Stock markets in several African countries are at risk as a result of the global financial crisis, and the implications for economic growth are worrying. Market capitalisation as a share of GDP – a better measure of the development of stock markets than changes in the share price index – has fallen more than 40% in some African economies, as shown in Figure 1. But does stock market development really matter for economic growth? People often tend to regard stock markets as glorified casinos. However, if supported by adequate policies and reforms, stock markets could well play a key role in fostering economic growth in African countries, helping the continent recover from the current crisis.
16 September 2009