President Goodluck  Jonathan

By Goddy Egene
Financial experts, regulators and investors have said that for African capital markets to attract more investments, there must be strong infrastructure, exchanges, increased investor education, good corporate governance and adequate capacity to enforce rules and regulations in the markets.
Following the global financial crisis that had heavy impact on most developed capital markets, African capital markets are  seen as the next destination for  most international investors.

However, the investments both from local investors have not been flowing in as expected. Some experts and regulators spoke to THISDAY on the sidelines of the 36th Conference of the International Organisation of   Securities Commissions (IOSCO) in Cape Town, South Africa recently on how to attract more investments.
For  instance, the  Secretary-General of the IOSCO, Mr. Greg Tanzer said African markets needed to have very robust trading platform in place so   as to accommodate the expected huge foreign investments inflow.

According to him, having put in place good standards and rules, there  must be strong infrastructure  to support those standards.
“You have to ensure that you have  strong  market  infrastructure. The trading platform, the clearing and settlement   system,  the dealing with counter party risk to provide a secure environment  must be  well in place. When you secure environment for investments, the business opportunities that exist in Africa would become more attractive to investors. If investors have confidence in the market, they invest in the market. If they do not have confidence, they would not invest,” Tanzer said.

Speaking in the same vein, a corporate governance expert and Head of International Finance Corporation (IFC)’s  Global Corporate Governance Forum, Dr. Phil Amstrong, said regulators should build capacity for proper enforcement of  corporate governance codes.
“Investors  patronise markets where there are good  corporate governance  codes. But another important thing is that those codes must be enforced. That is why it is good for regulators to train their staff on how to  monitor  and police the disclosures that companies make. They should be trained to ensure that their staff are well verse in terms of corporate governance issues and the relevance   of the corporate governance rules you have in place. Also the companies should be made to understand what you are   expecting from them,” Amstrong said.

In the opinion of  the Chief Executive Officer of  Capital Markets and Securities Authority(CMSA) of Tanzania, Dr. Fratern Mboya , introduction of more products into the markets and giving of incentives to investors and companies would also help to deepen the market further.

“In Tanzania for instance, the withholding tax on dividend is five per cent instead for 10 per cent. For companies coming to list more than 35 per cent is corporate tax is 25 per cent instead of 30 per cent. There is no capital gain tax. For long-term debts for three years and above, you do not pay taxes on the profit. If incentive like these are encouraged across our markets,  then there would be more inflow of investments both local and international,” Mboya said.
To the  Chief Executive Officer of  Capital Markets Authority of Uganda, Mr. Japhet Katto, investor education would significantly deepen our markets.

“What has been happening in some jurisdictions is   that regulators are not sure if investor education is part of their roles in the development of  our markets. In countries   where   regulators have not been taking investor education as their function, they should do that now and incorporate it their laws that investor education is a critical factor in the deepening of our markets,” he said.