In this paper, we present some policies and strategies to address the ecological deficit in the member countries of the Economic Community of West African States (ECOWAS). We first present an overview of the biocapacity of the various countries, the ecological footprint and then the ecological deficit. The aim of this overview is to highlight the differences that may exist and to explain these differences from the point of view of the structure of the economies analyzed. Then, we estimate a simple model (per country) to highlight the effects of some economic and environmental factors on the ecological footprint. We end with policy proposals and strategies to reduce the ecological footprint at the country level. These policies include the adoption of clean energy in production and consumption chains in order to reduce greenhouse gas emissions, and the promotion of green financing to support initiatives aimed at the energy transition, such as the green bonds issued by the African Development Bank (AfDB) since October 10, 2013. Beyond these policies, States must clearly include the "sustainable economy" component in their strategic development plans. Regional coordination of actions is also necessary for more efficiency in the management of the ecological issue in the ECOWAS region.
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The WAMU auction market is a market on which the eight (08) member states of this zone issue debt securities to mobilize financial resources to finance their budgets.
In this study, we review the evolution of yields in this market from 2018 to the first half of 2021 (H1 2021).
Sources: compiled from auction results
Weighted Average Rate (WAR): corresponds to the actuarial rate of return obtained by keeping the bond until maturity.
TMC=i=1nTi*OiO where Ti is the interest rate of the bid Oi ; O the total value of the bids; and n the total number of bids.
Coverage Ratio (CR): the rate at which the amount tendered is covered by bids. TC=Montant total des soumissions recueilliesMontant émis
Since 2020, we have been witnessing a revolution and a normalisation of the WAMU government securities auction market. Indeed, since 2019, this market has been recording a continuous decline in yields that has become more and more pronounced in recent months, with the lowest yields in the market's history.
On the 1-year maturity, the average weighted average yield in the WAEMU fell from 6.20% in 2018 to 4.16% in the first half of 2021. For the 5-year maturity and over the same period the yield fell from 7.30% to 5.93%.
If on the 7-year maturity, the yield went up between 2018 and 2020, this could be explained by the fact that this maturity remained the longest maturity until 2020. But in 2021 the yield on the 7-year maturity fell from 6.48% in 2020 to 6.12% in H1 2021.
In addition, issues with longer maturities are more regular and the yields on securities, even though they are falling, now move in line with their maturity.
While the longest maturities available on the market in 2019 were those of 5 years (7-year securities being rare: 05 issues in total), since 2020 issues of 7-year maturity have multiplied to cover 7 of the 8 WAMU member countries. In addition, 10-year securities have been issued since 2020 (3 issues) and are becoming more regular in H1 2021.
Similarly, while issues with lower maturities were often more remunerative than those with higher maturities, since 2020 this trend has become more normal. Thus, in 2020 and H1 2021, yields are an increasing function of maturities.
While this trend of continuously declining market rates can be explained by the strong demand for securities, as reflected in bidding coverage rates, the improvement in coverage rates even for longer maturities would be supported by certain factors.
The fall in market rates is an advantage for issuing States which are asking to mobilize longer resources at competitive costs. The States with the help of the WAMU Securities Agency are therefore working towards this end. Indeed, the States of Côte d'Ivoire, Senegal and Benin have already been soliciting the international debt market for some years now for very long maturities (over 20 years) at lower interest rates than those offered by the regional market, and with larger volumes.
This recourse to the international market does not favour the promotion of the regional market, in the sense that the mobilization of a significant volume of debt on the international market limits the recourse to other borrowings to respect the debt ratio. The decline in rates on our market and the greater possibility of mobilizing long resources with significant volumes would promote the development of the regional market.
Some measures taken by the BCEAO since 2020 also contribute to the fall in rates. With the advent of the Covid 19, the need for financing of States has increased to cope with the consequences of the pandemic. Thus, instruments such as Covid 19 Bonds and Recovery Bonds have been structured, with the will of the BCEAO to support the States in mobilising resources at low cost. Thus, a special 3-month refinancing window was set up to enable banks to refinance the Bonds. It should be noted that WAEMU banks intervene on the market on their own account and finance more than 90% of the issues on the market. Another special refinancing window called the "revival window" for revival Bonds was set up to refinance Bonds for a minimum period of 6 months.
The continued decline in interest rates on the securities market may result in the withdrawal of individual investors or legal entities other than banks. These investors are looking for better yields and prefer shorter maturities. However, the subsequent reduction in interest rates on traditional savings products could slow the withdrawal of these investors.
In any case, retail investment in the government securities market remains low.
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African stock markets are struggling to keep up with the continent's development. This situation is due to several factors, notably the timid interest of the private sector, the absence of privatization, and competition from the major world stock exchanges.
Yet almost all economic policies adopted by emerging and developing countries to accelerate their growth focus on improving the mobilization of long-term resources, which are usually found in capital markets.
At the end of 2019, the African continent had 32 stock exchanges, with about 2,000 listed companies, compared to 5,899 in China, for a market capitalization of $1.4 trillion, or 60% of the continent's GDP, compared to 82.89% for China. In addition to these data, there are profound differences between the markets. Daily trading on the continent's leading stock exchange, Johannesburg, which has a capitalization of over $1 trillion, amounts to $13.8 billion, which is about the same as the total capitalization of the Mauritius Stock Exchange in Port Louis ($14.9 billion). All these indicators reflect the insufficient contribution of African markets to the development of the continent due to their low utilization. Moreover, despite the many advantages of going public (capital gains on sale, cessation of subsidies, improvement in tax revenues, popular shareholding, etc.), it is not favored by private companies on the continent when they seek to raise long-term capital, with the exception of a few large companies in the financial or telecommunications sector (Ecobank, MTN, BMCE Bank of Africa, Vodacom, Safaricom, etc.).
It is also said that the continent's stock exchanges are neither liquid nor deep. They would therefore not attract African companies, which would prefer London or New York. But the liquidity and depth of a capital market cannot be decreed. They are created within a virtuous circle: admission of new companies to the list, financial information and investor education, liquidity, attraction of new investors, market depth, admission of new companies to the list. Africa, with its potential of corporate investors and the development of its middle class, a new category of individual investors, who should be informed and educated financially, can succeed in setting up this mechanism. The continent's development therefore depends on the integration of its banking systems and capital markets and the mobilization of the long-term resources needed to finance infrastructure and industrialization.
Source: Jeune Afrique, 2019
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