Interview: Karim Hajji
What changes will the CSE undergo following the passage of its new articles of association?
KARIM HAJJI: The new articles of association, part of our Ambition 2021 development plan, will boost the attractiveness of our marketplace by diversifying the product offering. The implementation of real estate investment trusts will make the exchange particularly attractive, as they have great integration potential. This will allow business to rent rather than buy premises, freeing up funds for their working capital requirements. It will also provide investors with a certain return, varying between 5% and 7% depending on the case. This is significantly higher than the return rate on Treasury bills and listed shares. The framework will also be updated to allow exchangetraded funds and Undertakings for Collective Investments in Transferable Securities to be listed.
The new articles will also provide greater flexibility for small and medium-sized enterprises (SMEs) that are looking to enter the CSE. There will now be a main segment with three sub-funds, in addition to an alternative market with two sub-funds. One advantage of the alternative market for SMEs is that they can enter the market while continuing to report on a half-yearly basis, instead of quarterly.
The ELITE programme launched in 2016 will enable SMEs to call upon the capital market in various ways, not only through the stock exchange but also through private equity and other forms of financing. There are now 94 companies in the programme, of which about 30 are certified, which allows them to obtain the facilities needed to go public.
In what ways will the African Exchange Linkage Project (AELP) bring benefits to both the continental and Moroccan market?
HAJJI: We must contribute in whatever ways we can to improving the liquidity of stock exchanges across the African continent. Liquidity is a significant issue in most African markets. To address this, a number of initiatives have been implemented to strengthen liquidity, including the AELP, which aims to interconnect the seven major stock exchanges across the African continent. This project involves the Nigerian Stock Exchange, the Nairobi Securities Exchange, the Johannesburg Stock Exchange, the CSE, the Regional Securities Exchange, the Stock Exchange of Mauritius and the Egyptian Exchange, which together represent more than 85% of Africa’s entire market capitalisation.
The AELP will allow investors – both in the countries of these markets as well as those from around world – to place an order with a broker on one of the seven exchanges that can be transferred to the other exchanges. Through this initiative, it will be possible to engage in cross-border trading without taking into account the specific regulations of each country that prevent a foreign broker from operating on local platforms. This project has received $1m in financing from the Korea-Africa Economic Cooperation Trust Fund and is being managed by the African Development Bank. We hope to have well-established links between the exchanges by mid-2020 and then start to build up our volume.
The AELP should allow us to add more liquidity to the Moroccan market because some African countries have surplus funds – such as Botswana, Gabon and Cameroon, which have large pension funds – but do not have a sufficiently developed capital market to invest locally, which pushes them to invest abroad. It will also help Moroccan firms to internationalise, which will in turn lead to domestic job creation. Africa is projected to double its population by 2050; around 75% of that population will be under the age of 25 and over 500m new jobs will be created. By strengthening our own capital market and integrating with the continent, we can enable companies to finance their growth and create more job opportunities.
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