Increasing public knowledge about the functioning of the stock market could promote the development of the stock market in Africa. Knowledge about stock market activity can be improved through regular and intensive education programs. Educating the public about the role of the stock market can help increase the investor based and improve the liquidity of the stock market. There is often very little or no education on the role of stock markets in African economies. Being new financial systems in most of Sub-Saharan Africa, stock markets would not appeal automatically to economic agents. Education about stock markets must be at the firm and individual level. At the firm level, it is important to allay the fears of firms by educating them strongly and regularly on the benefits of listing. Firms in Africa have an array of reasons why they would not list on stock markets. Apart from the lack of knowledge about how stock markets work, there are other reasons such as high listing requirements and fear of losing control over family businesses. A study on the Ghana Stock Exchange (Yartey, 2005)
revealed that 33 percent of firms surveyed were unwilling to list on the stock exchange because of fear of losing control. At the individual level, African markets could tap into potentially large amounts of financial wealth which exists outside of the financial system, by pursuing vigorous and consistent educational campaigns about stock markets at various levels of society. Such educational drives are already in existence in a number of stock markets in Africa. In South Africa, the JSE/Liberty Life Investment Challenge which introduces the youth to dynamic games in economics and finance and its application to investing and trading on the JSE has been running for three decades now.
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
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International Monetary Fund
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The IMF is an international organization
of 185 member countries. It was
established to promote international
monetary cooperation, exchange stability,
and orderly exchange arrangements; to
foster economic growth and high levels of
employment; and to provide temporary
financial assistance to countries to help
ease balance of payments adjustment.
Since the IMF was established its purposes
have remained unchanged but its
operations—which involve surveillance,
financial assistance, and technical
assistance—have developed to meet the
changing needs of its member countries in
an evolving world economy.
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