Nigeria has proposed a series of regional capital market reforms to make it easier for investors to trade bonds across West Africa and unlock long-term funding for infrastructure and growth.

Finance Minister Taiwo Oyedele set out the proposals on Tuesday, 10 November, at the S&P Global Ratings Africa Summit in Lagos. He said fragmented capital markets across the region were limiting access to the long-term financing needed for infrastructure, with no single market deep enough to attract investment at the scale required.

A regional passport for issuers

At the centre of the plan is a regional “passport” regime. Under it, an issuer approved in one participating market would be able to raise capital across the others without seeking separate regulatory approvals in each country.

Nigeria is also advocating a unified investor identification system. An investor registered in one market would be able to buy bonds and equities across the region without repeating onboarding requirements, removing a practical barrier that currently slows cross-border trading.

Mr Oyedele said the proposals would build on existing initiatives, including the West African Capital Markets Integration Council, the African Exchanges Linkage Project and the Pan-African Payment and Settlement System (PAPSS).

Ten countries in the plan

The plan would cover ten countries: Nigeria and Ghana, plus eight francophone countries that share the CFA franc and a common central bank. They are Benin, Burkina Faso, Ivory Coast, Guinea-Bissau, Mali, Niger, Senegal and Togo.

Other proposals include creating a regional local-currency bond index and a credit enhancement facility to support cross-border infrastructure financing. A local-currency index would give investors a clearer benchmark for pricing bonds issued in the region’s currencies, while a credit enhancement facility could help infrastructure projects attract funding on better terms.

A $1 trillion market target

Nigeria aims to attain investment-grade credit ratings within three years, Mr Oyedele said. It is also targeting a capital market worth at least $1 trillion under a ten-year capital market plan, as part of efforts to make the country a more attractive destination for domestic and foreign investors.

The proposals are at the discussion stage. No timetable for agreement among the ten countries has been announced, and the reforms would need the support of regulators and exchanges across the region before a passport regime could take effect.

If adopted, the changes would matter well beyond Nigeria. West African governments face large infrastructure bills, from roads and power to ports, and deeper regional bond markets could give them a wider pool of investors to turn to, rather than relying mainly on their own domestic markets or on borrowing in foreign currency.