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Speeches & Transcripts February 10, 2020

Capital Market Driven Development and the Role of the World Bank Group

Dear Prime Minister and Head of Government, dear Minister of Economy and Finance of Côte d’Ivoire, dear Minister of Finance of Benin and President of the WAEMU Council of Ministers, dear Ambassadors, dear President of CREPMF, dear President of the WAEMU Commission, dear Vice-Governor of BCEAO, and dear honorable guests and participants, let me extend my sincerest gratitude for your support of this important event.

Your hospitality is impeccable, and it is a pleasure for me to be here with all of you in this beautiful country. 

I would like to especially thank the CREPMF for its support and great partnership. You have been instrumental in developing WAEMU’s capital markets.

This event is a milestone for the WAEMU region and for the World Bank Group.  The turnout in this room is a testament to the interest and expectations of the future of WAEMU’s capital markets.

The agenda for the coming two days is packed with a wide spectrum of important topics, ranging from policy discussions on how to strengthen the sovereign debt market and the domestic investor base, to technical working sessions on credit risk, the innovations of fintech and the financing of key sectors, such as infrastructure, housing and SMEs.  

This will be an exciting time. I am delighted to be with you and to have the opportunity to discuss WAEMU’s capital markets development.

This is also a great opportunity to discuss ways to connect those to the regional and international investors of the world, so as to create a key channel of financing for the region’s investment needs.

The World Bank Group views local capital markets as critical to accelerating the sustainable economic growth needed to broaden prosperity and reduce poverty. Deeper and more efficient equity and debt markets can be more effective in helping to mobilize domestic savings, complementing traditional bank lending by fostering risk-taking and long-term investments.

Further, capital markets can protect economies from volatile fluctuations in capital flows and reduce the dependency on foreign debt. Capital markets also promote strong transparency and governance and they provide diversified sources of investment to savers and firms.

Looking ahead, capital markets need to play an even bigger role by mobilizing more private capital for key sectors with financing needs, including infrastructure, housing, SME and climate action projects.

Unfortunately, many developing countries cannot enjoy these benefits as their local capital markets remain small or inactive.

To help countries accelerate the development of their markets and realize the benefits offered, the World Bank Group created the Joint Capital Markets Program, or as we call it, J-CAP.

J-CAP was launched in June 2017. It differs from other initiatives as it mobilizes experts across the World Bank Group to deliver country-tailored advice and investments that can create a systemic market impact.

Developing capital markets successfully requires a supportive institutional, legal and regulatory framework for institutional and retail investors as well as the issuing companies and banks. For such frameworks to develop, a highly coordinated approach is needed. It requires a wide range of experts and involves a large group of different stakeholders.

These include central banks, ministries and regulatory agencies, market infrastructure providers, the private sector, and non-sovereign issuers and investors. In addition to the enabling framework, well-functioning capital markets require strong capacities in asset, risk, and debt management.

Lastly, J-CAP includes a powerful investment component as part of which the WBG aims to crowd-in issuers and investors by acting as an anchor investor, risk mitigator, or provider of local currency solutions.

J-CAP is focusing initially on six priority countries and one sub-region.

For Latin America, this is Peru, in Asia, these are Bangladesh, Indonesia and Vietnam and for Africa, these are Kenya, Morocco and the West African Economic & Monetary Union. 

I am proud to say that in the short period of time since JCAP was launched, we have seen significant progress across all seven priority countries in which J-CAP operates.

While I leave it to my colleague Sergio to tell some of the success stories of WAEMU, I would like to give you a flavor from those in other parts of the world . For example, in Peru we have been able to promote the financial inclusion of SMEs by investing in a factoring fund that provides them with urgently needed working capital. 

In Kenya and Morocco, preparatory work is underway to support infrastructure financing via project bonds. 

In Indonesia, we have successfully promoted the climate finance agenda by issuing a green local currency bond and use the proceeds to act as an anchor investor in one of Indonesia’s largest commercial banks.

J-CAP is an important strategic effort of the World Bank Group to support WAEMU’s economic development and poverty reduction.  We are thankful to the governments of Australia, Germany, Japan, Luxembourg, Norway, and Switzerland for their backing of J-CAP.  I very much look forward to the rich agenda ahead of us today and tomorrow. 

I also look forward to meeting many here today and hearing your insights and perspectives. 

I know this conference will be a huge success and I want to again thank our generous hosts here in Côte d’Ivoire.