PwC report highlights challenges in Africa's capital markets

African capital markets - and capital markets worldwide - experienced some hard times in 2015, according to PriceWaterhouse Cooper's (PwC) "2015 Africa Capital Markets Watch" released Monday.

The report includes studies of equity and debt capital market transactions that took place between 2011 and 2015 on exchanges across Africa; it also looks at transactions completed by African corporations using international exchanges.

“At 31 December 2015, African exchanges had a market capitalization of about US $1 trillion, with 23 percent of this value residing on exchanges outside of South Africa," Nicholas Ganz, PwC's Africa capital markets leader, said. "Though statistics cannot be interpreted in isolation, certain metrics commonly used to analyse global market performance, such as the market capitalisation-to-GDP ratio, suggest that untapped value remains in Africa’s capital markets.”

Across Africa, the report showed, $12.7 billion was raised in 2015; the amount of money raised since 2011 was $41.3 billion.

The African IPO market was topped by financial services, followed by industrial, health care and consumer goods sectors.

Challenges are likely to continue, the report said, but new strategies will help.

“Despite challenging economic times, which are felt heavily in Nigeria, 2016 will be pivotal as companies will be looking to reassess their strategies, which may include divesting of non-core businesses," Darrell McGraw, PwC Nigeria capital markets partner, said. "This will create an opportunity for cash-rich investors, or other corporates to tap into the local debt markets to raise domestic currency bonds. Until relative certainty returns to the currency markets, the popularity of U.S. dollar denominated bonds is likely to taper."

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