Cairo — The North African Capital Markets Development Workshop, organized jointly by the Economic Commission for Africa (ECA), JP Morgan (the Investment Bank) and the Cairo and Alexandria Stock Exchanges, successfully concluded here today when the ECA's, Patrick Asea, rang a bell to open trading at the Cairo Bourse.
The three-day workshop, which focused on identifying an action plan for the development of North African capital markets, brought participants from major investment banks such as CitiGroup, Rand Merchant Bank and Goldman Sachs as well as organisations such as the African Development Bank, African Stock Exchange Association, the International Monetary Fund, CEOs of stock exchanges and regulators, including US Securities and Exchange Commission.
A key element of the action plan is to find innovative ways to increase the liquidity of North African capital markets. Another point made in the plan is the need for the development of bond markets to tap domestic savings. The Bond Exchange of South Africa noted that for over 100 years before the establishment of the New York Stock Exchange, US capital markets consisted only of bond markets.
Mr. El Torgoman, President of the Cairo and Alexandria Stock Exchanges, congratulated participants for the high quality of the deliberations and said he looked forward to working with all stakeholders to strengthen capital markets in the region.
There was consensus on the need for increased coordination and harmonisation of the efforts to develop capital markets in Africa. In that respect, a steering committee of major stakeholders was established to coordinate technical capacity-building efforts in the region. Members of the committee include the US Securities Exchange Commission, the IMF and ECA.
Opening the meeting on Tuesday, Patrick Asea, Director of the Economic and Social Policy Division, ECA, noted that while the emerging capital markets of North Africa were well poised to benefit from the increased flow of capital due to globalisation, they nonetheless faced a special set of challenges as they compete with other emerging markets in Asia and Latin America for new issues and investors.
Mr. Asea also noted attributes of the market that reduced investor attraction, including shallow and illiquid markets, high transaction costs and weak regulatory frameworks. "Underlying economic structures do not help much, either" he added, "for instance, the prevalence of frequent and deep macroeconomic shocks means that risks remain high for investors."
Mr. Asea said there was a need for measures that could minimize the risks and maximize the benefits. He said that these include better clearance, settlement, and depository systems and the strengthening of regulatory and legal frameworks of capital markets.
This is the second in a series of regional workshops organized by the ECA as part of its efforts to assist in the development of capital markets in Africa. The first sub-regional workshop was held in Johannesburg, South Africa in October 2003. It was jointly organized with Rand Merchant Bank, the largest investment bank in Southern Africa.
