Absence of privatizations, timid interest from the private sector and competition from major global stock exchanges:
What can African places still do to support the development of the continent?
Almost all of the economic policies recently adopted by emerging or developing countries
development to accelerate their growth gives priority to improving the mobilization of
long-term resources, which are generally found on the capital markets.
Africa currently has 32 stock exchanges, with about 2,000 listed companies, compared to 5,899 in China, for
a market capitalization of 1,400 billion dollars, or 60% of the continent's GDP against 82.89% for
China.
These indicators clearly show that African markets do not yet make a sufficient contribution to the
development of the continent because they are little used.
Indeed, privatizations of public companies by the Stock Exchange are still rare.
For years, privatizations have certainly been announced. But if they are not cancelled, they are
carried out bit by bit or are still waiting.
However, the advantages of going public are numerous: capital gain on sale, stoppage of
subsidies, improved tax revenue, popular shareholding...
But this option is not favored by private companies on the continent when they seek to raise
long-term capital, with the exception of a few large companies in the financial sector or
telecommunications (Ecobank, MTN, BMCE Bank of Africa, Vodacom, Safaricom...).
Private equity fund exits are also very rare in Africa, although
Emerging Capital Partners and Helios Investments Partners have carried out a few operations of this type
recently.
However, it is illusory to want to move from an economy dominated by debt for several
decades by the banking sector to a market economy without a transitional phase, during which
we would give the means to the private sector to develop by facilitating its financing, thanks to private
equity, reduced guarantees, mini or basket bonds, etc.
We also often hear that the continent's stock markets are neither liquid nor deep. They
would therefore not attract African companies, which would prefer London or New York. But the liquidity
and the depth of a capital market cannot be decreed.
They are created within a virtuous circle: admission of new companies to listing, information
financial and investor education, liquidity, attraction of new investors, depth of
market, listing of new companies.
This virtuous circle can be formed in Africa. On the one hand, thanks to its potential of people investors
morals. And on the other hand, thanks to the development of the middle class, which favors the emergence of a new
category of natural person investors, who should be "educated" and informed in order to make
active and knowledgeable market participants.
This circle could be reinforced by a better integration of African Stock Exchanges, when
the Continental Free Trade Area (CFTA) into force.
This will only produce the desired effects if trade integration is accompanied by integration
financial institution facilitating the free movement of capital in the banking sector and on the markets.
Let's unlock the continent's long-term resource mobilization potential. Let's activate all the levers that
can ensure the development of the African private sector by organizing an orderly transition from
debt economies towards market economies, thanks to proactive attraction policies
private investments. And let's integrate our banking systems and capital markets.
It is at this price that the development of the continent will be able to accelerate, thanks to the mobilization of resources
necessary for the financing of infrastructure and industrialization, in order to achieve growth
stronger and better shared by the African populations.