FG Proposes Unified Bond Market Framework for 10 West African Countries

By Adedapo Adesanya

The federal government has proposed a unified bond market framework for 10 West African countries to harmonise capital market regulations, facilitate cross-border investments and mobilise long-term financing for infrastructure development and economic growth across the region.

The Minister of Finance and Coordinating Minister of the Economy, Mr Taiwo Oyedele, disclosed this on Tuesday at the S&P Global Ratings Africa Summit in Lagos, saying the proposed reforms would make it easier for investors to buy and trade bonds and other financial securities across participating countries.

He said the fragmented nature and relatively small size of individual capital markets in West Africa had limited their capacity to attract the long-term investments required to finance large-scale infrastructure projects and support economic expansion.

According to him, integrating the markets would create a larger investment pool, improve access to capital and enable governments and businesses to raise funds from investors across national borders.

One of the key components of the proposed framework is a regional passport system that would allow companies and other issuers approved to raise capital in one participating country to access investors in other member countries without undergoing separate regulatory approval processes in each jurisdiction.

Nigeria is also proposing a unified investor identification system that would enable investors registered in one participating market to purchase bonds and equities in other countries without repeating registration and onboarding procedures.

The proposed reforms would also involve connecting trading, securities settlement and payment infrastructure across participating countries to facilitate cross-border transactions.

Under the arrangement, investors would be able to settle securities transactions directly in local currencies, potentially reducing dependence on the United States dollar and lowering transaction costs associated with cross-border investments.

The proposed framework would cover Nigeria, Ghana, Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Mr Oyedele noted that existing initiatives, including the West African Capital Markets Integration Council, the African Exchanges Linkage Project and the Pan-African Payment and Settlement System (PAPSS), had provided foundations for regional financial integration.

He said the priority was to connect these initiatives into a coordinated framework capable of improving the efficiency of cross-border investment transactions.

The minister also proposed a regional local-currency bond index to provide investors with a benchmark for assessing market performance and identifying investment opportunities across participating economies.

In addition, Nigeria is advocating a regional credit enhancement facility to support cross-border infrastructure financing by improving the risk profile of projects and making them more attractive to institutional and international investors.

The initiative is expected to complement Nigeria’s broader capital market development strategy, which includes a target of growing the market to at least $1tn under its 10-year capital market development plan.

Mr Oyedele also said the country was seeking to attain investment-grade credit ratings within the next three years, a goal that would require stronger investor confidence, improved market infrastructure and greater participation by domestic and international investors.

For pension funds, insurance companies and asset managers, the proposed regional integration could provide access to a wider range of securities and investment opportunities, while enabling governments and private sector issuers to tap into a larger pool of long-term capital.