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Weak institutions and poor governance in Nigeria and other African countries is one of the major factor slowing down capital flows into critical sectors such as power and manufacturing, Managing Director, Goldman Sachs International, Colin Coleman, has said.
He made this known at the ongoing New York Forum Africa, holding in Libreville, Gabon.
Speaking on the topic, “Transforming Africa’s Financial Landscape,” he stated that African governments must take steps to strengthen institutions and put in place policies that will ensure strong governance in public and private institutions to attract investors.
Coleman stressed that investors around the world are looking for low risk countries to invest their capital hence the need for governments to improve on governance.
According him, “Apart from strengthening institutions, government across Africa must create very liquid capital markets that will enable both state owned and private companies to issue equities easily.
“China used state owned companies to create liquid capital market, and today its capital market is one of the most capitalized stock markets in the world. The two biggest stock markets in Africa is not even close to China.
"The Johannesburg Stock Exchange (JSE) which is the biggest in Africa has a market capitalisation of $800 billion with a daily turnover of $2 billion. Nigeria which is the second largest exchange has a market capitalisation of just $80 billion with a daily turnover of $25 million”
On his part, Vice-President of Standard Chartered Bank, Ebenezer Essola, said African companies are doing well despite several constraints. African companies, he added, are now doing big ticket transactions and listing their shares in European stock exchanges.
“Recently Standard Chartered Bank and Dangote Industries signed an agreement for the construction of the Dangote Petrochemical Refinery in Nigeria. African companies can now compete in other countries around the continent.
"The future is bright for Africa and companies are willing to put proper governance in place. In several meeting with investors in Europe and Asia, whenever Africa is mentioned everybody listen, “he said.
Former Finance Minister of Tunisia and a candidate for the African Development Bank (AFDB), Jaloul Ayed, pointed out that African companies are making progress in facilitating capital.
He sighted the United Bank for Africa Plc which has presence in 16 African countries as an example of the gradual integration of African economies.