Unveiling investment opportunities in African securities markets
In a significant move towards addressing Africa's infrastructure financing needs, a new partnership named ESMID Africa has been established. The collaborative effort involves the International Finance Corporation (IFC), the World Bank, the Swedish International Development Agency (Sida), and OMX, with an initial funding of Kr40mn (US$5.5mn) from the mentioned organizations.
The aim of ESMID Africa is to address the shortage of long-term local currency funding for infrastructure projects in Sub-Saharan Africa. Thierry Tanoh, IFC's director for Sub-Saharan Africa, emphasized that the initiative would allow for more effective collaboration with regulators, market participants, and international partners to identify securities market shortcomings and develop practical solutions.
Roger Garman, Sida's senior advisor for financial systems, highlighted the importance of local currency financing for infrastructure development. He stated, "Local currency financing is essential for infrastructure development."
The partnership intends to bring new types of securities products to market, attracting investors and further developing securities markets. These securities market products, such as bonds and securitization, are crucial for local and regional governments and private sector companies to obtain long-term financing for major infrastructure projects.
ESMID Africa will work closely with government regulators and market participants to design new securities products and strengthen marketplaces and institutions. The goal is to make long-term financing in local currencies more widely available in emerging markets, starting in Sub-Saharan Africa.
The initiative will also diagnose securities markets in selected African countries and design country programs through PEP-Africa, IFC's technical facility in the region.
This development comes at a time when Africa's economic growth has spurred demand for infrastructure improvements and affordable housing. The broader context of infrastructure development and financing initiatives in Africa is relevant, with various projects like the Lobito Corridor, Mattei Plan, and World Bank support aiming to enhance economic growth and infrastructure development in the region.
The U.S.–Africa Economic Initiatives, launched by the U.S. Mission to the African Union, also focus on enhancing economic ties through trade and investment, particularly in areas like critical minerals, manufacturing, and infrastructure development.
In light of these broader initiatives, ESMID Africa's focus on securities market development for infrastructure financing is likely to align with these goals, contributing significantly to the economic growth and infrastructure development in Sub-Saharan Africa.
Investing in emerging markets, such as Sub-Saharan Africa, presents opportunities for business growth, particularly in the realm of real-estate and infrastructure. The new partnership, ESMID Africa, aims to provide long-term local currency financing for these sectors by developing securities market products like bonds and securitization, which can attract finance from investors.
