Apply for Capital Markets Development Trust Funds – Most African financial markets are small and deeply fragmented, resulting in the overall financial sector being dominated by banks. Most importantly, the state of Africa’s capital markets is impeding the mobilization of local currency savings.
Furthermore, capital markets development in Africa is limited by the absence of a critical mass of listed and tradeable securities, too few participant issuers, investors, intermediaries, etc., lack of product diversity, weak regulatory structures, inadequate financial infrastructure, poor risk and price identification methods, limited activity in the secondary markets, among other constraints.
Apply for Capital Markets Development Trust Funds – These challenges have resulted in ineffective capital markets, limiting their ability to address the financing needs of Africa’s development agenda.
Against this backdrop, the African Development Bank Group approved the establishment of the Capital Markets Development Trust Fund (CMDTF) in November 2019 with the Ministry for Foreign Trade and Development Cooperation of the Netherlands(link is external) and the Ministry of Finance of Luxembourg(link is external) as the initial donors to roll out the Phase I (2020-2022) in West Africa exclusively.
CMDTF objectives in West Africa
Apply for Capital Markets Development Trust Funds – As a multi-donor trust fund hosted and managed by the African Development Bank, the overall objective of the CMDTF is to support the establishment of well-functioning capital markets that can efficiently mobilize and allocate savings to fund credit needs of economic agents and catalyse the continent’s development while reducing intermediation costs. This will be achieved through 2 pillars:
Theory of change outcomes
To design impactful and transformative projects, the theory of change of the CMDTF covers the four specific outcomes as presented in the following chart:
- Stock exchanges
- Local/regional capital markets authorities
- Institutional investors and their regulators
- Central banks
- Regional Member Countries, ministries of finance, Debt Management Offices
- African government institutions involved in capital markets development
- Ministry of regional integration
- Regional Economic Communities/regional and continental bodies, such as WAEMU (West African Economic and Monetary Union), ECOWAS (Economic Community of West African States), WAMI (West African Monetary Institute), AfCFTA (African Continental Free Trade Area) Secretariat.
- Capital markets soft/hard infrastructure development through technical assistance to modernize the functioning of targeted client/recipient in West Africa.
- Workshops and seminars to build consensus/understanding/skills among stakeholders for appropriate policy, regulatory and institutional reforms.
- Policy, regulatory and institutional reforms to assist with designing and implementing specific reforms, including studies, roadmaps, and masterplans.
- Training to strengthen capacity of targeted clients in the design and execution of capital markets, development-related projects and programs.
- Knowledge products and services i.e. sector studies, establishment of trade knowledge platforms, market information systems, dissemination of best practices in the field of capital market development, etc.
How to submit your proposal
Apply for Capital Markets Development Trust Funds – There are three main options through which the CMDTF Secretariat sources projects:
- Project identification by the Bank’s investment officers through regular interactions with African capital market stakeholders. Officers will guide them towards producing comprehensive proposals;
- Demand-led proposals – To submit your proposal, use the request for funds form in English or the request for funds form in French
- Call for proposals – When resources are available, the Secretariat will launch a call for proposals using various communication channels such as the African Development Bank website, social media, etc.
- Project with capital market stakeholders as the final beneficiary may also be initiated by the Oversight Committee and other Bank sectors.
The pilot phase (2020-2022) is limited to West Africa but the Secretariat assesses all proposals submitted for future consideration.