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Douala Stock Exchange

BVMAC-DSX: the rivalry continues

BVMAC-DSX: the rivalry continues
  • Comments   -   Thursday, 13 February 2014 15:54

(Business in Cameroon) - The Douala Stock Exchange has seen some of its market share gobbled up by its regional counterpart, the BVMAC. This persists despite the offensive led by the Cameroonian regulatory authority whenever local investors are lured by opportunities on the Libreville market.

 

The 21st May 2013, Cameroon’s Financial Markets Commission (FMC) urged Cameroonian investors to be prudent when considering shares sold by the SIAT Gabon Company which decided to open-up its capital by joining Central African Securities Exchange (BVMAC) based in Libreville in Gabon.  “In light of the current state of its offer, the FMC is unable to guarantee to the Cameroonian public the totality and quality of the information available about the company itself or the conduct of its operations to enable informed decision-making,” stated FMC Chairman, Theodore Edjangue.  Sometime earlier, in March 2013, the Cameroonian financial markets regulator had expressed concern about SIAT’s operations.  He decried “illegality” in Cameroon for the non-attribution of the FMC seal of approval. These two decisions, which were perceived as an attack on Gabon and by the Central African Commission for the Monitoring of Financial Markets (COSUMAF), demonstrate the rivalry between the Cameroon-based DSX and its sub-regional equivalent, BVMAC based in Libreville. This rivalry was apparent when the FMC characterised the bond of BVMAC’s BGFI Holding as “illegal” and broadcast this sentiment in Cameroon.

 

Can they coexist?

Many analysts are of the opinion that, beyond stock exchange culture and an implementation process that needs more improvement, the Douala Stock Exchange is paying a heavy price for its close proximity to its equivalent in Libreville. In one such analysis (in 2009), in discussing the ways to “make the [sub-regional] financial market more dynamic”, the COSUMAF recognised this impossible coexistence. “The coexistence of two stock exchanges has hit a roadblock due to the limited scope of their markets which can hardly benefit from economies of scale that their consolidation would yield. Furthermore, the low number of operations conducted to date on these markets raises questions about their viability,” noted the sub-regional regulatory body.  

As evidence of the COSUMAF’s dismal prediction, stock market activity has virtually flat-lined in both. Businesses in Douala’s financial sphere blame this occurrence on the Cameroonian government’s decision to sell its shares in some companies. Outside of Cameroon’s borders, no company has run to the DSX to raise funds. As if to avoid choosing sides in the rivalry between the two financial markets that have been struggling to coexist, and in a counterproductive manner within the CEMAC zone, some institutions have chosen to use both markets simultaneously. This applies to the loan bonds of the Central African States’ Development Bank (BDEAC) and Société financière internationale (SFI).