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Localising sovereign debt: the rise of local currency bond markets in sub‐Saharan Africa

Dafe, Florence, Essers, Dennis and Volz, Ulrich (2018) Localising sovereign debt: the rise of local currency bond markets in sub‐Saharan Africa. World Economy. ISSN 0378-5920

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Identification Number: 10.1111/twec.12624


This paper analyses the development of local currency sovereign bond markets (LCBMs) in sub‐Saharan Africa (SSA), a potentially important source of longer‐term public finance. We make two contributions to the literature. First, we build a novel data set comprising 28 SSA countries for the period 2000–14 to uncover the main correlates of LCBM capitalisation, of local currency bond (LCB) tenors and of LCB issue yields. We find that LCBM capitalisation in SSA relates to politico‐institutional factors, overall financial development and financial system structure. For LCB tenors and issue yields, inflation levels matter too. Second, we complement our econometric analysis with qualitative case studies of Kenya and Nigeria, where we further investigate the drivers of LCBM development and place LCBMs in a broader public debt context. While we document the increasing importance of LCBMs in SSA, we also highlight new vulnerabilities, including those related to investor base composition.

Item Type: Article
Official URL:
Additional Information: © 2018 John Wiley & Sons Ltd
Divisions: International Relations
Subjects: H Social Sciences > HB Economic Theory
J Political Science > JZ International relations
JEL classification: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment; Long-Term Capital Movements
F - International Economics > F3 - International Finance > F34 - International Lending and Debt Problems
G - Financial Economics > G2 - Financial Institutions and Services > G23 - Pension Funds; Other Private Financial Institutions
H - Public Economics > H6 - National Budget, Deficit, and Debt > H63 - Debt; Debt Management
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O11 - Macroeconomic Analyses of Economic Development
Date Deposited: 25 Apr 2018 09:53
Last Modified: 20 Oct 2021 00:38

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