Interview: Kadi Fadika-Coulibaly
How have emerging legal and business frameworks affected Côte d’Ivoire?
KADI FADIKA-COULIBALY: The main relevant development in this regard has been the Uniform Act of the Organisation for the Harmonisation of Business Law in Africa (Organisation pour l’Harmonisation en Afrique du Droit des Affaires, OHADA), which is applicable to all UEMOA member states – including Côte d’Ivoire – as well as 17 countries outside of the area.
The Regional Council for Public Savings and Financial Markets (Conseil Régional de l’Epargne Publique et des Marchés Financiers, CREPMF) and the West Africa Stock Exchange (Bourse Régionale des Valeurs Mobilières, BRVM) regulations are aligned on various grounds with the provisions of the OHADA Act. It is systematically applied to all regional financial market actors subject to the OHADA Act for private companies. However, the CREPMF and the UEMOA’s Court of Justice have been able to subtly avoid the litigations of the financial markets through the use of OHADA capacities.
The laws governing the operations of the primary and secondary markets are covered by this Act. The harmonisation of the law is meant to facilitate and simplify the understanding of financial structures and operations by all types of investors seeking to invest in a country under OHADA’s jurisdiction. Nevertheless, it does leave room for financial engineering and offers specific texts for securities listed on the stock exchange.
What kind of activity can we expect in the primary market in the short term?
COULIBALY: New operations within this market will primarily concern bond issues by member states of the UEMOA on the bond market, and initial public offerings of companies linked to the Ivorian government’s disengagement policy on a number of companies, including NSIA Bank. Additionally, the evolution of the regulatory framework for banks and insurance companies in accordance with Basel II and III may encourage a number of institutions to resort to the capital markets to strengthen their equity capital.
Which sectors offer the most potential for investors in the stock market?
COULIBALY: In the short term, several sectors offer growth perspectives on the BRVM, such as the trade and distribution sector, which is supported by the demand for construction materials and an increase in vehicle sales. The latter will be followed by growth in the oil sector, which will also profit from the increase in air traffic and development of asphalted roads in both Côte d’Ivoire and the region. The banking sector’s indicators are also solid and investment opportunities will arise when more stringent regulations by the Central Bank of West African States come into force in 2018. The textile sector is expected to be driven by strong domestic demand and exports, and the agro-industrial sector has started its upward trend, offering good opportunities for investment.
What measures are necessary for the further development of the secondary market?
COULIBALY: The activity and dynamism of the secondary market depends on several factors, including free-float levels, market capitalisations, investors’ need to rebalance securities portfolios and the efficiency of intermediaries accompanying these issuers and investors. Therefore, measures must first cover incentives for the issuance of new securities and in respect to the free float by companies already listed, as well as the issuance of additional free float, while stock splitting to ensure access to individual investors. Thereafter, investors must be provided with reliable financial information from issuers and intermediaries to enable them to make investment or divestment decisions through the use of quality information. Lastly, intermediaries must be on the lookout for investment opportunities for investors and accompany them proactively.
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