COSUMAF Defines The Development Plan To Foster A Dynamic Financial Market In Central Africa
8 March 2017
Created by decision of the Central Africa Heads of States Conference, 2001, the Supervision Commission of the Central AfricanFinancial Market (COSUMAF) is the supervisory, regulatory and control authority of the Central African Financial Market, whose mission is to ensure the protection of savings invested in securities, the quality of Investors’ information and the good functioning of the Market.
Recently COSUMAF [whose headquarters was established in Libreville, Gabon] was admitted to the International Organization of Securities Commissions (IOSCO); an organization that brings together the world's leading financial market authorities and whose role is to set standards in financial regulation.
Similarly, the President of COSUMAF has been elected to chair for two years the Francophone Institute for Financial Regulation (IFREFI) and CEMAC is privileged to host the 16th annual meeting of this international organization in 2017.
This international recognition of our financial market which acknowledges the effort to adapt the regulatory corpus of our market to international best practices is a real source of pride that must be put at the service of the development of the market and its players, whose professionalism will now have to meet the requirements of an efficient market.
At the same time, we are pleased with the steady increase in the number of market intermediaries approved by COSUMAF and currently helping the investors and issuers they are responsible for assisting. Indeed, the region for a long time only had three (3) brokerage companies;it now has seven (7) in different countries of the subregion. Given the role assigned to these professionals in the structuring of capital raising operations, we must welcome the emergence of these new players.
However, at present, the Central African financial market contributes less than 1% to the CEMAC's GDP. It therefore does not reflect the full economic potential of our subregion. It is perhaps by completing a thorough thinking on the development of the Regional Exchange that this percentage can be substantially increased. This is our greatest wish.
The financial market development plan constitutes the response given by the COSUMAF authorities with regards to the weak performance of the CEMAC financial market, twelve years after the launch of its activities.
Indeed, the Financial Market of Central Africa, where its bonds compartment is predominant, shows to date a total fund raised of approximately CFA 500 billion, ie a market capitalization representing 1% of the GDP of the CEMAC States.
The awareness of this situation has led COSUMAF to rethink the areas of improvement that could lead to the dynamism of the financial market in order to accelerate regional economic development.
As part of this target, COSUMAF with the financial assistance of the World Bank initiated in 2015 a prospective study on the potential of the regional financial market of Central Africa and the definition of measures to accompany its development. This study, carried out by the firm Roland Berger, was presented at the market development forum held on the 24th and 25th of February 2016 in Malabo, Republic of Equatorial Guinea.
The study highlighted many areas for improvement, covering the current supply, the legislation and regulation, as well as the demand. It identified five mechanism that would make it possible to boost the CEMAC financial market in a sustainable manner, namely, an initial impulse focused on electroshock, favoured by (i) ad hoc strong States measures and (ii) the development of Issuers and Intermediaries model to lead the market and convey a positive image; ongoing actions based on (iii) the structuring of supply to meet the financing needs of the economy; (Iv) the regulation and process to define a regulatory framework favorable to investment and monitoring its implementation; (V) promotion of demand via a marketing plan, the support and development of the local financial culture.
Consequently, the study recommends the establishment of eight priority development projects on the market, to be implemented and carried out in some 40 concrete actions. These projects are:
- Strengthening the market player’s capacity.
- Community legislation and regulation, focusing in particular on taxation and the general business framework.
- Issuance, public/private investment and support to the economy in order to stimulate and prepare States, enterprises and other institutions to issuance on the financial market.
- Infrastructure and intermediaries.
- Products and services in order to design and promote tools adapted to the specific needs of the economy and countries, in particular with regards to infrastructure and SMEs financing.
- Issuance preparation, Marketing and Communication; - Financial culture and ecosystem through raising awareness, education and developing the stakeholders’ skills.
- Merger of exchanges, the first stage of which involves the merger of the texts and processes of stock exchange transactions.
On the basis of the ambitious recommendations of the market development plan, the President of COSUMAF, Mr Rafael TUNG NSUE, stresses the imperative need for its implementation and takes all necessary steps to finance its implementation, with a view to diversify financing tools for enterprises and CEMAC States in line with the will of the Heads of States.
Thus, the most decisive phase is the research and mobilization of contributors who could contribute to the market development plan with an estimated financial assistance of nearly €6 million, i.e. about XAF 4 billion, for 5 years.