VII F. Attract Capital Flows and Encourage Foreign Participation: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA
VII F. Attract Capital Flows and Encourage Foreign Participation: PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA
are an important for stock market development. Even though capital flows to Africa have
been increasing recently, they are still at very low levels. In particular, portfolio investment
accounts for a minor share of capital flows to Africa with a meager share of 0.15 percent of
the total capital flows to Africa in 2003 (excluding South Africa). On the other hand,
portfolio flows dominate the total capital flows to South Africa increasing liquidity on the
JSE.
African countries need to do more to attract capital flows especially portfolio flows.
Sustained economic growth, quality public institutions and infrastructure, trade liberalization,
and efficient capital markets are important for attracting capital flows (Asiedu, 2006). An enabling business climate with low costs of doing business, property rights, effective
regulations and legal institutions, and some capital account liberalization are important.
Capital account restrictions still hold in a number of African countries. Such restrictions also
limit the capabilities of exchanges to explore cross-border investments. There is the fear that
capital account liberalization for these countries could also expose such economies to
potential huge capital flights and financial crises. However, it has been argued that such
problems depend on the nature of capital that comes in (Henry, 2000). Debt based capital
flows could cause crises if there is bad news and creditors rush in to obtain their funds.
Equity or bond based capital flows however have the risk shared, with high payouts during
good times and little or nothing during bad times. Therefore, lifting capital account
restrictions to attract portfolio investment would benefit African stock markets tremendously.
Off course capital account liberalization should be preceded by trade liberalization and
domestic financial liberalization to minimize financial market risks.
The problem with portfolio capital is that they are normally targeted at large and growing
markets. This makes further argument for de-fragmentation of African. Attracting portfolio
capital flows into stock markets goes hand in hand with opening up markets for foreign
investor participation. Apart from the injection of fresh capital, opening up markets to
foreign participants help to increase trading and liquidity of markets. Increasingly African
markets are opening up to foreign participation with little or no ceilings on foreign ownership
of shares. A few markets still have some foreign participation restrictions. For instance,
foreign ownership of shares cannot exceed 40% in stock markets in Kenya and Zimbabwe
and 74% in the Ghana.
IMF Working Paper
African Department
Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges
Prepared by Charles Amo Yartey and Charles Komla Adjasi
August 2007
VII F Attract Capital Flows and Encourage Foreign Participation PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - To learn more about this author, visit International Monetary Fund's Website.
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Private capitals flows—foreign direct investment, remittances and portfolio investment and
are an important for stock market development. Even though capital flows to Africa have
been increasing recently, they are still at very low levels. In particular, portfolio investment
accounts for a minor share of capital flows to Africa with a meager share of 0.15 percent of
the total capital flows to Africa in 2003 (excluding South Africa). On the other hand,
portfolio flows dominate the total capital flows to South Africa increasing liquidity on the
JSE.
African countries need to do more to attract capital flows especially portfolio flows.
Sustained economic growth, quality public institutions and infrastructure, trade liberalization,
and efficient capital markets are important for attracting capital flows (Asiedu, 2006). An enabling business climate with low costs of doing business, property rights, effective
regulations and legal institutions, and some capital account liberalization are important.
Capital account restrictions still hold in a number of African countries. Such restrictions also
limit the capabilities of exchanges to explore cross-border investments. There is the fear that
capital account liberalization for these countries could also expose such economies to
potential huge capital flights and financial crises. However, it has been argued that such
problems depend on the nature of capital that comes in (Henry, 2000). Debt based capital
flows could cause crises if there is bad news and creditors rush in to obtain their funds.
Equity or bond based capital flows however have the risk shared, with high payouts during
good times and little or nothing during bad times. Therefore, lifting capital account
restrictions to attract portfolio investment would benefit African stock markets tremendously.
Off course capital account liberalization should be preceded by trade liberalization and
domestic financial liberalization to minimize financial market risks.
The problem with portfolio capital is that they are normally targeted at large and growing
markets. This makes further argument for de-fragmentation of African. Attracting portfolio
capital flows into stock markets goes hand in hand with opening up markets for foreign
investor participation. Apart from the injection of fresh capital, opening up markets to
foreign participants help to increase trading and liquidity of markets. Increasingly African
markets are opening up to foreign participation with little or no ceilings on foreign ownership
of shares. A few markets still have some foreign participation restrictions. For instance,
foreign ownership of shares cannot exceed 40% in stock markets in Kenya and Zimbabwe
and 74% in the Ghana.
IMF Working Paper
African Department
Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges
Prepared by Charles Amo Yartey and Charles Komla Adjasi
August 2007
VII F Attract Capital Flows and Encourage Foreign Participation PROMOTING STOCK MARKET DEVELOPMENT IN AFRICA - To learn more about this author, visit International Monetary Fund's Website.
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John BrennanJohn Brennan Ed.D. Dr. Brennan is President of Interpersonal Development, LLC, a training and development firm. Interpersonal Development has provided sales training and coaching to more than 3,000 sales reps from over 100 companies. A native of Australia, Dr. Brennan received his doctorate from the University of Rochester. His dissertation researched the effectiveness of Behavioral Modeling Technology in training people in interpersonal skills. While he has spent most of his career designing or delivering training, he was also a Vice-President of Sales of a training and development franchise with operations in 25 markets. Dr. Brennan has designed and delivered sales training in North America, Asia, Europe, Australia and the Middle East. He has been a guest speaker at numerous national and regional professional conferences. When Microsoft wanted Best Practices articles on sales for their web site, they called Dr. Brennan. The results are at http://office.microsoft.com/en-us/FX011387391033.aspx His firm’s clients have included Volvo, The Prudential, Merrill Lynch, Eastman Kodak, Gannett, Equifax Europe, the Economist Group and countless small businesses. - Visit John Brennan's Website |
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Kim CastleWith nearly two decades in the advertising and design business, with clients like Domino's Pizza, General Motors, Direct TV, Pedigree, Wolfgang Puck, Higher Octave Music, Hollywood Celebrity Products, Disney, and Paramount, as well as thousands of entrepreneurs around the world define, structure, communicate, and position their business for greater profits, BrandU(R) co-creators Kim Castle and W. Vito Montone discovered that entrepreneurs could experience the same power that big brands command for a fraction of the cost with the world's only process-based results-drive Integral approach to business creation. BrandU(R) is helping entrepreneurs grow with the power of extreme clarity from idea...to brand...to market(TM) and helping one million entrepreneurs become successful and whole so that they can make a difference in the world. Are you one of them? If you want to experience clarity all the way to the bank(TM), get started now at http://www.brandu.com. - Visit Kim Castle's Website |
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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John PowerJohn Power, founder of Biltmore Franchise Consulting, has extensive experience developing and marketing franchises and business opportunities. He has been in and around franchising for over twenty years. From 1980 through 1990 he conceptualized, organized, and developed the American Video Association. He grew AVA to 2,000 national members, before selling the company it 1990. It was later merged into another home video marketing company. From 2000 to 2005 he worked as a contract marketing and human resources consultant to several local and national companies. In 2005 Mr. Power began working as a franchise development consultant on a full-time basis. Since that time he has helped more than three dozen companies initiate and develop their franchising program. He notes that there are many companies interested in developing a franchise program, and who need his specialized assistance. Mr. Power is a “hands-on” franchise consultant. He said, “I am the ‘nuts and bolts’ person who tends to the details for my clients.” Mr. Power holds a B.S. degree with a major in Marketing. See: www.biltmorefranchise.com You may contact Mr. Power at: jpower@biltmorefranchise.co - Visit John Power's Website |
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David AchesonDavid Acheson is the founder of DCJA Consultancy. DCJA Consultancy is a management consultancy business specialising in B2B sales consultancy. They offer bespoke and packaged sales consultancy including Sales Optimisation Review, Interim Sales Management, Sales & Marketing Review, 1:1 Sales & Management Staff Analysis, Management Training, Solution Sales Training, Creation of New Pay Plan, KPI's, run Customer Feedback Campaigns, assist with Recruitment, Coaching, Appraisals and set up Strategic Marketing Campaigns. David spent his early career in accountancy and then moved into sales in 1982, working in Office Equipment, IT, Advertising, Training, Outsourcing and Consultancy. He has held many Senior Positions in SMBs and Global Organisations including Head of Sales Operations & Head of Business Development. His knowledge, skills and great experience of the Sales Industry has led to David making keynote speeches and running educational sessions to key businesses through organisations including The Chamber of Commerce and Business Link. - Visit David Acheson's Website |
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Linda RichardsonLinda Richardson is the Founder and Executive Chairwoman of Richardson, a global sales training and performance improvement company. As a recognized leader in the industry, she has won the coveted Stevie Award for Lifetime Achievement in Sales Excellence and she was identified by Training Industry, Inc. as one of the “Top 20 Most Influential Training Professionals.” Ms. Richardson is credited with the movement to Consultative Selling and is the author of ten books on selling and sales management, including Sales Coaching — Making the Great Leap from Sales Manager to Sales Coach, and Stop Telling, Start Selling. She teaches sales and management at the Wharton Graduate School of the University of Pennsylvania and the Wharton Executive Development Center. Linda is a frequent speaker at industry and client conferences, has been published extensively in industry and training journals, and has been featured in numerous publications, including The Wall Street Journal, Forbes, Nation’s Business, Selling Power, Success, and The Conference Board Magazine. Learn more about Richardson's sales training and performance improvement solutions at http://www.richardson.com web - Visit Linda Richardson's Website |
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