- Seven IPOs, Four Dominant Markets: OECD Sets Out Africa’s Capital Challenge
African equity markets grew sharply in 2025, with market capitalisation rising 49% more than twice the 21% increase recorded globally.
But the rally has not resolved the deeper weakness facing the continent’s capital markets: they remain small, illiquid and concentrated in a handful of countries, limiting their ability to channel savings into long-term business investment.
The Organisation for Economic Co-operation and Development’s Africa Capital Markets Report 2026 estimates that the continent’s listed companies had a combined market capitalisation of US$836 billion at the end of 2025, equivalent to 43% of regional gross domestic product.
South Africa, Morocco, Egypt and Nigeria accounted for 88% of that total. The rise in market value therefore sits alongside a narrow geographic base and a limited pool of listed companies.
That distinction matters. A rising market capitalisation can reflect stronger share prices and improved investor sentiment, but it does not by itself show that companies are raising enough new capital to build factories, expand services or hire workers.
The report records US$6.7 billion raised through equity in Africa in 2025, including about US$1 billion from initial public offerings and US$5.7 billion from secondary offerings. Just seven companies completed IPOs during the year.
The composition of equity fundraising points to a market where existing listed businesses were better able to access capital than new entrants.
Secondary offerings can support companies’ expansion, but a low number of IPOs limits the arrival of new industries and issuers.
That narrows the range of investment opportunities and makes it harder for savings to reach businesses that are not already established in public markets.
The gap between market performance and market depth is central to the OECD’s assessment. It says African markets “remain small and illiquid, with concentrated ownership”.
Corporate debt financing has increased, but companies still rely heavily on syndicated loans, while corporate bond issuance remains low relative to other regions. Capital markets are consequently underused as a source of long-term finance, weakening their contribution to economic growth and resilience.
This matters especially when companies need funding over longer periods than banks may be willing to provide. Bond markets can help firms borrow directly from investors and match financing with the long life of infrastructure, equipment and other investments.
But when issuance is thin and trading is limited, borrowers face a smaller investor pool and investors have fewer opportunities to buy and sell securities. The market then struggles to serve as a reliable financing channel, even when economic conditions are improving.
The OECD says foreign-currency borrowing costs generally declined and credit ratings improved among major sovereign issuers, including Egypt, Nigeria and South Africa. Domestic-currency issuance is also growing.
Those trends could create a favourable environment for deeper local markets, but they do not remove refinancing risks.
The report warns that concessional financing is declining and some governments are issuing shorter-term debt, leaving them exposed to the risk of having to refinance more frequently.
For governments, the challenge is to develop domestic debt markets while managing that risk. The OECD points to predictable public debt issuance and liquid benchmark bonds as ways to improve price discovery and provide reference rates for corporate borrowers.
A government bond curve can help investors price company debt and give local markets a foundation for longer-term financing. But short maturities and unpredictable issuance can have the opposite effect, reinforcing the preference for short-term instruments.
The report also identifies a shortage of investable assets. High listing costs and regulatory requirements can discourage companies from seeking public equity, particularly where firms are small or still developing their governance systems.
This creates a policy question: how can rules protect investors and ensure transparent reporting while remaining proportionate to the size and capacity of prospective issuers?
State-owned enterprises are another potential source of new listings. The OECD notes that most state-owned assets remain unlisted, giving governments room to increase their participation in capital markets.
Listing some state-owned companies could widen the supply of shares, broaden public ownership and impose stronger reporting and governance requirements. But the value of such listings would depend on transparent valuation, credible oversight and clear plans for how the proceeds are used.
Investor concentration is a further constraint. Pension and insurance assets are concentrated in only four countries, while portfolios in some major markets are heavily weighted towards government securities.
The report argues that expanding pension and insurance coverage could build a larger base of long-term domestic investors and mobilise more savings for investment.
That change will take time: retirement systems need broad participation, sound supervision and investment frameworks that allow funds to diversify without exposing savers to poorly managed risks.
Digital finance could help bring more retail investors into the market and reduce some of the friction in trading and settlement. The OECD points to modern trading and post-trade infrastructure, as well as digital investment platforms, as ways to broaden access and improve efficiency.
It also stresses the need for financial literacy, investor protection and cybersecurity. Wider access without reliable safeguards could damage confidence, especially if retail investors lack the information or support to assess risks.
The report’s recommendations link market growth to the broader quality of economic governance. Macroeconomic stability, credible regulation, strong legal frameworks and effective public institutions help build investor confidence.
Better corporate governance and transparency can make companies more investable, while stronger supervision can protect market integrity. These foundations matter because capital will not flow sustainably towards new issuers if investors doubt the quality of company information or the fairness of enforcement.
Africa’s 49% market-capitalisation increase is evidence of momentum, but the region’s share of global financial assets remains only 0.9%, compared with 2.7% of global GDP. These figures measure different things, but together they underline the gap between the continent’s economic weight and its position in global finance.
The US$836 billion value of listed companies, concentrated in four markets, reinforces the same point: the expansion is real, yet uneven.
The next test is whether the rally can be converted into broader access to capital. More listings, deeper bond markets, stronger domestic pension and insurance pools, and better public debt management could help African businesses rely less on bank loans and short-term funding.
The key measure of progress will not only be how much market value rises, but whether companies across more countries and sectors can raise affordable long-term finance to invest and grow.
