PROMOTING GROWTH IN AFRICAN CAPITAL MARKETS
(Article Reference: Document No.18, November 2002)

PREFACE

This publication follows a UNITAR-conducted regional workshop entitled 'Development and Regulation of Capital Markets' which was held in Harare, Zimbabwe in August 2002 and which invited 29 senior government officials from East and Southern African countries. UNITAR conducts periodic regional training events with its partners (in this case, the Macroeconomic and Financial Management Institute of Eastern and Southern Africa) with the aim of sensitization and skills-building on the one hand and information exchange and cross-fertilization of experiences on the other.

As part of UNITAR's training activities in the legal aspects of debt, financial management and negotiation, UNITAR has now developed a distinct cluster of training and skills-building in the field of Development and Regulation of Capital Markets. This cluster has evolved from our firm belief that capital markets provide the financial investment support for companies to fund research and product development, business modernization and infrastructure as well as expansion of domestic and international markets. Furthermore, an efficient capital market requires careful planning and controls by both government and the private sector. If there is too much control and regulation, the market will not develop because business entrepreneurs will move elsewhere. If there is too little control and regulation, foreign and domestic investment will be discouraged. Thus a delicate balance has to be found with the ultimate aim of growth and sustainability of the capital markets and the proper involvement of domestic entrepreneurs and companies as the engine for this growth.

This publication brings to the fore two papers, dealing with issues directly treated as part of our regional training workshops. The first paper introduces the New Partnership for African Development (NEPAD) and argues for its immediate implementation. It then showcases a specific Small and Medium-sized Enterprises Scheme as a possible case for emulation in Africa and concludes by commenting on the restructuring of African capital markets. The second paper argues that the slow growth of capital markets in Sub-Saharan Africa is a result of several factors including a lack of quality parastatal privatizations, a reluctance on the part of privately owned companies to raise capital through public offerings, and restrictive company and securities laws and stock exchange requirements. It states that continuing along the same path holds little promise and new and innovative thinking and measures are needed. It then goes along to say that Small and Medium-sized Enterprises hold the promise of the future and are instruments for achieving NEPAD's goals. The paper thus proposes a potential programme for reform through the development of Micro-Cap Securities Markets in Sub-Saharan Africa.

The two papers in this publication have been contributed by UNITAR's eminent experts and speakers, Chief Dennis O. Odife and Professor Stuart R. Cohn. I want to take this opportunity and thank them for their respective contributions to this publication and document series and for their constant support to our training activities.

I hope that this document is useful as well as challenging to the readers.

Marcel A. Boisard
Assistant Secretary-General of the United Nations
Executive Director of UNITAR

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