Trade-Related Financial Services > Sweden

Efficient Securities Markets Institutional Development (ESMID) Africa

Efficient Securities Markets Institutional Development (ESMID) Africa is a joint IFC and World Bank program funded by the Swedish International Development Cooperation Agency (Sida) to develop well functioning securities markets to finance priority sectors such as infrastructure, housing and microfinance. The objectives of the programme are:

  • To provide regional capital markets integration to help address market fragmentation facing many small developing countries and increase the pool of potential issuers and investors;
  • To improve the regulatory environment for issuing and trading bonds, thereby enabling more bond issues to come to market;
  • To provide pro-active, ‘hands-on’ transaction support for carefully selected non-government bond transactions, which are seen as having strong ‘demonstration’ impact and are likely to be successful as well to be replicable;
  • To strengthen the secondary market and related infrastructure for non-government bonds; and
  • To increase the demand and supply of securities products by increasing knowledge and capacity of market participants.

ESMID operates as a regional program in East Africa (covering Kenya, Uganda, Tanzania and Rwanda) and in Nigeria. ESMID adopts an innovative approach to bond market development that links efforts to strengthen the enabling environment (regulatory framework, market infrastructure, market participants, and regional integration) with supporting ‘demonstration’ bond transactions, which pave the way for more issues to come to market.

The Swedish support has enabled the realization of:

  • Harmonized regulations, institutions and infrastructure to create a single marketplace across the East African Community;
  • Increased knowledge and skills of market participants;
  • Improved regulations for primary and secondary markets of non-government bonds;
  • Increased transparency and efficiency in non-government bond transaction;
  • Increased issuance of local-currency non-government bonds as a result of ESMID transaction support;
  • Reviewed Assets backed Securities (ABS) regulations in Rwanda as requested by Capital Markets Authority (CMA) Rwanda and facilitated a workshop to discuss ABS regulations and transactions;
  • Support of the Retirement Benefits Authority in Kenya with the revision of investment guidelines for pension funds; and
  • Support of amendment to the licensing regulations in Kenya to allow other institutions such as banks to participate as Authorized Securities Dealers (ASD) in the bond market as part of the implementation of the hybrid bond market that included Over-the-Counter (OTC) trading of bonds.

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The FIRST Initiative

FIRST supports low- and middle-income countries in their efforts to strengthen financial sectors and ultimately achieve greater economic development and poverty alleviation. The program offers small scale and short-term grants for Technical Assistance (TA) projects that contribute to more stable, more efficient and more inclusive financial systems. Some of the sectors that are covered include: Banking, Insurance, Capital Markets, Other Nonbank Financial Institutions (NBFIs), Pensions, Financial Architecture, Crisis Preparedness, Access to Finance and Multisector/Others. The programme is based at the World Bank and is funded by Sida, the Department for International Development (DFID), the Federal Ministry for Economic Cooperation and Development (BMZ) the International Monetary Fund, the Luxembourg Ministry of Finance, the Netherlands Ministry of Foreign Affairs (MFA) and the State Secretariat for Economic Affairs (SECO).

FIRST assists recipients in preparing prioritized action plans addressing financial sector development and the sequencing of reforms (for example as a followup to Financial Sector Assessment Program (FSAPs)), and advise clients, especially in low-income countries, on the implementation of financial sector development programs. The program promotes coordination in the delivery of financial sector Technical Assistance (TA) and capacity building, drawing particularly on private sector expertise. FIRST supports research on and the dissemination of best practices and useful tools related to financial sector reform and development in low- and middle-income countries.

It works with international standard-setting bodies and other relevant partners to broaden the base of providers supporting countries’ efforts to implement standards and codes in accordance with FSAP and Report on the Observance of Standards and Codes (ROSC) recommendations and strengthen their financial systems. Sida’s support is specifically targeted to interventions in Sub-Saharan Africa.

This program has resulted into a growing recognition by donors and policy makers of the financial sector’s important role in creating stability, fostering economic growth, and supporting job creation—and thereby accelerating poverty reduction. FIRST’s quick response to client countries’ specific demands through TA projects has proven successful in addressing concrete, identified needs in financial sectors. FIRST has supported reform efforts that started by addressing pressing needs and built from there.

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Making Finance Work for Africa (MFW4A) Initiative

The Macroeconomic and Financial Management Institute of Eastern and Southern Africa (MEFMI) is a regionally owned institute currently with 13 member countries: Angola, Botswana, Kenya, Lesotho, Malawi, Mozambique, Namibia, Rwanda, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. The overall objective is to contribute towards human and institutional capacity development in the critical areas of macroeconomic and financial management for good governance and sustainable poverty reduction process. The specific objectives are:

(a) To build human and institutional capacity in macroeconomic and financial management of MEFMI member countries; (b) To facilitate the development and implementation of sound and stable macroeconomic and financial management policies, systems and databases; (c) To create awareness among officials of member states and other stakeholders of latest development in macroeconomic and financial management; and (d) To establish MEFMI as a sustainable centre of excellence in capacity building. As a result of these interventions, it is expected that there will be (i) strengthened institutional capacity in macroeconomic management in Central Banks and Ministries of Finance and Planning: (ii) strengthened institutional capacity in Financial Sector Management in Central Banks and Ministries of Finance and Planning; and (iii) strengthened institutional capacity in debt management in Central Banks and the Ministries of Finance and Planning.

As a Financial Cooperating Partner to MEFMI’s capacity building activities, SIDA provides funding to supplement member countries’ contributions. This support has assisted MEFMI member states to among others realize (i) improved policy delivery using financial programming frameworks in many countries and notably Tanzania, Kenya, Malawi and Uganda; (ii) a pool of regional experts has been developed comprising three accredited fellows and three graduate fellows from Kenya, Lesotho, Malawi, Zimbabwe and Tanzania. These experts are available and are effectively used in regional capacity building activities; (iii) all the 13 member countries have been able to operate a Real Time Gross Settlement system (RTGS); (iv) increased awareness as well as improved quality of growth and poverty reduction strategies in the region due to regional capacity building activities conducted jointly with the World Bank Institute; (v) countries have significantly improved Balance of Payment (BOP) methodology by achieving very high data quality in terms of coverage and periodicity in line with international data requirements - General Data Dissemination System (GDDS) and Special Data Dissemination System (SDDS).