This is the first edition of the OECD Africa Capital Markets Report. The report examines capital market development across the region, provides insights into current market conditions and challenges, and formulates policy considerations. The report draws on unique OECD datasets as well as original analyses of both commercial and publicly available sources. Recognising the diversity of economies and stages of economic development across the continent, the report focuses mainly on middle-income economies with a certain level of capital market activity and market structures. At the same time, parts of the report will be relevant to any African country seeking to expand and deepen the role of market-based financing in its economy.
Chapter 1 examines the growing role market-based financing can play in addressing Africa’s economic development challenges. It underscores the relative underdevelopment of capital markets in the region, the reliance on bank financing, and the implications for debt sustainability and climate investment. The chapter also explores capital market policies that African governments have put in place, including national strategic plans, regional initiatives, and efforts to align financial frameworks with international standards.
Chapter 2 explores the state of public equity markets and corporate governance across Africa and outlines key challenges hindering their development. It reviews market size, liquidity, trading activity, costs, ownership structures, and the prevailing corporate governance practices. The chapter concludes by identifying five main policy areas to foster sustained equity market growth and development.
Chapter 3 analyses Africa’s corporate debt markets, focusing on bonds, syndicated loans, and private credit. It examines their development over the past two decades within a global context and highlights four main policy considerations to support further debt market development, informed by a review of existing policy initiatives and international experiences.
Chapter 4 analyses the energy sector in Africa, emphasising the critical role of both private and public debt markets in achieving countries’ climate goals. It presents regional scenarios for North Africa and sub-Saharan Africa, and challenges in leveraging debt markets for a low-carbon transition. It also explores sustainable bond market growth, and reviews national policies and strategies to expand financing opportunities for climate investment.
Chapter 5 examines the development of African sovereign bond markets and the underlying macro-financial conditions. It reviews recent challenges, including rising borrowing costs, weakening foreign demand, and geopolitical uncertainties that may strain sovereign borrowing capacities. The chapter concludes with policy priorities to deepen local currency bond markets, mitigate financial vulnerabilities, strengthen monetary policy, and encourage sustainable investment.
Chapter 6 analyses the governance frameworks for state-owned enterprises (SOEs) in selected African countries. It reviews key state ownership models and legal frameworks, and emphasises effective state ownership and governance as foundations for capital market development. Finally, it outlines policy priorities for enhanced transparency, predictability, and professionalism in state ownership, which could, in turn, support the growth and development of the continent’s capital markets.
Chapter 7 examines the state of AI in selected African countries. It reviews AI applications in capital markets and the wider financial sector, and identifies key barriers to broader adoption of AI. It also offers policy considerations to facilitate the broader, effective, and responsible deployment AI in finance, enabling innovation and efficiency across Africa’s financial systems.
Chapter 8 analyses the role of insurance companies and pension funds as institutional investors in Africa’s capital markets. It highlights their contribution to market growth, examines constraints limiting their participation, and offers recommendations to expand their role as investors and strengthen their impact on the continent’s capital markets.
This report is part of the OECD Capital Markets Series, which supports policy discussions on how capital markets can better channel household savings into productive investment in the real economy. This report was developed in the context of a joint initiative between the OECD and the Regional Centre of Excellence within the Financial Services Commission of Mauritius, and was produced with the financial support of the Financial Services Commission and the Bank of Mauritius.