By TBY | Mozambique | May 26, 2014
Like many emerging markets, Mozambique has sought to add horsepower to its economy by harnessing public interest in securities. With the African Securities Exchanges Association lending a hand, the quest continues.
The Maputo Stock Exchange, or Bolsa de Valores de Mozambique (BVM), rang its first bell in 1999, with the assistance of the Lisbon Stock Exchange and World Bank. It was launched as an alternative means of generating revenue for the economy. And indeed, economic growth seems certain in light of its enormous natural gas reserves, which will spur major infrastructural developments estimated to require investments of up to $30 billion in the gas sector alone by 2018. The BVM, a state-owned entity under the Ministry of Finance, operates an exchange law that incentivizes foreign investment by permitting repatriation of up to $500,000.
THREE AT THE TABLE
Still embryonic, to date just three companies are listed on the BVM. These are brewer and distributor Cervejas de Moçambique, hydrocarbon extractor Companhia Moçambicana de Hidrocarbonetos, and construction firm CETA – Construção e Serviços. The listing of the latter company in June of 2012 enabled the market to register its first Mcap of $1 billion for the year.
The bourse recorded 250 trades in 2012, 191 of which were in the equity market and 21 on the bond market. Mozambique’s SMEs account for around 70% of GDP and hence spell great potential for future local listing. And hungry for capital in order to expand, but with bank loans not always an option, their cause was championed in 2010 when the bourse launched a dedicated market for SMEs at the BVM. Nonetheless, to date not one company has taken the bait. Yet, according to Pinho, “we have now signed an MoU with the head of the Confederation of Economic Associations (CTA) and are working more closely with the Institute for the Promotion of Small and Medium-sized Businesses (IPEME). In addition, we are partnering with Banco Nacional de Investimentos (BNI) to help attract SMEs to the bourse.”
THE ACTION SO FAR
In a TBY interview, Anabela Chambuca Pinho, the CEO of the BVM, explained that, “Since its creation [the BVM], it has seen the listing of 59 securities, with a capitalization of around MZN26 billion. Most of these have been debt securities that have already been amortized”. Besides the three listed stocks, the BVM has 32 marketable securities, 21 of which are bonds (13 corporates, and eight treasury bonds), while eight are commercial papers. The total capitalization of the BVM is MZN31.7 billion ($1.59 billion), accounting for roughly 7% of GDP. The total value of listed securities for 2012 stood at $60,546,463 with a trading volume of 18,777,821.
KNOWN BY ASSOCIATION
The BVM is among the 17 member nations of the African Securities Exchanges Association (ASEA). Among the Association’s goals is the lobbying on behalf of member bourses in the international financial markets. At the 17th ASEA Annual Conference early in 2014, ASEA President Sunil Benimadhu encapsulated the need for African exchanges to become an, “integral part of Africa’s transformation” in terms of, “the 4 S’s; Synergies, Support, Scope, and Substance.”
Meanwhile, the future, as Pinho confirms, depends on financial education to raise interest and ease public reluctance to view the BVM as a financial instrument, and an alternative to traditional banking. Mozambique needs to develop a centralized securities depository. “Right now, all securities are registered, but not in a central database, whereby we receive papers from the banks and perform manual registrations,” she told TBY. Meanwhile, hope for increased liquidity lies in a BVM announcement of February of 2013 that overseas listed companies arriving to work in the gas sector were required to also list a part of their operations on the local bourse.