Gov’t urged to lead in building long-term yield curve

At the inaugural West Africa Bond Capital Markets Conference, Mr. Pascoe spoke about the need for stronger government leadership. This conference was organized with the Ghana Stock Exchange (GSE). He emphasized the importance of building a resilient fixed income market in the region.

“For markets to develop, there must be predictability and trust,” he stated. He urged governments to establish a longer-term yield curve. Currently, many West African economies focus on short-term instruments.

This focus limits broader market participation. It also leaves corporate issuers without necessary pricing signals for long-term capital raises. “Issuance is currently focused on short-term activities,” he explained.

Since being excluded from international markets, the Treasury relies heavily on short-term instruments. This reliance has driven Treasury bill rates up significantly. For example, in early October 2024, the 91-day T-bill reached 25.20 percent.

Despite needing to borrow around GH¢200 billion from short-term markets, attempts at rate correction have intensified. In March 2025, total bids hit an all-time high of GH¢20.49 billion but only GH¢9.634 billion were accepted by the government.

By mid-April, rates for various tenors dropped significantly—15.65 percent for 91-day bills and more for others. Concerns arose about real returns and potential capital flight affecting the cedi's value.

However, Mr. Pascoe noted signs of macroeconomic normalization in Ghana. A downward trend in interest rates presents an opportunity for governments to extend the yield curve and create benchmark issuances.

These benchmarks could help corporate issuers price their bonds effectively. “Government should lead in establishing a yield curve,” he said.

Mr. Pascoe also highlighted the need for stronger domestic participation in bond markets. Attracting responsible international capital can complement local efforts.

He recommended reforms to improve market functionality, including developing a functional repo market. This would allow banks to borrow against bond holdings and enhance liquidity.

“A well-functioning repo market is crucial for advanced bond markets,” he argued. It would promote liquidity and support secondary market trading as well.

Regional regulators are working on the West Africa Capital Markets Integration Project now too. This project aims to enable cross-border trading among Ghana, Nigeria, and eight Francophone countries.

Abena Amoah, Managing Director of GSE, stressed developing strong domestic bond markets is urgent as access to international capital tightens. Robust local markets empower citizens to invest in infrastructure projects that bridge financing gaps.

“We want West Africans to have opportunities for profitable investments,” she said while emphasizing stable macroeconomic conditions are vital for attracting investors.

Ms. Amoah mentioned GSE’s initiatives like green bond guidelines and digital platforms improving retail investor access as part of building a resilient financial ecosystem.

Through collaboration with Nigeria and BRVM under this project, GSE aims to enhance liquidity by enabling cross-border trading of securities.

Dr. Emomotimi Agama from SEC Nigeria acknowledged that West Africa has room for improvement but sees many opportunities ahead. He reiterated mobilizing long-term capital through bonds is critical for national development goals.