(Business in Cameroon) - The creation of the DSX, Cameroon’s stock exchange, shows signs of improvisation. This might explain why it has been so under the weather. 

At the opening of the Conference of the Heads of State of the Economic Community of Central African States (CEMAC) in December 2000 in Ndjamena, Chad, there was no doubt that Douala should be the home of the Central African Stock Exchange (BVMAC in French), which the six CEMAC countries, Cameroon, Gabon, Congo, Chad, Equatorial Guinea and the Republic of Central Africa (RCA) hoped to achieve. Douala’s selection seemed even more evident as Cameroon represented 40% of the industry of the CEMAC zone, 52% of the GDP and over 55% of the total population of this sub-region, having 20 million inhabitants out of the 35 million for the entire CEMAC zone. Furthermore, according to authorised sources from the Central African States’ Bank (BEAC), “Douala’s agency represents 60% of all the financial flows within the area covered by BEAC.” Another considerable indicator is the fact that out of the top 100 Cameroonian companies in terms of sales figures, 79 are based in Douala, according to the National Institute of Statistics (NIS).

From this point of view, therefore, Cameroon and its economic capital are not short of assets. But when the CEMAC Heads of State withdrew for the usual private meeting at the end of the summit, which is always a moment of high anticipation as it is then that major decisions are made about the community’s direction, what followed could only be described as something out of a movie. In the absence of the Cameroonian Head of State, Paul Biya, who was represented by Prime Minister Peter Mafany Musongué, the Gabonese Head of State, Omar Bongo Ondimba, who has never hidden his thirst for power in the CEMAC zone, successfully rallied his counterparts to his cause. This transpired before a Cameroonian Prime Minister whose words failed him. And so it was that, instead of Douala, the headquarters of BVMAC was sent to Libreville, Gabon.

Questionable expertise

Cut to the quick, the Cameroonian authorities, led by their Head of State himself, decided to create a national financial market which would act as the competitor to the BVMAC. A year after what one might refer to as the affront of Ndjamena, on 1^st December 2001, a presidential decree created and organised the functioning of the Douala Stock Exchange (DSX), of which the capital is held mostly by the Professional Association of Cameroon Loan Establishments (63.3%) with 13.3% by a group of insurance companies and 23% by the State. The regulation of this financial market thus came into being more out of national egotism than after thoroughly developing the project as would be expected of the Financial Markets Commission (FMC). It was created on a whim.  At the same time, the Autonomous Amortisation Fund (CAA in French), a type of regulatory body that monitors public debt in Cameroon, was assigned the role of central trustee, while the SGBC became the regulation-delivery bank. With so many industry entities involved, it begs the question as to whether or not they were fully prepared to enter the very complex business of finance. The expertise would appear to be at least questionable, particularly with the novelty of the financial market at that time and even today. 

However, these are questions that the Cameroonian authorities have not bothered to ask as they espouse plans for the DSX: to use this financial intermediation platform not only to vary the economy’s financing mechanisms, but also to drive the vast privatisation programme in place for public sector companies.  The government of that time planned to add ten companies to the DSX during the first five years of operation. This was wishful thinking as it took six years (in May 2006 to be exact) before the first company listed on the DSX. This was Société des Eaux Minérales du Cameroun (SEMC), a Castel Group company which the State plans to strip of some of these shares to sell them on the DSX. 

Three companies in ten years

To date, that is to say, twelve years after its creation, DSX has only three listings of shares (SOCAPALM and SAFACAM arrived after the SEMC) and three listings of bonds (BDEAC, SFI and the State of Cameroon). Then, as if it too would abandon the DSX, and after a rather successful bond that raised 200 billion FCfa in 2010, the State of Cameroon, which also pays the assessed contributions to the Libreville BVMAC (created in 2003 and operational since 2008) has virtually set-up house on the BEAC government securities market since 2011 and has been regularly issuing Treasury goods and bonds with a level of success and dynamism that is in sharp contrast with the lacklustre Doula Stock Exchange.

Furthermore, as if in a flashback, the opinions of the experts of that time resurfaced. People questioned the need to create the DSX which would be creating competition in the fledgling Central African financial market. “The stock market as a financial intermediation instrument is a tool that will not meet the immediate expectations of Cameroonian businesses. Firstly, it won’t create jobs. It can only help national companies that are already in existence and ready to be listed. There aren’t many like that in Cameroon. Secondly, one has to wonder if one can even create a financial intermediation instrument for privatisation as is one of the aims of this stock exchange. The history of stock exchanges teaches us that it’s a game best left to the top financiers,” explained Pius Bissek, a Cameroonian businessman, some time ago.  

And Babissakana, a financial engineer and director of the Prescriptor firm in Yaoundé, adds: “The opportunities that certain companies have when approaching market structures are limited, because the requirements are not easy to meet. The stock exchange is for the business elite. In Cameroon, 90% of businesses are SMEs that can’t access the market. The government should be looking into how best to put in place a medium and long term loan market as there is no institution that currently offers this type of product.” Pius Bissek shares this opinion and is placing his bets on the efficiency of a “guarantee fund and development banks.” Unfortunately, neither of these structures will help the ailing DSX.