West Africa's BRVM aims for expansion
Bourse expects 20 listings in three years; Nigeria and Ghana links planned.
Edoh Kossi Amenounve, BRVM
Regional West African stock exchange, the Bourse Régionale des Valeurs Mobilières (BRVM), headquartered in Côte d’Ivoire, expects 20 new companies to list on the exchange over the next three years, boosting the liquidity and attraction of the bourse, according to BRVM chief executive Edoh Kossi Amenounve.
Those 20 listings will increase the number of names on the exchange by a third. BRVM currently only has 39 companies listed. In 2015, there was only one company listing and one float on the exchange.
Most of the new listings will come from a mixture of privatization by state authorities in the region and incentives to encourage businesses to list, with around eight listings coming from Côte d’Ivoire and the rest split equally between the other member countries, says Amenounve.
“While it is still difficult to attract companies to list on the regional exchange, we hope that this will change over the next three years as governments begin to drive forward with the process of privatization and as the exchange continues to introduce preferential tax rates and the like to boost listings and interest by companies,” says Amenounve.
He says the BRVM is working with governments and regulators and is creating an exchange specifically for small to medium-sized enterprises.
“They are the backbone of our economy and need a place on the bourse in order to thrive,” he says. “With these additional listings, we will increase liquidity and see our exchange reflect our economy much more accurately.”
The BRVM is the sixth largest bourse in Africa, behind the Johannesburg, Nigeria, Casablanca, Egypt and Nairobi exchanges.
In December 2015, the total market capitalization of the exchange (bonds and equities) was around CFA8,972 billion ($15 billion), according to Amenounve.
In 2014, nominal GDP was CFA24,332 billion and real GDP was CFA18,458 billion for the West African Economic and Monetary Union (WAEMU).
The eight countries connected to the bourse are: Benin, Burkina Faso, Guinea Bissau, Côte d’Ivoire, Mali, Niger, Senegal, and Togo. On December 17, Mali listed its first company, while Guinea Bissau is yet to bring a listing to the exchange. Côte d›Ivoire has the most companies on the exchange, accounting for 29 out of its 39 listings.
The two largest listings – telecommunications provider, Sonatel in Senegal and Togo-based Ecobank Transnational Incorporated – account for around 60% of market capitalization.
Despite currency fluctuations in Africa, due in large part to the fall in the oil price, some African share indexes have fallen dramatically over the year while the BRVM has remained relatively strong. As of December 10, the BRVM index was up 15.9% year to date.
“Increasing the market capitalization and the capacity of the bourse will be essential to the region’s future, especially as we see more and more private equity coming into the region,” says Amenounve. “At is stands, in our region and throughout Africa, many private equity companies struggle to exit investments made as capital markets are illiquid and don’t offer viable paths for exits. By boosting the exchange we will be able to help investment and growth into the region flow much more smoothly.”
Private equity funds have already been contacting the exchange, he says. To further deepen the BRVM and overcome liquidity shortages that still afflict African exchanges, the bourse is planning to join forces with others in the region, including the Nigerian and Ghanaian exchanges.
“For our exchange to hold any weight, it needs to be larger, and one meaningful way to do this would be to integrate with others in West Africa,” says Amenounve. Back in 2013, the West African Capital Markets Integration Council, of which Amenounve is chairman, was created to lead the charge.
“Eventually, we hope to have all countries within the Economic Community of West African States (Ecowas includes 15 West African countries, among them Nigeria, Ghana, Gambia and Sierra Leone, Liberia, Guinea and Cape Verde) connected by one exchange,” he says.
Plans are already underway, with Nigeria and Ghana spearheading the change, says Amenounve.
The first phase of integration, being rolled out now, will allow sponsored access to regional bourses for brokers. In August 2015, Nigeria’s United Capital and Accra-based CAL Brokers executed the first cross-border share transaction as part of the regional effort to pool West African markets and boost trading volumes when CAL Brokers bought 100 Dangote Cement and 6,000 Guaranty Trust Bank units from United Capital Securities.
The second phase will create West African qualified stockbrokers to trade freely throughout the region and current schedules predict that this will begin by 2017. The third and final phase will mean one order book for the whole region. “Our deadline to implement this is for 2020,” says Amenounve.