Why Africa’s capital markets penetration remains low – Stakeholders

Policymakers, regulators, academics and capital market operators have called for a stronger policy discipline, market reforms to deepening Africa-wide economic integration, noting that the continent’s capital markets penetration ‘ll remain low without critical reforms. Stakeholders made the disclosure at the 3rd Prof Uche Uwaleke (PUU) Biennial Colloquium on the Capital Market held on Monday at […]

Policymakers, regulators, academics and capital market operators have called for a stronger policy discipline, market reforms to deepening Africa-wide economic integration, noting that the continent’s capital markets penetration ‘ll remain low without critical reforms.

Stakeholders made the disclosure at the 3rd Prof Uche Uwaleke (PUU) Biennial Colloquium on the Capital Market held on Monday at the Yar’Adua Centre in Abuja.

The event was tagged “Future-Proofing Africa-wide Economic Integration: Infrastructure, Innovation, and Capital Markets.”

Speaking on the theme of the Colloquium, convener and Nigeria’s first Professor of capital markets, Prof. Uche Uwaleke emphasized that to future-proof Africa-wide integration means acknowledging that the world is changing at an unprecedented pace- technologically, economically, geopolitically- and that Africa must not merely react to these changes but anticipate them.

In his paper, he highlighted that “Infrastructure is the first pillar of this future. No economy integrates on paper alone. Trade agreements without roads, railways, ports, energy systems, and digital connectivity are aspirations without arteries. For Africa to trade efficiently within itself, goods must move seamlessly across borders.

“The second pillar is innovation. Integration without competitiveness is fragile. In a world driven by artificial intelligence, fintech, green technology, and digital platforms, Africa cannot afford to be a passive consumer of innovation. We must be creators. We must cultivate ecosystems that encourage research, support startups, and translate ideas into scalable enterprises. Regulatory frameworks must evolve to accommodate emerging technologies without stifling them. Governments, regulators, and the private sector must collaborate to strike the delicate balance between risk management and opportunity creation.

“The third pillar is capital markets. If infrastructure is the skeleton and innovation the muscle, capital markets are the bloodstream of economic integration. They mobilize long-term funds, allocate resources efficiently, and provide risk management tools that support investment and growth.

“For Africa-wide integration to succeed, our capital markets must deepen, broaden, and connect. Domestic savings must be mobilized more effectively. Pension funds, insurance assets, sovereign wealth funds, and retail investors must be channeled toward productive investments. Cross-border listing frameworks must be strengthened. Regulatory cooperation among African securities commissions must be enhanced. Settlement systems must be interoperable. Transparency and investor protection must be non-negotiable,” Prof. Uwaleke further explained.

Also speaking at the event, the Accountant General of the federation, Shamseldeen Ogunjimi lamented the low level participation of the African continent in the global capital market space.

“Africa’s capital market contribution just represents only about 2.6% of global listing, underscoring the continent’s limited market depth. Total market capitalization across African exchanges is estimated at about $561 billion, reflecting both goods, potentials and structural financing gaps. More broadly, Africans collectively account for roughly 2% of global market values, demonstrating that despite progress, the continent remains underrepresented in global capital flows.

“Despite growing financial institutions, Africa continues to face structural savings and liquidity constraints. The continent’s savings rate is estimated at about 18%, compared with a global average of 36%, limiting the pool of domestic investment capital available for infrastructure financing. Nonetheless, Africa’s sovereign funds, pension funds, central banks collectively manage close to $1 trillion in assets, demonstrating that domestic capital exists but requires stronger international channels” the AGF said.

 

…Sound legislation non-negotiable – Sen. Izunaso

In his remarks, the Chairman of the Senate Committee on Capital Markets and Institutions, Osita Izunaso, underscored the critical role of sound legislation and strong regulatory oversight in building resilient capital markets capable of supporting Africa-wide economic integration.

He said future-proofing Africa’s economy requires deliberate investment in infrastructure, the promotion of innovation and, crucially, the strengthening of capital markets to mobilise long-term finance and support cross-border investment.

“As lawmakers, we recognise that strong markets require strong governance,” Izunaso said, noting that “Sound legislation, effective oversight and credible regulatory institutions are fundamental to investor confidence.”

Also speaking on the structural support that the new tax reforms are providing to the capital market, the chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele stated that the new tax laws are strategically designed to deepen our capital markets by providing critical incentives to drive growth.

“To encourage long-term capital retention, the Act provides a full Capital Gains Tax (CGT) exemption when disposal proceeds are reinvested in Nigerian shares within the same year, regardless of the transaction size. This encourages long-term participation rather than short-term speculation. Also, there are higher tax-exempt thresholds for share sales up to N150 million, with gains of up to N10 million help reduce the tax burden and widen participation in wealth creation.

Earlier in her opening remarks, the Vice Chancellor at the Nasarawa State University, Keffi, Prof. Sa’adatu Hassan Liman represented by Prof. K’tso Ngharbu, Deputy Vice Chancellor, at the school noted that the university has made frantic efforts in capital market education and research are positioning the university as a reference point for capital market studies in Nigeria and indeed across Africa. “The establishment of the first university-based Institute of Capital Market Studies on the continent is a landmark achievement- one that reflects our commitment to innovation in higher education and responsiveness to national development needs.