West African stock markets talking integration – will they walk the talk?

West African stock exchange leaders are again talking about integrating the markets and are to form a West African Capital Market Integration Council. The exchanges in Ghana, Nigeria and Cote d’Ivoire have said they will seek to integrate by 2014. Latest arrival Sierra Leone is keen to join them.
John Tei-Kitcher, Acting Director General of the West African Monetary Institute (WAMI), opening a 2-day forum in Accra on 23-24 August, said that WAMI would provide leadershop for integration and act as facilitator on behalf of all stakeholders. Those attending were Ghana Stock Exchange, Nigerian Stock Exchange, Bourse Régionale des Valeurs Mobilières (BRVM) of Côte d’Ivoire, which joins eight countries, and Sierra Leone Stock Exchange.
According to a news report, he said: “Well-functioning capital markets are bound to accelerate economic growth and therefore alleviate poverty in the member countries. Deep liquidity and local capital markets can lessen vulnerability of the economies to external shocks by reducing currency and duration mismatches in raising funds.” He said the region’s capital markets are underdeveloped, as in many low-income countries, and could be an alternative source of financing, supplementing commercial banks, which dominate the financial sector in the West Africa Monetary Zone. Integration should be well-planned and coordinated, with short-, medium- and long-term goals spelled out. Steps would include governments removing exchange controls and eradicating or cutting withholding taxes to facilitate capital flows within the region.
He added: “Integration of the capital markets in the sub-region however has the potential to help countries overcome these constraints. If managed properly, integrated capital markets would allow savings to be pooled across the region. It will also lead to costs and information sharing among members, diversification of risks, and wider choices and innovation across financial institutions.” According to another report, Tei-Kitcher said markets should be linked up electronically to provide a single point of access and the private sector should be encouraged to develop new products.
However, Adu Anane Antwi, Director General of the Securities and Exchange Commission (SEC) of Ghana, reportedly told the workshop that over the last 15 years, many Memoranda of Understanding (MOUs) on integration have been signed among stock exchanges and regulatory authorities—without any action. He agreed that an integrated market would offer companies and even consumers more financing opportunities: “In segmented markets, the capital investment of firms in one country is limited to the savings provided by that country’s consumers, whereas integration allows for firms to access savings from other countries.”
According to Tei-Kitcher, integration talks began in 2006 and a technical committee was formed. This reportedly produced an interim report which has not yet been validated so that it can be implemented and there is no executive committee to drive the process.
Oscar Onyema, CEO of the NSE, believed global trends presented the most compelling necessity for West Africa’s exchanges to integrate. He said regulatory harmony and support from leaders and policy-makers were needed: “Since the private sectors in our countries are so small, governments must support the capital markets fully by creating the needed conducive environment for them to succeed.” He said competition would be maintained by the different exchanges which had different operations.
Kofi Yamoah, Managing Director of the GSE, said governments in the region do not use the market enough, state-owned enterprises and other large entities should be listed and use the exchanges to raise capital.

1 Response to “West African stock markets talking integration – will they walk the talk?”


  1. Rachel Kasumba

    Sounds like little progress (besides attending meetings) has been made since MOUs have been signed for last 15 years without any action.

    Besides putting the blame on governments, the private sectors need to do more to educate the public on the benefits of investing in stock markets and importance of integration.

    Self-interest and protectionist policies may also be at play here. It is time to get serious and take some action towards the realization of this noble not to mention more profitable move. NOW.