Adedipe: Africa’s capital markets poised to be bigger & more liquid

Africa's capital markets are on the brink of significant growth and increased liquidity, according to Biodun Adedipe, Chief Economist at B.Adedipe Associates. Speaking at the launch of the 2023 Africa Capital Market Outlook, Adedipe emphasized the importance of comprehensive reports to provide essential data for investors, both local and international. These reports serve as a critical tool to guide investment decisions and reduce costs associated with uncertainty. The availability of accurate information not only attracts international investors but also facilitates the identification and utilization of opportunities, thus enhancing market liquidity. Furthermore, improved infrastructure and regulatory frameworks are essential to support the influx of investors. The expected rate hikes in monetary policies and the shift towards capital markets for fiscal deficits indicate a positive outlook for Africa's capital markets. Additionally, the growing demand in real estate underscores the continent's population boom and presents further investment opportunities. As monetary policy rates rise, investors tend to shift from the money market to the capital market, fostering growth in debt capital markets. Sovereign debts pose a significant challenge for African countries, leading to the securitization of these debts as a disciplined financing option. Adedipe also highlighted the potential impact of elections and heightened risk sentiment on de-risking Africa's financial landscape. The African Exchange Linkage Project stands out as a transformative initiative, enabling investments across multiple countries and enhancing market liquidity for international investors. The substantial growth in intra-African trade, facilitated by initiatives like the African Continental Free Trade Area agreement, presents a tremendous opportunity for commodities markets. With the potential to increase intra-trade from 6% to 20% of total trade, the market for commodities is poised to expand significantly. The continent's rapidly urbanizing and youthful population drives the demand for commodities, creating a robust market environment. This growth not only benefits producers and traders but also promotes value addition and self-sufficiency in commodity supply within Africa. As Africa's capital markets evolve and expand, leveraging data-driven strategies, improved regulations, and intra-African trade agreements, the continent is positioned to attract greater investment, enhance market liquidity, and stimulate economic growth.