African capital markets and real sector investment


  • Yohane Khamfula

    Corresponding author
    1. University of the Witwatersrand, Johannesburg, Republic of South Africa
    • School of Economic and Business Sciences, University of Witwatersrand, P/Bag 3, Wits 2050, Johannesburg, Republic of South Africa.
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Many African capital markets find the lack of an efficiently organized capital market a serious obstacle to the efficient use of their savings, and thus to their overall economic development. To improve the situation, this paper suggests the following policy recommendations: removal of impediments to capital market development, improvement of the financial system infrastructure for efficient trading activities, sound economic policies that stabilize the exchange rate and prices to help attract foreign investors, increased integration of the local capital market with the world capital markets, encouragement of family-owned firms to go public and, most importantly, liberalization of international capital flows. The study also proposes ‘privatization’ and ‘currency union’ as enhancers of capital mobilization for real sector investment in Africa. Copyright © 2005 John Wiley & Sons, Ltd.