Interview: Félix Edoh Kossi Aménounvé
To what extent could the adoption of the eco currency benefit activity on the BRVM?
FÉLIZ EDOH KOSSI AMÉNOUNVÉ: The BRVM, like other stock exchanges on the continent, is looking for innovative solutions to widen and deepen the capital markets sector, taking into account challenges such as the low attractiveness for foreign investors, low rates of local savings and low liquidity. Faced with these challenges, our states and several large companies in the region often choose to raise capital on markets beyond Africa to finance major projects. For example, in 2018 some $26.2bn was raised with eurobonds by several African states.
I believe the creation of a single currency could help speed up the process of economic integration of ECOWAS member states. This would translate into a better mobilisation of savings – resulting from lower costs of access to financial services due to the absence of exchange rate variation – as well as access to a deeper and wider capital market. A single currency should also contribute to strengthening the competitiveness of issuers, with their performance positively affected by economies of scale.
What opportunities exist for private equity firms?
AMÉNOUNVÉ: Private equity appears to be an opportunity for both our financial markets and small and medium-sized enterprises (SMEs), by giving them access to long-term capital. At the end of their investment period, which usually extends between five and seven years, SMEs have acquired solid foundations in governance, organisation and strategy.
Thanks to the acquisition of new skills, SMEs can then access other sources of financing, for instance by raising capital through initial public offerings. It is precisely to support this new dynamic that the BRVM launched a third compartment dedicated to SMEs and high-potential businesses in December 2017. Observing the evolution of private equity in its member countries, the BRVM has established several partnership agreements with these stakeholders to better prepare SMEs and allow them to continue benefitting from long-term capital to finance their development.
More generally, the development of private equity in Africa will be helped by the improvement of economic factors such as strong GDP growth and the improvement of the business environment.
How will the region benefit from the partnership between the BRVM and Nasdaq?
AMÉNOUNVÉ: The BRVM aims to offer investors and stakeholders an competitive, transparent and solid market. To do this, it must exercise market surveillance, among other things. It is in this context that, in March 2019, Nasdaq and the BRVM signed a partnership for the supply of a stock market monitoring tool. Several advantages are derived from this partnership. First, the new software will significantly improve the BRVM’s ability to detect, deter inappropriate behaviour and avoid market disruption due to abnormal trading activity. Second, as Nasdaq is recognised internationally for the quality of its software, our partnership with them will strengthen the level of confidence of international investors in our capital markets.
By what means could the BRVM increase the current levels of capitalisation to GDP?
AMÉNOUNVÉ: Low levels of capitalisation are common among African stock exchanges. This is due to the small number of listed companies, and to the weakness of the stock market and financial education more generally.
Since 2012 the BRVM has been committed to raising this ratio. A number of steps have been taken, including meetings with privatisation committees in the various countries and certain players in the private banking sector. Awareness campaigns have also been carried out with large companies and multinationals to get them listed. In addition, training was provided in the various national stock exchange agencies of the BRVM.
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