​​The state of bond markets in the rest of Africa
Posted by Investment Solutions on 16 May 2014

By Zeenat Patel

In most African economies, the domestic bond markets, where they exist, are generally underdeveloped in depth and breadth. However, there has been an increase in the number of issuances by government and corporates over the last few years. The increase in African bond issues is due to investors' search for yield given the current low interest-rate environment in much of the developed world, the need for additional sources of funding by African governments for their growth projects — in particular, infrastructure — as well as financial sector reforms taking place in some countries.

For example, when the Central Bank of Nigeria increased the minimum capital requirement for banks in 2004, banks met it through bond issues on the local market that were largely taken up by wealthy Nigerian investors.

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