Domestic debt markets in developing economies:

Who shapes them? What drives them? Who benefits?

In the new era of market-based finance, developing countries are developing their domestic debt markets at unprecedented speeds and depths, contributing to ‘policy-engineered financial globalisation’. Whilst in theory aimed at providing increased funding sources for governments and developing domestic financial markets, these policy initiatives also come at considerable risk of increased vulnerability to international market conditions, exchange rate volatility, constraints on macroeconomic policy making, and fundamental changes in the domestic financial system itself which could undermine long-term growth.

This project investigates the drivers and effects of the changing nature of debt markets, particularly the emergence of local-currency debt market in Africa, which have been growing over the past decade to 21% of GDP for the continent on average, according to the IMF. Some countries, such as Côte d’Ivoire, Namibia and Uganda have more than doubled their domestic bond issuance in this period.

While there has been some research on implications for major emerging economies (e.g. Bonizzi et al. 2019), research on the effects in African countries has been largely neglected, despite the increasing depth of local debt markets, often promoted by international organizations and through the increased participation of foreign investors. Given the emerging enthusiasm among business reporters about the ‘possibilities’ for investors in Africa (e.g. Pilling 2018, Arditti 2019), we deem it to be particularly urgent to investigate the nature of these changing markets and their effects.

This project investigates 1) what is driving the changing structures of domestic debt markets in African countries, including the role of foreign investors and donors, 2) what are the effects of these changing structures on these economies’ ability to promote social and economic development, and 3) how and why do drivers and effects differ across countries and contexts.


Lead Academic at Lead University

Ingrid Harvold Kvangraven, University of York

Lead Academics at Other University

Annina Kaltenbrunner, University of Leeds

Caroline Metz, University of Sheffield

Other Staff Associated with this project

Maria Eugenia Giraudo, Politics, University of York

Arpita Bhattacharjee, Economics, Leeds University Business School

Jonathan Perraton, Economics, University of Sheffield and SPERI

Other Partners associated with this project

Making Finance Work for Africa Network (MFW4A)

Ngongo Samba Sylla, policy specialist based in Dakar, Senegal

University of Ghana


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