The African securities market has witnessed serious development since the early 1990s, but the central African region has not benefited from this evolution. According to an article dated the 2 of April 2015 byThis Day Live, prior to 1989, there were just eight stock markets in Africa of which three were in North Africa and five in sub-Saharan Africa. Today, there are over 22 stock exchanges in Africa. Alongside the rapid expansion of stock markets on the continent, there has also been a significant growth in market capitalization and the number of listed companies. At present, over 50 per cent of the 54 countries in the continent have formed securities exchanges.
In an effort to promote regional cooperation, individual African securities exchanges created an African Securities Exchange Association (ASEA) in 1993. The ASEA was incorporated in Kenya in the same year. Recently, there have been calls by interest groups for business combination of West African stock exchanges in other to foster unity and a wider securities market to ensure speedy development of the region in line with the ASEA objectives. Why has the Central African region not followed the example of West Africa? Is it a problem of lack of adequate constitutional and legislative parameters in the region? Is it a problem of lack of political will? Is it lack of personnel and institutions? If so what can be done to change the status quo for harmony and unity in the stock exchange market in the Central African region and in Africa at large?
Issues like the rule of law, property rights, protection of investor’s rights are fundamental to the constitutional and legislative environment governing Africa’s stock markets. According to the Doing Business Reports for 2013 and 2014, states in the Central African region like Chad and Cameroon still lag behind with respect to the above mentioned indicators, reason why this part of the continent lags behind when it comes to fostering unity and a wider securities market to ensure speedy development of the region in line with the ASEA objectives.
Lack of political will remains a canker worm in the African stock market environment. Many politicians, bureaucrats and lobbyists still prefer to make African stock markets weak because of selfish economic gains, especially making sure that their businesses are financed to the detriment of other growing businesses as argued by Sam Mensah and Todd Mos in a past article on African Capital Markets. These lobbyists also influence the activities of stock markets so that they can control government shares in privitised companies.
Institutions like Central Banks and government ministries of finance called upon to coordinate affairs of the stock exchange markets in Africa remain wanting. These institutions still find difficulties in understanding and participating in the activities of Africa’s stock markets.
Cultural factors also contribute enormously to the Central African regions slow progress in the stock exchange sector. A lot of preference is still given to hand to mouth consumption. Consumers and investors remain reticent to invest in stock markets because of the risks involved. Another factor which contributes to the poor stock exchange market environment especially in the Central African region include ignorance on how the system functions and non-familiarization with the financial markets culture.
There is thus need for a change of events. Giving constitutional and legislative importance to property rights in the Central African region would make owners of property to be confident enough to engage in activities of stock markets especially in obtaining financing for their property. Additionally if investor’s rights are protected constitutionally and with sound legislative instruments, this will equally make them trust stock markets and eventually contribute to fostering unity and harmony in stock markets in the Central African region and in Africa.
Bureaucrats, politicians and lobbyists would definitely not stop influencing the activities of stock markets if there is no external push. It is this important for think tanks, journalists, university dons to continue to put pressure on them to allow the stock exchange sector function free from political influence and pressure.
Revamping Institutions like Ministries of Finance and Central banks called upon to coordinate affairs of the stock exchange markets in Africa is very important. Personnel working with financial Institutions in the Central African region need to be schooled about the activities of stock markets especially in Africa.
Respecting Africa’s cultural values is germane, but if such cultural practices impede on the development of the continent then we cannot continue to talk of Africa’s renaissance. States like Gabon and Equatorial Guinea most understand that collaboration with other states like Cameroon and Chad is necessary for unity and growth in the stock exchange sector regardless of whatever cultural differences.
This article is originally published in French at LibreAfrique.org as ‘A quand l’intégration financière en Afrique centrale?’ http://www.libreafrique.org/Asanji-Burnley-Chofor-Che-marches-financiers-240415
Asanji Burnley is a diplomat by training from the International Relations Institute of Cameroon (IRIC). He is President and co-founder of the Cameroon based Central African Centre for Libertarian Thought and Action (CACLiTA), a partner of the Atlas Network.
Chofor Che is an analyst with Libre Afrique.org, Audace Institute Afrique and AfricaLiberty.org. He is also co-founder and current Chair of Research at the Cameroon based Central African Centre for Libertarian Thought and Action (CACLiTA). He blogs at caclitacm.wordpress.com