Abstract

The unemployment rate in Africa is on the escalating trend and is becoming a socio-economic threat to the general economic stability of the region. Furthermore, the aftershock of the 2008 global financial crisis exacerbates the poor development of the financial markets with an attendant decrease in capitalization and market liquidity. Efforts of the previous policies to promote stock market development and restore investors’ confidence did not yield significant outcome as the stock markets did not recover to their pre-crisis period.  This paper empirically examines the long-run relationship between unemployment and stock market development in Africa, using a pooled mean group (PMG) model for the sample period of 1996 to 2016. The findings reveal that unemployment has a positive and statistically significant impact on the stock market development. The findings go in line with the notion that unemployment can help forecast stock market thus policymakers should rely on the unemployment announcement as an avenue for promoting stock market development.