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Dr Bawumia advises capital markets to develop regulatory policies

BY: Chris Nunoo
Dr Bawumia (right) interacting with some executive of the West Africa Securities Regulatory Association at the conference in Accra
Dr Bawumia (right) interacting with some executive of the West Africa Securities Regulatory Association at the conference in Accra

Capital markets in the West African region have been advised to develop regulatory policies to protect the sector and investors from systematic risks, while improving efficiency.

The Vice-President, Dr Mahamudu Bawumia, said the development of such policies at the system level should be devoid of regulatory arbitrariness, facilitate risk sharing and encourage more competition in tangible outcomes.

Dr Bawumia, who gave the advice at the opening of the 2021 West Africa Capital Markets Conference in Accra yesterday, added: “It is time for Africa to build and develop strong capital markets to help finance the provision of public good, provide capital for entrepreneurs and the private sector, assist economic agents to take risks and innovate, as well as share and transfer risks to entities and sectors with the appetite to absorb the risks.”

The two-day biennial conference, which is being attended by participants from across the ECOWAS region, is being organised by the West Africa Securities Regulatory Association (WASRA).

It is the second since its inception.

It is on the theme: “Deepening and strengthening capital markets across West Africa through effective regulation”.

Regulatory acts

Dr Bawumia also called for technical regulatory acts that met the need for consensus on sound prudential principles and practices.

“I, therefore, urge WASRA and its member jurisdictions to make the best use of the tools presented by the international organisation of securities commissions to build coherent supervisory frameworks and well-established channels of communication across countries,” he said.

While attributing the “disruptive effects” of the global economy to the COVID-19 pandemic and the Russia/Ukraine war, the Vice-President said the situation had also culminated in profound rethinking of the effectiveness of financial supervision.

He added that “the flow of new business models, products and services on technological innovations is being seen across the globe. There is enormous potential for greater competition, interoperability, operational efficiency through cost-saving and improved risk management”.

Market capitalisation

In a speech read on his behalf, the Minister of Finance, Ken Ofori-Atta, said market capitalisation as of the end of 2020 was 54.374 per cent, down by 4.25 per cent over the previous year’s.

That, he explained, was a reflection of the resilience of the country’s market in prime times.

The country’s capital market, which started operations over 30 years ago with nine companies, according to Mr Ofori-Atta, had made some strides in ensuring the listing of 38 companies, a market capitalisation of over GHc64 billion on equity bars and GHc187 billion on outstanding securities on the country’s fixed income market as of March 2020.

“Total volume traded from January to March 2022 was over 280 million shares, valued at GHc300 million, representing an increase of 39.68 and 96. 77 per cent, respectively, over volume and value traded for the same period in 2021.

“At the end of 2020, when COVID-19 was biting hard, the stock market recorded one of its most successful years in volume. It traded in 695 million shares, the second highest in the exchange’s 30-year history, while value traded was GHc575 million, the third highest,” he said.

Significance

The Chairman of WASRA, Lamido Yuguda, said the conference was an appropriate avenue for members to deliberate on critical matters that would engender the growth of capital markets within the sub-region.

Mr Yuguda, who is also the Director-General of the Securities and Exchange Commission (SEC) in Nigeria, said the association had made progress since its inaugural conference through the adoption of strategic initiatives aimed at boosting the economy, improving infrastructure development and growing trust and confidence in the capital market.