Antecedentes Internacionales

The determinants of bond market development, using 26 African economies and 49 firms listed on various exchanges on the continent, are established and explored in this study. The econometric model for bond market performance determinants in African emerging economies employed accounts for the unique nature of African emerging markets. Analysis of a combination of data from various databases and annual reports of African firms suggest

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that from a macroeconomic perspective, inflation, central government debt, GDP, external debt, GDP per capita and fiscal balance have an effect on local bond market development in African economies. Furthermore, political unrest, governance, religion, former colonial power and culture are institutional factors that exert a significant influence on local currency bond market performance. The study finds that firm level factors that significantly affect bond market performance, from the demand perspective are firm risk, size, profitability and age.

Bond markets in Africa have made wide strides towards increased efficiency and liquidity over the last decade. Liquid liabilities as a share of GDP in Africa as a whole, have increased from approximately 32% to 53% between 2005 and 2013. Most notable is the increase in liquid liabilities in Algeria and Cote d’Ivoire with increases of approximately 4% and 11% respectively. This translates into increased bank capital available to firms requiring funding. Financial development, denoted by domestic credit to the private sector continues to appear promising in African economies. The prevalence of banks in the continent’s financial system persists and interest rates remain high with the exception of South Africa where interest rates are comparable to more developed countries such as Canada. The relatively depressed private credit to GDP and liquid liabilities to GDP reflect the small size of African banks in comparison to other emerging and more developed economies. The study attributes the deficient intermediation to weak enforcement of creditor rights and the relative lack of credit ratings. Trading platforms in African securities exchanges have progressed over the last decade. Securities exchanges vary from simple intraday systems in Uganda to more advanced trading systems in Nigeria where margin trading and the employment of the NASDAQ-QMX-X Stream Trading System is now in use. Faster payment, delivery of securities and more efficient clearing and settlement systems may have contributed to the increased performance in African trading platforms. The development of regional exchanges such as the Bourse Regionale Des Valeurs Mobiliers (BRVM) in Abidjan and the Bourse Régionale des Valeurs Mobilières d'Afrique Centrale (BVMAC) in Libreville has enabled a number of Francophone West and Central African countries that do not have functioning exchanges to trade bonds and stocks. Such arrangements have also made

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available additional platforms other than country securities exchanges to boost the output of capital markets.

Credit ratings of African countries also indicate improvements. Angola, Cameroon and Zambia which previously, were not rated by credit agencies were rated in 2014. Kenya’s rating progressed from B, BB to B1, B+, B+ from the three most widely accepted credit rating agencies. South Africa, however, dropped from a rating of A in 2010 to B in 2014. Compared to other emerging markets, and developed economies, African economies have far less domestic credit to private sector ratios; for example, the relatively developed Egyptian economy had an average ratio of 38 between the 2005 and 2013 period, while Japan and Brazil had respective ratios of 182 and 53 during the same period. Again, the only economy that is comparable with the more developed economies is South Africa. The firm information also suggests interest rates in Africa may be an inhibiting factor to bond market issuance. Countries that do not issue bonds have very low leverage, which may be due to the exorbitant costs in banking in most African countries. A further congruence between Africa and the emerging country sample is the variability and volatility among macroeconomic variables. The standard deviation and variance of African economies are consistently greater than in other emerging economies. The GDP per capita in the latter group is, however, more than double that of the African sample.

The sample suggests that growth rates of firms domiciled in countries with strong institutions perform better than those with weaker institutions. It is worthy to add that institutions have played an essential role in firm growth in the sample. A country’s institutional condition is important in so far as companies that operate in robust regulatory environments with sound enforcement of property rights and neutral justice function better than those with weak institutions. Specifically, legal systems and measures that decrease agency costs such as shareholder protection are important drivers of firm growth.

The overall outcomes of the analyses of firms’ habits regarding bond issuance suggests that bond issuers are more likely to borrow from banks than the firms which do not issue. Firms

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that issue debt are found to have more risk than those which do not. Non-issuers have higher profitability and much lower growth opportunities than issuers. An important finding is the statistically significant difference between firms that issue bonds and non-issuers. Corporate bond issuers, from the sample, have higher risk, lower leverage, larger size and more growth opportunities, rely less on assets and measure lower profitability and age than firms that do not issue bonds. Risk and size of the firm exert the highest influence on the decision to issue bonds. Furthermore, the results imply that the desired form of financing for firms in African economies is equity. This finding supports the idea that high interest rates on bank loans and inhibitive requirements prevent many firms from using bank financing. Results also suggest that dominance of the banking sector and underdevelopment of bond markets impel firms to utilize equity, which may not always be the most efficient financing channel, especially given that most African markets do not yet have well- functioning and efficient equity markets. Based on the broad review of the literature and empirical results of the study, detailed policy recommendations suited to the African context are discussed below.