Some Conclusions: Toward a Political Economy View of African Equity Market Development

This book has sought to find some of the political and economic reasoning behind the establishment of stock exchanges in Africa. It has also grappled with some of the possible consequences for African countries that choose the route of integration into global financial markets. Several themes emerge from these questions. First, political considerations appear to remain central in explaining policy outcomes, and this includes the technical world of financial sector development. Second, stock markets have the potential to make a positive contribution to African economies, but only under certain macroeconomic and policy conditions. Third, those conditions may be particularly difficult to achieve owing to the effects of political influences and structures on policymaking. Thus, many African governments may be openly supporting and encouraging the development of a national stock exchange, but the failure of wider reform, notably on the fiscal front, may at the same time be undermining their efforts and much of the potential for stock markets to play a constructive role. Finally, both the risks and opportunities presented by the opening of African stock exchanges are, therefore, likely to remain modest at best in the short- and medium-term.