Financial sustainability and regulatory proportionality of African capital market regulators

In Africa, capital market regulators are tasked with a dual mandate – both developing and regulating the market. This raises the difficult question of how a regulator might play a dual role, including determining the right strategic focus, activities and capacity to do so effectively. This is particularly important in resource-constrained economies where the regulator operates with a limited team and budget. Its functions must be delivered with constrained financial resources and managed in a way that is proportional to the market context.  The White Paper on Financial Sustainability and Regulatory Proportionality of Capital Market Regulators in Africa proposes an analytical framework to assess the state and stage of a country’s financial market, which guides how the capital market regulator should implement its mandate, focus areas and engage policymakers on appropriate funding models.

In addition, limited resources call for careful identification of regulatory gaps that need to be bridged by capital market regulators to enable them to achieve both their regulatory and developmental mandates.  Gleaning from institutional capacity assessments that we have supported in eight regulators in Africa from 2015 to 2022, the Institutional Capacity Assessment Toolkit for Capital Markets Regulators in Africa is a reference guide to equip regulators in systematically identifying their capacity gaps and developing appropriate institutional strengthening programs to address them.