This chapter examines the development of capital markets across Africa and highlights the growing need to expand market-based financing in the region. Despite Africa’s rising economic significance, its capital markets remain relatively underdeveloped and underutilised compared with those of other emerging economies. At the same time, achieving key economic objectives, such as narrowing business investment gaps, promoting formal employment, supporting climate and infrastructure adaptation, technological adoption, and improving public debt sustainability, depends on broader and more diversified forms of domestic capital. These challenges underscore the growing importance of implementing structural policy reforms at the country level and pursuing market integration initiatives at the regional level to deepen and strengthen capital market development across the continent.
Africa Capital Markets Report 2025
Abstract
Capital markets have evolved at different paces across countries and regions over the past two decades. In most regions, market capitalisation in public equity markets has grown since 2000. While the number of listed companies in advanced economies has declined, this has been more than offset by listings in Emerging Market and Developing Economies (EMDEs), particularly in Asia, which now hosts more than 50% of the world’s listed companies. Debt instruments other than direct bank lending have also grown to become an important form of corporate financing across regions over this period (OECD, 2025[1]).
In Africa, equity markets grew between 2000 and 2024, with market capitalisation increasing 27 times, to reach USD 561 billion. The number of listed companies shrank slightly over the period, due in large part to consolidations in Egypt and South Africa. Corporate bond issuance has remained steady, while syndicated loans have almost doubled both in terms of issuance and outstanding amounts. Despite this progress, Africa’s relative share of global capital market activity has declined over time, with the region’s capital market activity concentrated in a handful of economies. As a result, the region’s capital markets continue to play a relatively modest role in global finance across nearly all indicators (Figure 1.1).
Source: OECD Capital Markets Series, Africa Finance Corporation (2025[2]), State of Africa’s Infrastructure Report 2025 https://www.africafc.org/our-impact/our-publications/state-of-africa-infrastructure-report-2025
The relative decline of Africa’s capital market activity is in part explained by the considerable growth of some EMDEs in other regions, outstripping developments in Africa (Figure 1.2). Equity markets have seen significant growth in EMDE listings, mostly in Asia. Africa’s corporate debt issuance has also lagged behind other EMDEs, with outstanding amounts declining in relative and absolute terms between 2010 and 2024. These developments are discussed further in chapters 2 and 3.
African countries face a number of opportunities and challenges, which require a substantial scaling up of private investment, made all the more difficult by the general underdevelopment and underuse of capital markets in the region. At the same time, the presence of some level of capital market activity underlines the potential for growth in market-based financing in many jurisdictions. The rest of this introductory chapter explores some key economic imperatives of capital market development among African countries, how key economies in the region are reacting to these, and how this report can support these efforts.
Source: OECD Capital Markets Series dataset.
Limited access to finance remains a major impediment to business growth in many African jurisdictions, constraining capital investment, productivity gains, and achieving operational scale. Across the 23 African countries with recent participation in the World Bank Enterprise Survey, access to finance was identified as the single largest obstacle to business by 31% of respondents, roughly three times the next most cited obstacle (taxation), and well above the world average for this category (17%) (World Bank, 2025[3]). Smaller businesses are particularly affected in many jurisdictions (Figure 1.3).
(% of responding businesses)
Note: Years represented range from 2020 to 2024, depending on the availability of data.
Source: World Bank (2025[3]), World Bank Enterprise Surveys https://www.enterprisesurveys.org/
Internal financing is the most common source of funding for businesses in selected African countries. In terms of external financing sources, bank financing is particularly dominant in many countries, including Mauritius, Namibia, Côte d’Ivoire, Botswana and South Africa, while others show a more balanced mix of sources (Figure 1.4).
Source: World Bank (2025[3]), World Bank Enterprise Surveys https://www.enterprisesurveys.org/
Note: Years represented range from 2020 to 2024, depending on the availability of data.
While banks play an important role in business financing, structural features of bank lending can lead to gaps in access to finance. For example, requirements such as collateral and financial history can disproportionately exclude micro, small and medium enterprises (MSMEs) from formal credit systems, an important consideration considering MSMEs account for roughly 80% of employment across the region (AUDA-NEPAD, 2022[4]).
There is also evidence that rising sovereign issuance may be crowding out private credit in some jurisdictions with bank-centric finance ecosystems. Sovereign debt instruments can be a safer and more attractive asset for banks than private sector loans due to generally lower risks and a more liquid secondary market. Across the region, banks’ public sector exposures increased by close to 70% between 2010 and 2023, to 17.5%, corresponding to a decline in private sector lending over the same period (EIB, 2024[5]).
The size and depth of the local market for sovereign debt not only impact capital allocation to the private sector but also the total cost of public debt. As discussed in Chapter 5 of this report, nominal yields on foreign currency debt (usually USD-denominated) for African countries are generally lower than on local currency debt. However, the cost is highly volatile, and when considering the total costs at maturity, foreign currency debt exceeds the cost of local currency debt.
The lack of domestic currency markets for sovereign securities can add to debt sustainability pressures at a time when, as of 2024, roughly 80% of African countries were classified as high risk or very high risk, with only two countries (Botswana and Mauritius) securing investment-grade ratings (Figure 1.5). At the same time, developing domestic currency government bond markets over the long term can create a virtuous circle for wider capital market development, contributing to investor demand and liquidity.
Source: LSEG and OECD calculations.
In the absence of deep and well-functioning capital markets, EMDEs can be particularly exposed to large fluctuations in foreign capital flows arising from geopolitical tensions, global policy uncertainty, monetary policy cycles, and financial stability shocks (OECD, 2024[6]). Many African countries have experienced significant periods of volatility in incoming portfolio flows, as well as important outflows following the monetary policy tightening cycle in advanced economies in 2022 (Figure 1.6). Portfolio inflows have generally been muted since the COVID-19 period, with average quarterly equity inflows turning negative between 2020 and 2024 and average quarterly debt inflows falling by more than half the pre-pandemic average in 2016-2019. This highlights the challenges that these economies face in relying on foreign portfolio flows as a stable, long-term source of capital.
Note: Countries represented in the data sample are Botswana, Egypt, Ghana, Mauritius, Morocco, Namibia, Nigeria, South Africa, Tanzania, Tunisia, Uganda, Zambia and Zimbabwe.
Source: IMF (2025[7]), Balance of Payment dataset, https://data.imf.org/en/datasets/IMF.STA:BOP
Strengthening domestic savings mobilisation would support economic resilience by reducing dependence on volatile external financing and providing a stable buffer against global shocks. African countries’ domestic saving rates are generally lower than the global average, with widespread differences and large informal saving channels (Figure 1.7). Family and friends remain a significant source of credit across the region, arising from structural features in financial markets but also, importantly, cultural mores which emphasise local and relationship-based lending (Obonyo and Sydow, 2024[8]). Widening the availability of investment options for households could help transform savings into a durable domestic capital base and boost the efficiency of capital allocation. However, they need to be tailored to local cultural norms and preferences.
While some jurisdictions can be successful in developing households’ direct access to capital markets, for example, through instruments available on public markets, others may consider frameworks that recognise, support and formalise informal lending. Indirect saving measures such as asset-backed pension regimes could be particularly effective in channelling household savings towards investment while simultaneously building demand for local securities. The pension assets of many African economies are well below the global average, as discussed in Chapter 8, with ample scope to establish and develop them further.
Source: World Bank (2025[9]), Gross savings dataset, https://data.worldbank.org/indicator/NY.GNS.ICTR.ZS
Achieving a more diverse ecosystem of market-based financing will place African EMDEs in a stronger position to address some of their most pressing economic challenges, while also supporting longer term economic development and competitiveness. Capital markets are well-placed to provide the patient capital needed to finance riskier ventures, including in innovation and research, capital expenditure for expansion, early-stage growth companies, and infrastructure projects (OECD, 2025[1]). They support the diffusion of new technologies and will be central to meeting the climate finance gap and financing energy infrastructure.
Reflecting the growing importance of capital markets for future economic prosperity, many middle-income African EMDEs have recently undertaken or have planned comprehensive reforms to strengthen their financial systems. Out of 16 African EMDEs selected for size and level of capital market activity, 13 currently have Capital Market Master Plans (CMMPs) in place (Table 1.1). The CMMPs generally seek to identify barriers hindering capital market growth and to formulate comprehensive strategies to address them, oriented around enhancing resilience to external shocks, improving resource allocation, increasing financial inclusion, and boosting private sector investment.
The specific objectives and policies vary between countries, depending on factors such as market maturity, regulatory readiness, and digitisation capacity, reflecting the diversity of capital market development and needs across economies. For example, Tanzania has prioritised modernising its legal and regulatory frameworks to align with global standards (Capital Markets and Securities Authority, 2018[10]). Kenya, having recently modernised its regulatory environment with the Capital Markets Act in 2023, has focused its CMMP on Environmental, Social, and Governance (ESG) finance. This includes the creation of educational campaigns, the establishment of disclosure standards, the development of green taxonomies, and increased investment in staff training and talent development (Capital Markets Authority, Kenya, 2023[11]). Meanwhile, with the rapid adoption of digital technologies in finance across the continent, several countries have prioritised financial technology as a key strategic area within their respective CMMPs, including Ghana, Mauritius, Morocco, Namibia, South Africa, and Zambia.
Note: Cote d’Ivoire’s status in IOSCO is considered as part of the West African Monetary Union and in the Sustainable Stock Exchange initiative as part of the BRVM, and Gabon’s as part of Securities and Exchange Commission of Central Africa.
Source: Published national and/or regional authority CMMPs, IOSCO (2025[12]) https://www.iosco.org/v2/about/?subSection=mmou&subSection1=signatories, Signatories to Appendix A and Appendix B to the MMOU, Sustainable Stock Exchanges Initiative (2025[13]), SSE Partner Exchanges.
As part of domestic market reforms, many African EMDEs are actively aligning financial markets legislation, regulatory policies and corporate governance frameworks with international standards. This alignment aims to foster a strong financial infrastructure and a prudent regulatory environment that empowers regulators with broad oversight across all market segments, protects investors, mitigates systemic risks and facilitates capital formation.
One measure of regulatory alignment is adherence to the International Organization of Securities Commissions (IOSCO) Multilateral Memorandum of Understanding (MMoU), to which 17 African regulators are signatories. Two African regulators — South Africa’s Financial Sector Conduct Authority and Kenya’s Capital Markets Authority — are also signatories to the Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Co-operation and the Exchange of Information (EMMoU). Alignment with this international benchmark strengthens domestic securities market regimes by supporting supervisory and enforcement co-operation, combating cross-border misconduct and enabling the sharing of information, experiences, and best practices. It also serves to signal a commitment by regulators to uphold legal protections and shareholder rights, key drivers of capital market development, as explored further in Chapter 2 of this report.
Participation in global sustainable finance initiatives is also emerging as an important element of local policy development. For example, 16 African EMDEs, comprising 17 African stock exchanges, are partner exchanges of the United Nations (UN) Sustainable Stock Exchanges (SSE) Initiative, a collaborative platform for exchanges, investors, issuers, regulators, policymakers, and international organisations to improve ESG performance and promote sustainable investment — particularly in support of financing the UN Sustainable Development Goals (SDGs).
Retail investors can play a vital role in a country’s capital markets by expanding the domestic savings pool, enhancing liquidity, stabilising markets and driving product innovation. In countries where traditional financial infrastructure is limited, digital tools reduce barriers, increase access, and build engagement, enabling more households to channel domestic savings into capital markets and thereby deepening those markets. For example, in Asian EMDEs, notably Korea and Chinese Taipei, retail investors are key participants in domestic equity trading, accounting for 64% and 54% of the daily turnover, respectively (OECD, 2025[1]). This heightened activity has been enabled by the widespread adoption of FinTech, including digital brokerages and mobile based platforms, and improved financial literacy.
Adoption rates of FinTech are also high in Africa. Globally, four African countries – Nigeria (2nd), Ethiopia (26th), Kenya (28th) and South Africa (30th) – rank among the top thirty in cryptocurrency adoption (Chainalysis, 2024[14]), underscoring the continent’s openness to emerging digital technologies in finance. Many countries in the region have used digital financial services (DFS) to expand access to financial services through innovations like e-money, digital payments and remittances, crowdfunding, and tailored credit solutions, as further explored in Chapter 7. In this context, retail bonds delivered through DFS and FinTech innovations can serve as an effective means of channelling household savings into financial markets, complementing the sovereign financing programme while promoting financial literacy. For example, the Kenyan government has actively encouraged retail investment in government securities through its mobile bond platform, as further explored in Chapter 5 of this report.
However, the widespread adoption of FinTech and digital innovation in Africa has not yet translated into an increase in retail investor participation in domestic markets. Recognising this, African countries have introduced initiatives to further promote FinTech solutions to enhance investor participation and inclusion. For example, Nigeria’s Securities and Exchange Commission (SEC, Nigeria, 2025[15]), Botswana’s Non-Bank Financial Institutions Regulatory Authority (NBFIRA, 2025[16]), and the Seychelles’ Financial Services Authority (FSA, Seychelles, 2025[17]) have developed responsible FinTech regulatory frameworks. These frameworks are centred around promoting transparency, enhancing consumer protection, building relevant financial literacy, and facilitating innovation-friendly growth.
Regional integration, combined with coordinated market development and accompanying regulatory harmonisation, can be a powerful mechanism to drive scale and depth in smaller markets, support inter-African trade and investment, and cushion exposure to global shocks. In Africa, established regional exchanges, notably the Bourse Régionale des Valeurs Mobilières (BRVM) serving the West African Economic and Monetary Union (WAEMU), and the Bourse des Valeurs Mobilières de l’Afrique Centrale (BVMAC) serving the Central African Economic and Monetary Community (CEMAC), have allowed countries to pool capital, promote regulatory convergence and support the development of unified platforms for market-based finance.
The African Exchanges Linkage Project (AELP) have also been developed to support operational connectivity among exchanges. Launched in 2022, Phase I of AELP connected seven of the continent's largest and most active exchanges (BRVM, Casablanca, Egyptian, Johannesburg, Nairobi, Nigeria and Mauritius) which, combined, represent over 90% of Africa’s total market capitalisation. A second phase will seek to expand connectivity with the inclusion of the Botswana Stock Exchange, the Ghana Stock Exchange and the Uganda Securities Exchange (AELP, 2025[18]).
Though Africa’s capital markets are generally underdeveloped relative to the region’s economic weight and fragmented in terms of size and level of sophistication, the existence of infrastructures and a base level of activity provide a robust foundation on which to continue domestic and regional market development. How governments use the various policy and operational levers at their disposal will be the main determinant in realising their stated capital market strategies and goals.
Importantly, capital market development is a long-term project. The experience of Asian EMDEs following the Asian Financial Crisis has demonstrated how comprehensive, sustained domestic market reforms can help build vibrant market ecosystems which support dynamic and diversified economies. This achievement was at least two decades in the making and is still ongoing.
This report provides analysis and presents policy considerations with a general focus on middle-income African economies, which have an existing level of capital market activity. It covers fundamental elements of market governance and the supporting infrastructures for equity and corporate debt, including corporate governance regimes. It examines levers within wider government policy that can be used to drive further development in markets, such as state ownership practices, public debt management and pension regimes. Finally, it also connects market governance with concrete economic priorities around the adoption of digital technologies. In doing so, it aims to support African countries’ efforts to develop local capital markets into sustained sources of finance which drive economic development and bring tangible positive impacts to the lives of citizens.
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