and Senegal accounting for two-thirds of the total $548 million in corporate bonds outstanding by infrastructure providers.

With medium- to long-term bank financing costly and scarce, and macroeconomic conditions stabilizing in a number of the focus countries, corporate bond financing is increasingly seen as a viable alternative by firms, including those operating in infrastructure sectors. Further progress is needed in many countries, however, in developing a benchmark for pricing in the form of a well-established yield curve, maintaining low and stable inflation rates and interest rates, improving corporate governance and transparency, developing a larger and well-regulated institutional investor base, putting in place credible rating agencies, and increasing awareness of prospective issuers and investors.

With the exception of the Johannesburg Stock Exchange, the stock exchanges of the focus countries have a small number of equity listings (particularly by local companies), very low ratios of market capitalization to GDP, and low turnover ratios. They have not yet contributed substantially to efficient resource mobilization and allocation. Although equity markets tend to be larger and somewhat more developed than bond markets across the countries, companies providing infrastructure services have accounted for a relatively smaller percentage of the market capitalization of many national stock exchanges than of the corresponding national bond markets. Seven of the 14 organized national and regional stock exchanges that operate in these countries (those of Cameroon, Cape Verde, Ghana, Malawi, Mozambique, Namibia, and Zambia) had no equity listings by companies operating in infrastructure at the end of 2006. In contrast, bond listings by companies operating in infrastructure sectors comprised more than half of total outstanding bonds listed on two of these exchanges (those of Mozambique and Namibia). In South Africa, equity listings by companies operating in infrastructure comprised only 7.8 percent of the total market capitalization of South Africa’s stock exchange, as opposed to 20 percent of the country’s bond exchange (table 6.3).

**Table 6.3 Overview of financial instruments for locally sourced infrastructure financing: South Africa** Amount <u>outstanding at end-2006 or most recent available (US$ millions)</u>

||Bank loans /a|Government<br>bonds /a|Corporate<br>bonds|Equity issues|
|---|---|---|---|---|
|South Africa: Total outstanding, all financing purposes|249,020.2|62,858.0|33,817.2|621,633.8|
|South Africa: Total outstanding financing infrastructure (% of total)|3|1|20|8|
|South Africa: Total outstanding financing infrastructure (US$ millions)|6,274.9|762.8|6,841.3|48,148.7|
|Of which:|||||
|Transport|||772.5|11,268.8|
|Telecoms|||1,929.1|34,785.0|
|Transport, communications, and storage|5,011.0||||
|Electricity generation/power|1,263.8||3,613.9|1,965.4|
|Water and sanitation||||129.5|
|Other /a||762.8|525.8||

Source: South African Reserve Bank, Johannesburg Securities Exchange, Bond Exchange of South Africa. a. See corresponding notes, table 6.2.

Infrastructure companies listed on the Nigerian Stock Exchange, the second-largest stock exchange among the focus countries, comprised a very tiny portion of the exchange’s total market capitalization 67