Interiew: Bilel Sahnoun
What incentives are necessary to increase the number of listed companies on the BVMT?
BILEL SAHNOUN: There are two main fiscal incentives in place for companies to enter the stock exchange. First, companies floating more than 30% of their equity capital pay tax at a rate of 15% instead of 25% for the five years following their initial public offering (IPO). Second, gains resulting from capital injections of equities in a mother company or a holding are exempted from capital gains tax if the mother company or the holding are to be listed on the stock exchange. We have also implemented an equity savings plan (compte epargne en actions CEA) so up to TD50,000 (€19,200) of the amount of money deposited in the CEA can be deducted from the tax base. These have attracted many new investors, particularly high-tax paying professionals.
Concerning small and medium-sized enterprises’ (SMEs), in 2017 the BVMT launched a programme to help SMEs access financing through capital markets, thus diversifying their sources of finance away from traditional banking. The African Development Bank is providing £2.6m for this programme.
What sectors of the economy not yet on the stock exchange offer the most potential for being listed?
SAHNOUN: With 81 listed companies, the BVMT does not cover all the sectors of the economy. Agriculture, tourism, mining, telecommunications, energy and other sectors are not yet represented in the stock market. We have a market capitalisation of 25% of GDP, so there is room for improvement and we hope to attract companies from sectors that are still absent from the stock market list. To raise more interest from international investors, we aim to double the market capitalisation to 50% by 2020, mainly through large companies’ IPOs. In Tunisia, there are a number of large state-owned companies that are likely to perform much better should they go public, and partially selling to private investors can help take the pressure off public finance. This form of capital opening via the stock market would also improve not only the operations, but also the governance and transparency of these companies. They could become better taxpayers and better employers. However, increased political will is needed to open capital of state-owned companies so that the Tunisian economy can be financed through capital markets.
What new capital market instruments could be best introduced into the Tunisian market?
SAHNOUN: Exchange-traded funds (ETFs) are the products that could be launched the fastest. Various other products, such as derivatives, are more difficult to introduce because they require a well-established market maturity in terms of liquidity, participants’ capacities and market organisation. ETFs, however, are less demanding and will still be meeting an important need in the market, thus attracting a new category of investors. If an investor does not have the capacity to properly evaluate the stock of specific companies, he would be more comfortable with a marketable security that tracks a sector index, and, for example, could invest in the banking sector, as opposed to a specific bank. ETFs assure transparency, liquidity and cost effectiveness. However, for these to enter the Tunisian market, there is still some work to be done in terms of stakeholder collaboration and regulatory framework development.
Furthermore, there is plenty of room for the development of Islamic financial products. In 2017 we signed a partnership agreement with Nasdaq Dubai to promote Islamic capital markets products and solutions in Tunisia. This cooperation provides us with an opportunity to diversify the financial products available in the country and is also a means for the Tunisian government to expand its sources of financing. Since sukuk (Islamic bond) markets are becoming increasingly attractive for international investors, they could most certainly contribute to the financing of the budget in Tunisia.
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