1,400 billion dollars, or 60% of the continent's GDP compared to 82.89% for China.

These indicators clearly show that African markets do not yet make a sufficient contribution to the development of the continent because they are little used.

Indeed, privatizations of public companies by the Stock Exchange are still rare.

For years, privatizations have certainly been announced. But if they are not canceled, they are carried out bit by bit or are still waiting.

However, the advantages of going public are numerous: capital gains from the sale, cessation of subsidies, improvement in tax revenue, popular shareholding, etc.

But this option is not preferred by private companies on the continent when they seek to raise long-term capital, with the exception of a few large companies in the financial or telecommunications sector (Ecobank, MTN, BMCE Bank of Africa , Vodacom, Safaricom, etc.).

Private equity fund exits are also very rare in Africa, although Emerging Capital Partners and Helios Investments Partners have carried out a few operations of this type recently.

However, it is illusory to want to move from a debt economy dominated for several decades by the banking sector to a market economy without a transitional phase, during which the means would be given to the private sector to develop by facilitating its financing, thanks to private equity, reduced guarantees, mini or basket bonds, etc.

We also often hear that the continent's stock markets are neither liquid nor deep. They would therefore not attract African companies, which would prefer London or New York. But the liquidity and depth of a capital market cannot be decreed. They are created within a virtuous circle: admission of new companies to listing, financial information and education of investors, liquidity, attraction of new investors, depth of the market, admission of new companies to listing.

This virtuous circle can be formed in Africa. On the one hand, thanks to its potential for corporate investors. And on the other hand, thanks to the development of the middle class, which favors the emergence of a new category of natural person investors, who should be "educated" and informed to make them active and knowledgeable participants in the markets. .

This circle could be reinforced by a better integration of African stock exchanges, while the Continental Free Trade Area (ZLEC) will come into force. This will only produce the desired effects if trade integration is accompanied by financial integration facilitating the free movement of capital in the banking sector and on the markets.

Let's unlock the continent's long-term resource mobilization potential. Let us activate all the levers that can ensure the development of the African private sector by organizing an orderly transition from debt economies to market economies, thanks to proactive policies to attract private investment. And let's integrate our banking systems and capital markets.

It is at this price that the development of the continent will be able to accelerate, thanks to the mobilization of the resources necessary for the financing of infrastructures and industrialization, in order to achieve stronger growth and better shared by the African populations.

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Edoh Kossi Amenounve

Managing Director of the Regional Stock Exchange (BRVM)

This Tribune was published in Jeune Afrique Finance N°51