Irving, JacquelineManroth, Astrid2012-03-192012-03-192009-03-01https://hdl.handle.net/10986/4076With the exception of South Africa, local financial markets in sub-Saharan Africa remain underdeveloped and small, with a particular dearth of financing with maturity terms commensurate with the medium- to long-term horizons of infrastructure projects. But as financial market reforms gather momentum, there is growing awareness of the need to tap local and regional sources. Drawing on a comprehensive new database constructed for the purpose of this research, the paper assesses the actual and potential role of local financial systems for 24 African countries in financing infrastructure. The paper concludes that further development and more appropriate regulation of local institutional investors would help them realize their potential as financing sources, for which they are better suited than local banks because their liabilities would better match the longer terms of infrastructure projects. There are clear signs of positive change: private pension providers are emerging in Africa, there is a shift from defined benefit toward defined contribution plans, and African institutional investors have begun taking a more diversified portfolio approach in asset allocation. Although capital markets remain underdeveloped, new issuers in infrastructure sectors-particularly of corporate bonds-are coming to market in several countries, in some cases constituting the debut issue. More than half of the corporate bonds listed at end-2006 on these countries' markets were by companies in infrastructure sectors. More cross-border listings and investment within the region-in both corporate bonds and equity issues-including by local institutional investors, could help overcome local capital markets' impediments and may hold significant promise for financing cross-country infrastructure projects.CC BY 3.0 IGOACCESS TO BANKACCOUNTINGASSET HOLDINGSAVAILABILITY OF BANK CREDITBALANCE SHEETBANK ASSETSBANK BONDSBANK CREDITBANK DEPOSITSBANK FINANCINGBANK LENDERBANK LENDINGBANK LOANSBANKING SECTORBANKING SECTOR ASSETSBANKING SYSTEMSBILATERAL TRANSACTIONSBOND ISSUESBORROWERBROAD MONEYCAPITAL FLOWCAPITAL FLOWSCAPITAL MARKETCAPITAL MARKET DEVELOPMENTCAPITAL MARKETSCAPITAL MARKETS DEVELOPMENTCENTRAL BANKCENTRAL BANKSCOLLATERALCOMMERCIAL BANKCOMMERCIAL BANK LENDINGCOMMERCIAL BANKSCOMMERCIAL CREDITCORPORATE BONDCORPORATE BOND MARKETSCORPORATE BONDSCREDIT DISCIPLINECREDIT RATINGCREDIT RATINGSCREDIT RISKCREDIT RISK EVALUATIONCREDITORSCREDITWORTHINESSCREDITWORTHY BORROWERSCURRENCYCURRENCY MISMATCHDEBT BURDENSDEBT FINANCINGDEBT RELIEFDEMAND FOR CREDITDEPOSITDEPOSIT MONEY BANKDEPOSIT MONEY BANKSDEPOSITSDEVELOPING COUNTRIESDEVELOPING COUNTRYDEVELOPMENT BANKDEVELOPMENT FINANCEDIVERSIFIED PORTFOLIODOMESTIC CAPITALDOMESTIC CAPITAL MARKETSDOMESTIC DEBTDOMESTIC FINANCIAL MARKETSEMERGING MARKETEMERGING MARKET ECONOMYEQUITIESEQUITY ISSUESEQUITY MARKETSEXPENDITUREEXPORTERSEXTERNAL DEBTFINANCESFINANCIAL CRISISFINANCIAL DEVELOPMENTFINANCIAL INSTITUTIONSFINANCIAL INSTRUMENTSFINANCIAL LIBERALIZATIONFINANCIAL MARKETFINANCIAL SECTOR DEVELOPMENTFINANCIAL SYSTEMFINANCIAL SYSTEMSFISCAL POLICIESFOREIGN CURRENCYFUND MANAGERSGOVERNMENT BONDGOVERNMENT BOND MARKETSGOVERNMENT BONDSGOVERNMENT BORROWINGGOVERNMENT GUARANTEESGOVERNMENT SECURITIESGROSS DOMESTIC PRODUCTHOLDINGSHOLDINGS OF GOVERNMENT SECURITIESINCOME LEVELSINFLATIONINFLATION RATESINFRASTRUCTURE DEVELOPMENTINFRASTRUCTURE FINANCEINFRASTRUCTURE FINANCINGINFRASTRUCTURE INVESTMENTINSTITUTIONAL INVESTORINSTITUTIONAL INVESTORSINSTRUMENTINSURANCEINSURANCE COMPANIESINSURANCE COMPANYINSURANCE POLICIESINTEREST RATESINTERNATIONAL BANKINTERNATIONAL BANKSINTERNATIONAL DEVELOPMENTINTERNATIONAL FINANCIAL STATISTICSINVENTORYINVESTINGINVESTMENT ALLOCATIONINVESTMENT ALLOCATIONSINVESTMENT ALTERNATIVESINVESTMENT BANKINVESTMENT CLIMATEINVESTMENT INSTRUMENTSINVESTMENT PORTFOLIOINVESTMENT STRATEGYINVESTOR BASEISSUANCELIQUIDITYLOANLOAN MATURITIESLOAN PORTFOLIOSLOCAL BANKLOCAL BANKSLOCAL CAPACITYLOCAL CURRENCIESLOCAL CURRENCYLOCAL FINANCELOCAL FINANCIAL MARKETSLOCAL INFLATIONLOCAL INFRASTRUCTURELOCAL MARKETLONG-TERM FINANCEMACROECONOMIC CONDITIONSMACROECONOMIC DATAMACROECONOMIC POLICIESMACROECONOMIC STABILITYMARKET ANALYSTSMARKET CAPMARKET CONDITIONSMARKET REFORMSMARKET RETURNSMATURITIESMATURITYMAXIMUM MATURITIESMAXIMUM MATURITYMONETARY FUNDMORTGAGEMORTGAGE LOANSMUTUAL FUNDSNONPERFORMING LOANSOUTSTANDING BANK LOANSOUTSTANDING CREDITOUTSTANDING LOANSPAYMENT OF INTERESTPAYMENT SYSTEMSPENSIONPENSION ASSETSPENSION FUNDPENSION FUND ASSETPENSION FUND ASSETSPENSION FUNDSPENSION SYSTEMPENSION SYSTEM REFORMSPENSION SYSTEMSPENSIONSPOTENTIAL INVESTORSPRICE RISKPRIVATE BANKPRIVATE CREDITPRIVATE FINANCINGPRIVATE INVESTMENTPRIVATE INVESTORSPRIVATE SECTOR CREDITPUBLIC BORROWINGREAL INTERESTREAL INTEREST RATESREGULATORY FRAMEWORKSRETURNSRISK EVALUATIONRISK PREMIUMSSAVINGS INSTRUMENTSSAVINGS RATESAVINGS RATESSECURITIESSECURITIES EXCHANGESSHAREHOLDERSHORT-TERM BANK DEPOSITSSHORT-TERM FINANCESHORT-TERM GOVERNMENT SECURITIESSTOCK EXCHANGESUPERVISORY AUTHORITYTELECOMMUNICATIONSTERM DEPOSITSTIME DEPOSITSTIMELY PAYMENTTRANCHETRANCHESTRANSACTIONTRANSACTION COSTSUNDERDEVELOPED CAPITAL MARKETSVALUE OF COLLATERALVARIABLE RATESWorld Bank10.1596/1813-9450-4878