Scoop has an Ethical Paywall
License needed for work use Register



Cablegate: Abidjan-Based Regional Stock Market

DE RUEHAB #1114/01 2780857
R 050857Z OCT 06





E.O. 12958: N/A

1. (U) Summary. The Abidjan-based regional stock market
(BRVM) recently hosted the EconChief to discuss the current
expansion of the bourse, its potential, limitations, and its
place in the evolution of the market economy in Francophone
West Africa. Reflecting the regional understanding that Cote
d'Ivoire remains vital to the zone's long term economic
importance, the BRVM is healthy and expanding despite Cote
d'Ivoire's persistent political problems. End Summary

2. (U) The Director of the Abidjan Office of the
Abidjan-based regional stock market (BRVM), Amadou Tiadiane
BAH, briefed the EconChief at BRVM HQ on the bourse's
expanding capitalization and its role as an anchor of the
regional financial network. While the West African
Francophone-region stocks and bonds market remains a
relatively modest player compared to its much larger brethren
in Lagos and Johannesburg, it is growing, expanding its
liquidity and attracting more international investors.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Some key BRVM statistics:

-Number of firms listed: 40
-Number of firms that are Ivorian: 36
-Total capitalization represented by non-Ivorian firms: over
50% (Senegalese telcon Sonatel and Togo-based regional
banking powerhouse Ecobank together comprise approximately
1/2 of total BRVM capitalization)
-Total capitalization of stock exchange, as of (Sept. 29,
'06): $5.86 billion (vs. $31.92 billion in the Lagos Stock
Exchange and $1.2 in Ghana's)
-YTD Growth of BRVM's Composite (Oct 2, '06): 31% (vs. 35%
on the Lagos Exchange and 4% on Ghana's)
-Total capitalization of the BRVM bond market: $569 million
-Number of brokers: 20 (9 in Cote d'Ivoire, 3 in Senegal, 3
in Benin)

History, Operation of the BRVM's Stocks and Bonds Bourses

3. (U) The BRVM, the world's first regional stock exchange,
was formed in 1998 under the auspices of the Francophone West
African Economic Monetary Union (UMOEA) and its regional
Central Bank (based in Cote d'Ivoire), the BCEAO. The BRVM
began with the 20 firms listed on the Ivorian-only exchange
that had been in existence for 20 years prior to the BRVM's
inception and has gradually added several firms from other
West African nations as well as a number of Ivorian

4. (U) The overrepresentation of Ivorian firms (in numbers,
not capitalization) vis-a-vis those listed from other UMOEA
countries is related in large measure to the weakness in
privatization in the region compared to Cote d'Ivoire. Cote
d'Ivoire's mid-1990s privatization push (spurred in part by
the 1994 CFA devaluation) created a natural pool for
companies eager for public investment, particularly since, by
Ivorian law, 20% of the shares of privatized firms must be
made available to the public, and insurance companies are
mandated to invest a percentage of their capital in the local
capital markets. Other Francophone West African countries,
by contrast, have lagged in privatization efforts.

5. (U) The BRVM's bond market remains limited in size. Both
private and national bonds can be floated, as can bonds from
the West African Development Bank (BOAD). Ivorian bonds are
backed by the country's substantial port receipts, while
investors demand that other nations' bonds be guaranteed with
assets, limiting the regional sovereign debt market. Debt
floated by Ivorian entities, public and private, dominates
the BRVM's debt market, comprising over 60% of the total.
(Note: Ivorian national bonds floated to pay WB arrears in
May and June of '06 were done so outside of BRVM channels and
are not included in this figure. End Note)

6. (U) Firms listed on the BRVM are scrutinized by the West
African Regional Securities and Exchange Commission, which
was created by and continues to be managed by UMOEA. Listed
firms are required to be audited, as are brokers.

7. (U) Trading is done electronically. Trading takes place
between 8:30am and 10:30am, with settlement being completed
by 11:15am. All trades must be done through brokers, who
electronically place buy and sell orders via a common
computer interface allowing all market participants to
instantly see the actions of the others. Buy and sell orders
with matching prices are automatically married during the
settlement period following the trading morning. BRVM HQ has
a public viewing area to allow anyone to watch the trading as
it goes on. Daily volume varies greatly, as is frequently

ABIDJAN 00001114 002 OF 002

seen in small, relatively illiquid markets.

Recent Expansion

8. (U) Ecobank, based in Lome but operating in 13 countries
in West and Central Africa, cross-listed its share on the
BRVM, Accra and Lagos stock exchanges on September 12. The
firm, with its $2.5 billion balance sheet, has added
substantial liquidity to BRVM, and overnight the
capitalization of the regional bourse nearly doubled.

9. (U) BRVM management attributes the exchange's steady,
positive performance to the inherent profit potential of the
listed firms as well as favorable tax treatment of investors.
As of June 30, 2006, of those firms listed on the BRVM stock
exchange that had paid dividends, the average annual dividend
was 10.22%. Dividends are taxed at a 10% rate, and no
capital gains taxes are levied. Bah estimated that between
20% and 30% of total investment into the BRVM comes from
foreign (mainly institutional) investors, and that this
figure is rising. There are no restrictions on foreign
ownership or investment in the BRVM.

© Scoop Media

Advertisement - scroll to continue reading
World Headlines

UN News: Aid Access Is Key Priority

Among the key issues facing diplomats is securing the release of a reported 199 Israeli hostages, seized during the Hamas raid. “History is watching,” says Emergency Relief Coordinator Martin Griffiths. “This war was started by taking those hostages. Of course, there's a history between Palestinian people and the Israeli people, and I'm not denying any of that. But that act alone lit a fire, which can only be put out with the release of those hostages.” More

Save The Children: Four Earthquakes In a Week Leave Thousands Homeless

Families in western Afghanistan are reeling after a fourth earthquake hit Herat Province, crumbling buildings and forcing people to flee once again, with thousands now living in tents exposed to fierce winds and dust storms. The latest 6.3 magnitude earthquake hit 30 km outside of Herat on Sunday, shattering communities still reeling from strong and shallow aftershocks. More

UN News: Nowhere To Go In Gaza

UN Spokesperson Stéphane Dujarric said some 1.1M people would be expected to leave northern Gaza and that such a movement would be “impossible” without devastating humanitarian consequences and appeals for the order to be rescinded. The WHO joined the call for Israel to rescind the relocation order, which amounted to a “death sentence” for many. More

Access Now: Telecom Blackout In Gaza An Attack On Human Rights

By October 10, reports indicated that fixed-line internet, mobile data, SMS, telephone, and TV networks are all seriously compromised. With significant and increasing damage to the electrical grid, orders by the Israeli Ministry of Energy to stop supplying electricity and the last remaining power station now out of fuel, many are no longer able to charge devices that are essential to communicate and access information. More


Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.