The Trade, Finance and Economic Development Division (TFED) convened a two-day meeting on capital markets development in Nairobi, Kenya on 10-11 November 2006. The meeting was attended by participants from commercial banks, central banks, national stock exchanges, regulatory bodies, multilateral development agencies such as International Monetary Fund, International Finance Corporation, International Climate Facility and key Pan-African institutions such as the African Union Commission and the African Development Bank. The objectives of the forum were to deliberate and exchange views on the problems and challenges confronting capital market development in Africa and explore the benefits and risks of a regional approach to capital market development.

It was argued that Africa's capital markets are small and shallow and therefore lack the capacity to generate sufficient capital to finance long-term development. The experts therefore concluded that regionalization of capital markets can overcome the problems currently bedeviling national capital markets. More importantly, regionalization has the potential of increasing liquidity of capital markets through the pooling of resources and thus provides a larger pool of investible resources for national and regional development. However, they cautioned against a ‘big bang' approach to regionalization of capital markets.

The experts urged for a more sequenced and gradual approach to regionalization of capital markets- first strengthening national capital markets before turning to regionalization. Other important steps that could be taken before regionalization may include cross-listing, mutual recognition, harmonization of policies, regulatory frameworks and clearance and settlement procedures.

They also bemoaned the dearth of research on capital markets development issues and called strengthened research on capital market to buttress policy-making. It was agreed that ECA would undertake a study on key issues of relevance to capital markets development in Africa.