Today, Africa's capital markets remain relatively underdeveloped compared to their global peers. South Africa's market capitalisation is above 246.3% of GDP, but Nigeria sits near 29%, Kenya at 12%, and Rwanda at 31%. This shows that on the supply side, our businesses are not using the capital market to fund their operations; they either use the traditional banking systems or other means.
On the demand side, the savings story has its own toll. Africa averages only 15â€"17%, meaning we are under-mobilising our own capital due to several factors, including widespread poverty and low incomes, in other instances, lack of access to formal banking services caused by high costs or distance, but more so limited financial literacy, which mostly exacerbates the lack or limit saving opportunities.
In comparison, Asia's high-growth economies reached savings rates of 30â€"40% of GDP during their transformation. These gaps for African countries show both the progress in some and the untapped potential of most African markets.
One way of improving the condition is indeed to devise measures that could improve the savings levels at least in the higher 20 percentile, like our Asian brothers and sisters did to achieve their miracle growth rates. However, in the meantime, we could already use even the means we have today because, as we already stand, the challenge is not necessarily lack of resources in aggregateâ€"it is limited access.
Asset ownership remains concentrated among a small African elite or foreigners. Yet, Africa's economy is powered by at least 80% of SMEs in most cases, employing most of the workforce. The real opportunity lies in connecting this entrepreneurial backbone to domestic savings and investments.
A useful illustration comes from Rwanda, where the capital market Investment Clinic is playing a pivotal role in helping local corporates and SMEs raise capital through the stock market in the past few years. Since its inception, the Clinic has supported dozens of companies in preparing for investment readiness which has sparked some excitement on listings, bond issuances, and other market instruments.
This has already translated into hundreds of millions of Rwandan francs mobilised, with firms gaining not only access to capital but also improved governance and visibility. By demystifying the listing process, providing technical guidance, and mobilising investors, the Clinic has shown that even smaller firms can successfully tap into public markets. This modelâ€"where companies are coached into capital marketsâ€"could be replicated across the continent, giving thousands of African businesses a pathway to growth financed by domestic savings.
Another needle we can move is leveraging technology. Technology offers a breakthrough. Sub-Saharan Africa is home to over 1.1 billion registered mobile money accounts, with more than 500 million active users for example, could be put to good use. Platforms like MoMo pay, M-Pesa, and the like across the continent prove that everyday citizens can be brought into the financial system on a large scale. Imagine the same inclusiveness applied to government bonds, equities, and collective investment schemes and linked to the African Diaspora? That is the democratization Africa needs.
There are a few other pointers that could drive the growth and deepen the capital markets to make them more inclusive on the continent. Privatisation of public assets by reserving a stake for the public. The push for privatisation of government assets as a key growth strategy could play a catalytic role for IPO pipelines across the markets, as it would pave the way for other private issuers and family-owned businesses to also join as they tend to benchmark with governments.
This would only require a minimum of 1 or 2 privatisation IPOs per year or more, depending on the country at hand, and if done well the reinvigorate domestic stock exchanges and make it easier for them to mobilise other private issuers on their own, but hand in hand, it would make our markets achieve the main objective to mirror the underlying economies.
The next one, but equally important, could be that countries have an intentional policy put in place to compel public utility companies (Telcos, Banks, Insurance, Cement, Breweries, Transport, Mining, eligible schools, universities, and hospitals, Power generating and other public utilities) to give a certain percentage of their shareholding to the public through listings.
In addition, there should also be a policy to compel a certain size of businesses or a certain number of shareholders, especially those companies doing exports and earn hard currency. Such a policy would not only increase domestic savings levels but would also promote local ownership of the local economy and thus reduce not only dependency on foreign ownership but, most importantly, it would reduce capital flight due to reduced dividend payouts that get repatriated to foreign shareholders, which puts pressure on the local currencies.
Finally, all regulators should adopt a more developmental approach than policing the markets to make sure we are as a continent more enabling and easing doing business for all players (issuers, market intermediaries, and investors) to allow more players and deepening of the markets before we start over-regulating. Overregulating small and fragmented markets can only stifle instead of developing them.
While I am reflecting on all the above, sustainability must also be at the centre. ESG (Environmental, Social, and Governance) frameworks are no longer optionalâ€"they are critical for attracting long-term capital. Global investors are increasingly channelling funds into markets that prioritise transparency, accountability, and environmental resilience. If African markets embed ESG into their structures, they can compete globally while ensuring growth benefits local communities.
As we look ahead, the upcoming African Securities Exchanges Association (ASEA) Annual Conference, scheduled to take place in Kigali from 26th to 28th November 2025, will arrive at a pivotal moment. It will not just be another gathering of financial leadersâ€"it should serve as a collective call to action. The conversations there must move beyond reflection to commitment.
Leaders, policymakers, and investors must work together to democratize public assets so that every citizen can own a stake in their nation's economy. Savings channels must be broadened to raise Africa's savings rate closer to the 30 percent threshold that history shows is necessary for structural transformation. Capital markets should be strengthened to serve as the first line of resilience against global shocks, rather than the last to recover from them.
Equally, the integration of environmental, social, and governance (ESG) principles must become central to how African markets operate, ensuring that growth is both sustainable and equitable. Models such as Rwanda's Investment Clinic and Ibuka initiative demonstrate what is possible when inclusion and innovation meet; scaling similar approaches across the continent could open the doors of capital markets to thousands of SMEs and corporates.
Africa's future depends on a shared visionâ€"one grounded in inclusion, fairness, and participation. A continent of 1.4 billion people cannot afford markets where only a small fraction takes part. By democratizing capital, mobilizing domestic resources, and embedding sustainability at the core of development, Africa can chart a path where prosperity and resilience are not privileges for a few but a shared reality for all.
The author is the President of the African Securities Exchanges Association (ASEA) and Chief Executive Officer of the Rwanda Stock Exchange (RSE).
Pierre Celestin Rwabukumba
