Abstract:

The aim of this research was to analyze the key economic drivers of stock market development in Africa. The study used market capitalization as the explained variable to represent stock market development; credit availed to the private sector, external reserves, foreign direct investment, broad money supply, external trade, GDP per capita, inflation and lending rate to represent macroeconomic factors. Eight African countries were used to represent Africa’s stock markets- Egypt, Nigeria, South Africa, Morocco, Tunisia, Ghana, Kenya, and Mauritius. The study concludes that credit to the private sector, levels of external reserve and inflation were the most important variables that affect African stock markets. Thus the study recommends that private sector credit, foreign reserves and income levels are key issues which must be addressed if African Stock markets must develop.