A plan by 15 West African nations to link up their debt markets is on track to become a reality by the end of 2023, part of a wider push toward great integration for their economies and finances, a market regulator said.

The aim is to open up the debt auctions of individual countries to investors from across the Economic Community of West African States, or Ecowas, as the bloc is called, Daniel Ogbarmey Tetteh, director general of Ghana’s Securities and Exchange Commission, said in an interview.

To allow that to happen, regulators and stock exchanges from across Ecowas are working to put in place a passport system that would allow broker-dealers to trade across the different markets, he said. The idea is that by giving member nations access to a wider pool of lenders, they’ll be able to bring down their borrowing costs.

“One major advantage is that you get a bigger base of investors bidding for a country’s bonds,” Tetteh said.

The plan is part of a wider drive for greater economic integration by Ecowas, a trading bloc with a combined population of 380 million people. The group has been working to set up a common currency — called the eco — for more than two decades, although the pandemic has forced it to push that project back to 2027.
Key to the success of the debt-market plan will be making sure that the countries are on an equal footing in terms of systems and processes, Tetteh said.

Lagging Behind
While Nigeria, Ghana and the eight French-speaking members of Ecowas have well-developed stock exchanges and regulatory mechanisms, Liberia, Sierra Leone, Guinea and The Gambia still lag behind, he said. The African Development Bank is providing grants to help those countries improve their market infrastructure.

Prices for the debt of the different Ecowas nations show how much terms of borrowing vary across the region. Yields on government local debt maturing in 10 years range from 5.9% in Ivory Coast and 12.7% in Nigeria to 19.7% in Ghana, according to data compiled by Bloomberg.

The long-term goal is to set up one virtual secondary market for bonds and stocks, said Tetteh. Cross-border deals will be done through convertible currencies such as dollars, pounds and euros until the region creates its own common currency, Tetteh said.