Vice-President Dr. Mahamudu Bawumia has urged capital market stakeholders within the sub-region to ride on the back of the Pan-African Payment and Settlement System (PAPSS) as they seek to further integration, describing the platform as the most important monetary development in Africa since 1960.

PAPSS, which was formally launched in January, allows a party in one African country to pay in their own currency while a counterparty in another country receives payment in their own currency.

Opening the second edition of the West African Capital Market Conference 2021 (WACMaC 21), which has as its theme ‘Deepening and strengthening capital markets across West Africa through effective regulation’, Dr. Bawumia stated that PAPSS provides a solution to the biggest non-regulatory challenge faced by the market integration initiative.

“It not only applies to goods and services but will also be available for stocks and bonds. As we work on the payment and settlement platforms for capital market integration, we should ride on the PAPSS platform which makes it easy for someone in Ghana to buy stock in another jurisdiction and pay in cedis while the settlement is done in the corresponding currency… we should use this platform to make our integration feasible. We should now press-on to get the rest of the regulatory framework in place,” he said.

Extolling efforts of the West African Securities Regulators Association (WASRA) and West African Capital Markets Integration Council (WACMIC) in pursuing homogeneity, Dr. Bawumia said the benefits to be derived from an integrated market remain too significant to be left untapped.

These benefits, he said, include the possibility of closing the continent’s infrastructure financing deficit – which is estimated to be around US$100billion a year and could reach as much as US$170billion a year by 2025.

Regulatory equilibrium

The Vice-President urged regulators not to be heavy-handed when interacting with the rapid developments brought about by innovation, saying the latter is crucial for growth in the new global economic architecture.

“As regulators we should not stand in the way of innovators, as they will drive our next industrial economy and we should give them the space,” he said.

He was however quick to add that a favourable disposition toward financial innovation must not lead to a compromise on financial market integrity and stability, financial inclusion, consumer production as well as compliance with existing Anti‑Money Laundering/ Counter‑Terrorism Financing (AML/CTF) rules.

Also speaking at the event, Deputy Minister of Finance John Kumah emphasised the importance of building a reliable sub-regional capital market.

He said: “A world-class capital market engenders investors’ confidence, facilitates economic diversification, characterised by the highest level of integrity, among others”.

In an era of competition in the global marketplace for strategic investment to support capital formation in economies, he said, the capital market is seen as a highly visible tool for economic reforms and modernisation.

This, according to him, should guide the efforts toward fostering capital markets integration across the sub-region.

Among others, he recognised the progress being made in achieving a stringent regional capital markets integration – but insisted that more needs to be done in the area of economic integration and stability across the region to support the efforts.

The Deputy Finance Minister opined that the world’s biggest economies boast well-functioning capital markets, structured to provide long-term capital for businesses. However, on the other hand, financial systems in many African countries remain underdeveloped. This, he said, has resulted in credit constraints for individuals and firms, especially SMEs, as well as low investment rates.

This is evident as some countries within the region, such as Liberia and Sierra Leone, currently do not have standalone local bourses.

Taking his turn, the Director-General West African Monetary Institute (WAMI), Dr. Olorunsola Olowofeso, announced some progress on phase-two of the WACMI project, which is geared toward establishing a common and integrated platform for the listing, trading and settlement of capital market security transactions within the ECOWAS region.

“I would like to inform you that WAMI, in conjunction with WASRA and WACMIC, has completed the initial phase of phase-two of the project… this will deepen the capital market ecosystem and make it attractive to institutional and retail investors,” he said.

By: Kizito Cudjoe & Ebenezer Chike Adjei Njoku