Interview: Karim Hajji
What steps is the Casablanca Stock Exchange (CSE) taking in order to encourage more initial public offerings (IPOs) by small firms?
KARIM HAJJI: To encourage listings, we meet with around 200 companies each year across all sectors in the major cities of the country. Furthermore, through our partnership with the Moroccan Business Association we also meet with small and medium-sized enterprises (SMEs) in Tangiers, Meknès, Rabat and Agadir.
In addition, we have created some pro-SME policies to promote listings. For example, we offer a Dh500,000 (€54,400) subsidy to SMEs introducing their shares on the stock market if their shareholder equity is below Dh50m (€5.44m) and if they list through a capital increase.
Despite our efforts to convey these policies and incentives, no SMEs have taken advantage of this to date. Furthermore, a new listed firm could benefit from a corporate tax rebate of 25% or 50%.
One of the main obstacles to listing that is cited by SMEs is a reluctance to adopt greater transparency in their financial statements. However, given that financial disclosure is one of the most important requirements for any stock market, a tax amnesty could be a good incentive to counter this reluctance.
What progress has been made on creating a designated SME board on the CSE?
HAJJI: In order for an SME board to be created, the stock exchange law first needs to be approved. This would allow the CSE to change the rules governing these compartments as well as create new ones.
We are working closely with the securities regulator and authority, the Council for the Code of Ethics in Securities, to create more flexible conditions for listing and reporting on an SME board. We are also working to create a sponsorship programme whereby companies will be assisted before, during and after their IPOs to ensure compliance. Furthermore, we are looking to develop a training programme for SME managers to help them better understand the financial market, as well as how they need to prepare their firms to be ready to take advantage of financing opportunities for SMEs – whether through the National Agency for the Promotion of SMEs or via banks and capital markets.
This programme, which we will be implementing in cooperation with the London Stock Exchange, will also focus on helping SMEs to develop business plans, communications strategies and good corporate governance practices.
What advantages does Morocco have to help it become a regional financial hub?
HAJJI: Morocco’s strong regional presence lends itself to becoming a financial hub. We already have close links to other countries in the region, with 30 direct flights departing from Casablanca, in addition to having the second-most-developed financial industry in Africa – despite being its fifth-largest economy. Furthermore, Moroccan banks are present in more than 20 African countries.
The Casablanca Finance City (CFC) has the potential to attract high-calibre international asset managers and banks, which, in turn, will help to increase liquidity – not just on the CSE, but on other exchanges throughout sub-Saharan Africa. We are working with the CFC and the regulatory authorities to create a foreign currency board on the CSE.
How has the reclassification of the Morgan Stanley Capital International World Index in 2013 impacted portfolio investment?
HAJJI: While it is difficult to measure the impact, some frontier funds have come to Casablanca since the country was reclassified as a frontier market. Teamwork is needed to further boost liquidity, much like heavy-hitter Maroc Telecom did in 2004. This will also help reduce some overblown share valuations, as more listed firms create arbitrage opportunities.
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