Get Guardian on GoogleAfrica’s capital markets recorded strong growth in 2025, with equity market capitalisation rising 49 per cent, more than twice the global growth rate, but the sector remains too shallow and concentrated to adequately support the continent’s development needs, the Organisation for Economic Co-operation and Development (OECD) has said.
In its Africa Capital Markets Report 2026, the OECD said African economies had demonstrated resilience despite global interest-rate pressures, energy price shocks and geopolitical uncertainty, with governments and businesses generally maintaining access to capital market financing.
However, it warned that the region’s financial markets remain significantly smaller and less liquid than those of other emerging markets, limiting their ability to provide long-term financing and cushion economies against external shocks.
The report estimated Africa’s domestic capital pool at more than $4.4 trillion, equivalent to only about 0.9 per cent of global financial assets, despite the continent accounting for around 2.7 per cent of global GDP.
It said the size of the domestic capital pool represented a major opportunity if governments and regulators could improve mechanisms for channelling savings into productive investment through deeper domestic and regional capital markets.
Nigeria among leading markets
Nigeria emerged as one of the continent’s strongest-performing equity markets in 2025, with market capitalisation increasing 77 per cent, compared with 21 per cent globally.
The OECD put Nigeria’s equity market capitalisation at about $147.6 billion, equivalent to 20 per cent of GDP. The country was also among the four markets — alongside South Africa, Egypt and Morocco — that together accounted for about 88 per cent of Africa’s total equity market capitalisation.
Despite the strong market performance, however, the report highlighted the limited use of African equity markets as a source of fresh corporate capital.
Only seven companies across Africa raised a combined $1 billion through initial public offerings (IPOs) in 2025, while 38 companies raised $5.7 billion through secondary equity offerings.
Nigeria raised no capital through IPOs during the year but companies raised about $914 million through secondary equity offerings, according to the OECD data.
The report said the increase in African market capitalisation was driven largely by higher valuations of existing listed companies rather than a substantial expansion in the number of listed businesses. Only seven new listings were recorded across Africa in 2025.
The OECD identified pension funds and insurance companies as potentially critical to the next phase of capital-market development, particularly because they can mobilise domestic savings and provide long-term financing to businesses and governments.
But it said institutional savings remained heavily concentrated in a few countries and largely invested in government securities.
Nigeria provides a significant example. Pension fund assets represented only about 6 per cent of GDP in 2025, compared with 84 per cent in South Africa. The OECD said Nigerian pension funds also had about 70 per cent of their assets in bonds and bills, most of them domestic government securities.
The concentration, it said, reflects both regulatory constraints and the limited supply of suitable investment opportunities in Nigeria’s domestic market.
The OECD noted that pension fund equity investment in Nigeria is subject to relatively low limits, ranging from five to 30 per cent depending on the type of fund, compared with Botswana, where pension funds can allocate up to 70 per cent to listed equities and an additional 20 per cent to unlisted equities.
It argued that as financial markets deepen, regulators should progressively allow greater portfolio diversification, provided this is supported by stronger risk management and supervisory frameworks.
The report also identified Africa’s large informal economy as a major obstacle to expanding the institutional investor base.
About 85 per cent of employment in Africa is informal or self-employed, compared with 58 per cent globally, limiting access to formal pension and insurance arrangements.
Nigeria has attempted to address this gap through its Contributory Pension Scheme and the Micro Pension Plan, introduced to extend retirement savings to informal workers and employees of very small businesses. However, the OECD said substantial coverage gaps remain.
It recommended expanding pension coverage among self-employed and informal workers, improving compliance and enforcement, encouraging sustained contributions and limiting premature withdrawals from retirement savings.
Corporate debt remains weak
Beyond equities, the OECD said African corporate debt markets remained underdeveloped, with companies still relying heavily on bank financing and syndicated loans.
The report argued that deeper corporate bond markets would provide businesses with alternative sources of long-term funding while reducing dependence on banks and external financing.
It also called for stronger corporate governance, improved disclosure, more effective regulation and greater investor participation to increase confidence in African capital markets.
For Nigeria, the OECD’s assessment points to an opportunity to move beyond strong stock-market valuations and develop a broader ecosystem capable of converting the country’s growing pool of domestic savings into long-term financing for businesses, infrastructure and productive investment.
Overall, the report said Africa’s capital markets had proved their resilience but remained “well below potential”, requiring policies that expand the supply of investable assets, diversify investors and improve market infrastructure.
