FG proposes regional capital market passport across 10 West African countries

The Federal Government has proposed a regional capital market framework that would let companies and governments raise funds across 10 West African countries without separate regulatory approvals in each market. Taiwo Oyedele presented the proposal at the S&P Global Ratings Africa Summit in Lagos yesterday.

The plan is aimed at removing barriers to cross-border investment and improving access to long-term financing for infrastructure and economic growth. Oyedele said fragmented capital markets across the region had limited the ability of countries to mobilise the scale of funding required for development. No single market was deep enough to meet the region’s financing needs, he said.

Passport regime for issuers

Under the proposed framework, an issuer approved by regulators in one participating country would be able to raise capital in other member markets without going through separate approval processes. The arrangement, described as a regional passport regime, is expected to make it easier for governments and companies to access investors across the region.

Nigeria is also proposing a unified investor identification system. It would allow investors registered in one country to buy bonds and equities in other participating markets without repeating registration and verification procedures.

Local currency settlement and new facilities

Oyedele said the reforms would be complemented by the integration of regional trading, settlement and payment systems. That would allow securities transactions to be settled directly in local currencies and reduce dependence on the United States dollar. Other proposals include establishing a regional local-currency bond index and a credit enhancement facility to support cross-border infrastructure financing.

The proposed integration covers Nigeria, Ghana and eight French-speaking countries that use the CFA franc and share a common central bank. They are Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Oyedele said existing initiatives provide a foundation for deeper regional integration. They include the West African Capital Markets Integration Council, the African Exchanges Linkage Project and the Pan-African Payment and Settlement System (PAPSS). “The task now is to join these pieces together,” he said.

Nigeria’s domestic targets

On Nigeria’s domestic capital market, Oyedele said the government was targeting investment-grade credit ratings within three years. It is also targeting a market capitalisation of at least $1 trillion over the next decade.

For Nigerian businesses and investors, the proposal could widen access to regional capital and reduce the cost of repeated registrations if regulators agree on common rules. It could also support local-currency fund raising and cut some dollar dependence in cross-border securities deals.