Nigeria proposes unified West African bond market

A new initiative by Nigeria aims to establish a unified capital-market system linking bond markets across West Africa, enabling 10 nations to jointly facilitate funding for governments and corporations. The plan would integrate Nigeria, Ghana, and eight CFA-franc-using countries, all of which share a central bank, into a cohesive financial framework.

Taiwo Oyedele, Minister of Finance, outlined the proposals at the S&P Global Ratings Africa Summit in Lagos. He argued that fragmented financial markets across the region are restricting the ability of countries to attract investment for major development projects.

The proposed framework includes a regional passport regime, enabling issuers approved in one market to raise capital in other member countries without separate regulatory approvals. A unified investor identification system would also allow investors to purchase bonds and equities across participating markets without repeating registration procedures.

Oyedele proposed connecting regional trading, settlement, and payment infrastructure to allow securities transactions to settle directly in local currencies. This would reduce reliance on the US dollar for cross-border transactions. He also suggested creating a regional local-currency bond index and a credit-enhancement facility to support infrastructure financing.

Existing initiatives, such as the West African Capital Markets Integration Council and the Pan-African Payment and Settlement System (PAPSS), provide a foundation for deeper integration. Oyedele said the task now is to join these pieces together to address the limitations of individual markets, which are not sufficiently deep to attract long-term investment.

The proposals align with Nigeria’s broader capital-market ambitions, including targeting investment-grade credit ratings within three years and a capital market worth at least $1 trillion. The government wants to make Nigeria a more attractive destination for domestic and international investors.

The proposed regional arrangement would give issuers access to a wider pool of investors while reducing regulatory and operational barriers to cross-border investment. Oyedele’s proposals remain at the planning stage, with participating countries yet to align their regulatory systems to establish the regional framework.

In similar regional integration efforts, the Economic Community of West African States has been working to promote economic cooperation and integration among its member states. Nigeria’s proposal could potentially build on this existing framework, leveraging the strengths of individual markets to create a more robust and attractive regional capital market.