The latest issue of LA TENDANCE offers, through its “Analysis of the Moment” section, a focus on the secondary government securities market as a lever for the development of WAMU economies.

Over time, the government securities market has become a key option for financing the economies of the WAEMU region and is expected to continue absorbing the increasingly significant financing needs of Member States.

The initiatives developed by UMOA-Titres to support the development of the government securities market have notably resulted in a remarkable increase in the resources mobilised by States.

To support this momentum, UMOA-Titres’ actions also target the development of the secondary market for government securities issued by auction.

“Analysis of the Moment” provides a detailed review of the development of the secondary market through three analytical pillars:

• the short-term economic situation of the WAEMU region;
• the medium-term economic outlook for the region;
• and developments in the secondary market for government securities issued by auction.

In the short term, the region’s economic activity remained dynamic in the second quarter of 2022. GDP grew by +5.7% compared with the same period a year earlier, after +5.6% in the first quarter. This momentum was supported by all sectors of activity. Contributions to the Union’s GDP growth stood at 0.5 and 1.1 percentage points in the second quarter of 2022 for the primary and secondary sectors respectively, unchanged from the previous quarter.

As for the outlook, medium-term growth forecasts also remain favourable. After the acceleration recorded in 2021, growth is expected to slow in 2022 before rebounding to around 7.0% in 2023. This momentum would be driven in particular by the performance of the tertiary sector, whose contribution to growth is expected to rise from 3.1 to 3.4 percentage points between 2022 and 2023. The continued strong performance of economic activity across the Union would benefit from ongoing implementation of construction projects included in National Development Plans (NDPs), in a context of controlled health conditions across the region.

In addition, the evolution of the secondary market for government securities issued by auction has seen strong growth in transaction volumes, rising from CFAF 103.4 billion in 2014 to CFAF 1,583.4 billion in 2020, as well as an increase in the number of participants. Aware of the need to promote the development of the secondary market for government securities issued by auction in order to support the growth of amounts raised on the primary market, UMOA-Titres has implemented several initiatives aimed at developing this segment of the government securities market.

Among the flagship measures are the standardisation of securities issued on the government securities market and the Secondary Market Convention.

You can discover all the initiatives undertaken by consulting the 8th issue of LA TENDANCE.

UMOA-Titres also intends to establish a trading platform for the secondary market for government securities issued by auction. The project aims to:

• bring together supply and demand for securities on a centralised platform;
• display continuous prices for market makers;
• provide analytical tools and reporting to support decision-making.

Ultimately, this project should generate the data needed to improve the yield curve produced by UT and facilitate the proper functioning of the secondary market for government securities issued by auction.

Discover more by reading the full article in LA TENDANCE Webzine No. 8.