The African Development Bank Group (AfDB) has approved $350,000 in grant funding for technical assistance to consolidate the Cape Verde’s capital markets strategy and increase the liquidity of its fixed income markets.
The grant will be sourced from the Capital Markets Development Trust Fund (CMDTF), a multi-donor fund administered by the African Development Bank. The national stock exchange, Bolsa de Valores de Cabo Verde (BVC), will use the funds to develop a capital markets masterplan and upgrade current infrastructure to stimulate liquidity in secondary bond markets.
Ahmed Attout, Manager of the African Development Bank’s capital markets development division, expressed delight about the partnership.
“We are delighted for the partnership with the BVC and the domestic capital markets ecosystem to support capital markets development in Cabo Verde”.Ahmed Attout
The African Development Bank highlighted that the program design emerged from a participatory process involving the BVC, the national ministry of Finance, the capital markets regulator, Auditoria Geral do Mercado de Valores Mobiliários. The country’s central bank, Banco de Cabo Verde also took part in the design process.
Significance of the partnership
Marcia Teixeira, BVC Executive Director stated that the partnership will help strengthen the country’s capital market to enhance the implementation of the Global Goals.
“AfDB´s partnership, for which we are grateful, will help consolidate the capital markets as a means of excellence in project financing and resource mobilization. It will help empower the capital markets to boost SDG implementation and its financing in Cabo Verde and West Africa, with impacts for regional and continental integration”.Marcia Teixeira
Cabo Verde’s national stock exchange began operations in 1998 to provide an alternative source of investment and financing to the private sector. Since 2005, around $1.4 billion worth of securities have been issued on the bourse. According the African Development Bank, the bourse has current market capitalization of around $962 million, equivalent to just over half of the country’s GDP.
The Capital Markets Development Trust Fund
The multi-donor grants facility (CMDTF) has continued to play a significant role in the development of capital markets on the continent.
CMDTF aims to support the African Development Bank’s efforts to mobilize domestic resources to finance Africa’s development. Administered by the AfDB, the CMDTF is supported by the Ministry of Finance of Luxembourg and the Ministry of Foreign Trade and Cooperation of the Netherlands.
In May 2021, the CMDTF awarded a grant to the West African Monetary Institute (WAMI) to finance the West African Capital Markets Integration (WACMI) Phase 2 Project. Cabo Verde is one of the countries that is currently benefitting from the program.
The overall objective of the WACMI Project is to establish a common and integrated platform for the listing, trading and settlement of capital markets securities transactions within the capital markets in the ECOWAS region.
The WACMI project seeks to implement in three phases, initiatives and sub-projects towards the eventual integration of the capital markets in the West African region.
The Project will deepen the West African capital markets, enabling them achieve scale to attract institutional and retail investors. Additionally, it seeks to broaden the range of capital markets instruments, corporate and sovereign issuances available for mobilization of funding into private and public enterprises.