Financing the company in the
Market:
- As we might think sometimes the introduction of a company in the market is
not a simple thing. We saw the listing requirement for the different market
previously and this is one of the reasons why we want to create another
compartment for the stocks
Concerning the
BRVM:
- The crisis of the banking structure in the 1980's highlighted the limits of
the increased financing of the economy by the central currency.
- Thus, it appeared necessary to create the conditions of an increased
mobilization of the interior saving in the purposes of a healthy financing for
companies' development, the central currency have a role of an auxiliary.
- Recommendations for a better effectiveness of the services of the Brvm in
the funding of the company.
- In this third part of our study, we will make a proposals and
recommendations for the improvement of the effectiveness of the BRVM, like a
tool of financing for companies in UEMOA space.
- In this purpose, we initially will propose solutions for the improvement of
the external environment of the BRVM, then to make recommendations for the
improvement of its services.
A. Improvement of the
actions of the public authorities and Authorities of the market
Intervention of the
authorities public and of the market
a. The public
authorities:
- In order to mobilize the saving in favour of the stockholders' equity, the
market needs a stable regulation, which supports the right of ownership and
also a clear taxation, not too heavy on the goodwill and the dividends.
- Finally a state which does not puncture all the saving available to cover
the budget on the public deficit.
- It is necessary to continue the efforts of stabilization of the
macroeconomic framework in the countries of the UEMOA, with the implementation
of economic policies healthy at the national level and coordinated on a
regional scale so as to preserve the conditions of a durable and strong growth.
- To reflates the development of the financial market, it is imperative that
the States begin to use the channel of the BRVM to carry out privatisations.
- These various actions of the authorities will have the principal following
impacts:
- Firstly, they will support the discussions of the States with the strategic
partners (Buyers) reticent with the introduction out of Stock Exchange by
equipping them with a Community text.
- Then, they will show with the international lessors that privatisations
fall under the direction of the good governorship, and would bring them to
better supporting them.
- Lastly, they will make it possible the structures of the Market to pass
their break-even point, would help them to take actions of promotion of the
stock exchange culture and to develop financial tools and to reduce the costs
of the financial intermediation.
b. Reinforcement of the
working tool of the crempf.
- The Regional Council in its capacity as regulator of the stock market, is
charged to protect the saving invested in transferable securities, must obtain
sufficient means to fully assume the missions which were assigned to him by the
authorities of the Member States of the Union.
- Its environment of work must be modern in order to be maintained on a high
level of performance and to permanently have the best secured and best to share
information.
- It must be of easy and permanent connection with all the actors and the
other regulators throughout the world.
- To this end, the Regional Council must acquire data-processing equipment,
software to reinforce its operational capacities as well as the modern tools of
New Communication and Information Technologies (dedicated computers, systems of
electronic documents management, radio connections, networks tools, etc).
- The Power of control given to the Regional Council make him obligation to
effectively exert it in order to guarantee a greater equity and a transparency
of the financial market in particular within the framework of the operations of
the secondary market.
- The Regional Council must thus obtain a monitoring system of the able
market permanently:
- Ø To quickly detect the bad practices and offences on the stock
exchange market in particular handling of course, offences of initiates as well
as the fraudulent behaviours of the speakers;
- Ø - To carry out exhaustive analyses on the data relating to the
stock exchange operations;
- Ø - To produce relevant statistics for the use of its authorities.
- The Regional Stock market does not currently have a framework for the
sanction of the stock exchange infraction. It is urgent to fill this gap in the
law, which exists since the creation of the market.
- To ensure the development of a right, equitable and transparent market on
the one hand, and on the other hand, to reinforce the climate of confidence
which will guarantee the rise of a more dynamic secondary market, work must be
completed within the framework of the project so:
-
- Ø To define and implement a regulated framework which will make it
possible to sanction all the punishable practices which would occur on the
market;
- Ø To ensure a broad diffusion of these regulations on the scale of
the Union.
- So, working sessions must be organized with the Court of Justice of the
UEMOA, the Regional Commission on money laundering in order to be ensuring of
the coherence and the harmonization of the texts to be adopted. Seminars of
information and formation must also be organized for the Members of Parliament
of the Union.
B. Guarantees reforms and
tax policies
a. The reform of the
guarantee.
- Currently on the Regional Stock market, in the deficiency of a rating
agency and in a preoccupation with a protection of the savers, the borrowing
companies are subjected to the obligation to produce a guarantee at 100 % for
the bonds by public call with the saving.
- This regulation constitutes a serious blocking for certain companies
because of the difficulties of obtaining this guarantee as well as the high
costs, which it generates.
- The progressive elimination of the requirement of guarantee will have to be
planned according to the introduction of a system of notation on the Regional
Stock market.
- One limited period will have to be observed during which a thorough
analysis based on the financial ratios of the transmitters will be used like
criterion of selection.
- Few issuers, according to the branch of industry, must be exempted
partially or completely of the guarantee, under certain conditions. It is the
case, for example, of the banks.
- Research on the reform of the guarantees must be carried out in order to
find tangible solutions:
- Ø With the mechanisms to put place to soften the guarantees required
on the market;
- Ø - With the mechanisms of substitution of the current guarantees by
analyses of financial ratios;
- Ø - A the definition of an institutional framework for the
installation of an agency of notation within the UEMOA;
- Ø - At the adaptation of the lawful framework in order to accept the
notations made by the international agencies.
- We made a statement about the rating later in this document. We represent
the rating as a key tool for the efficiency of the market.
b. The Tax policy
- The most important stage towards the development of the integrated stock
market was the creation on September 16, 1998 of the Bourse Régionale
des Valeurs Mobiliere (BRVM), institution common to the eight Member States of
the UEMOA.
- The BRVM constitutes also an adequate response of the States Member to the
challenges of globalisation: `it was to better choose the installation of a
Community market dedicated to a better integration of their economy, rather
than for the creation of national financial markets dedicated to blow up'.
- It is important to remind that the BRVM was created in a context of:
- Ø Harmonization of the legislations initiated either within the
framework of the UEMOA with in particular the institution of a common
accounting system (the SYSCOA),
- Ø Within the framework of a broader co-operation which integrates
the UEMOA with in particular the adoption,
- Ø Within the framework of the Treaty relating to the harmonization
of laws of the Businesses in Africa, of the Uniform Act Relating to the Company
law Commercial and of the Economic Grouping of Interest.
- As a result, the combination of the whole initiatives with a real policy of
modernization and harmonization of the tax legislations in general, and the one
of the taxation in particular for the transferable securities.
- All that should contribute to the development of the regional Stock market
by the promotion of the interior saving and the increase in the mobility of the
capital also know as liquidity in the market.
- Aware of the negative impact of the current tax systems on the functioning
and the development of the stock market, the UEMOA had invited its Member to
make the suitable requirements in order to integrate in their finance laws for
the year 1997 those following measurements:
- Suppression of the system of the "double taxation" and institution instead
of a deduction at the source, legal tender of any other tax, at differentiated
rates which could be:
- 10% for the equity
- 13% for the bond
- 15% for the batches
- The refitting of the indirect taxation applicable to the Transferable
Securities, by the institution of a right to the title of the fees registration
on and the new issue applications for shares of capital (the right suggested
was of 6 000 FCFA);
- Suppression of the excise tax on the equity, as well as the exemption of
the any other turnover tax and bond interest on the VAT.
- The exemption of the residents except UEMOA of the deduction at the source
on the incomes of the obligations.
- The exemption of the SICAF and SICAV of any income tax other than the
deduction at the source on the incomes, which are versed for them.
- Extension of the mode of the exemption in force in holes country to the
whole of the Union, for the most been worth transferable securities carried out
by the private people.
- Adoption of a certain number of measurements of accompaniment among which
the simplification of the formalities of declaration and payment of the
deduction at the source.
- However, in spite of the efforts made by certain States in order to apply
these recommendations, the tax systems into force in the Member States of the
UEMOA still constitute real factors of distortion and disarticulation of the
regional stock market.
- We think that it is imperative in spite of the mistakes noted in the
application of the measures recommended by the UEMOA, of continuing the policy
of harmonization of the taxation of the incomes of regional market to ensure a
harmonious operation of the regional money market. However, the UEMOA must also
take measurements of accompaniment become essential.
- The application by the Member States of the measures recommended by the
UEMOA partial and is mitigated for several reasons of which most determining
are in our opinion:
- The legal status of the note taken by the UEMOA: the Council of Ministers
preferred to take a simple recommendation instead of a decision or of a payment
what leaves in the States all the latitude as for the implementation of the
recommended measures.
- The difficulties of a budgetary nature, which seem to be one of the
principal reasons of the partial and mitigated application of the aforesaid
measurements.
- The policies of structural adjustment imposed by the lessor leave a weak
room for manoeuvre to the "developing" countries for all the reforms likely to
have a budgetary incidence. The importance, which the States attaches to their
sovereignty, in particular when it acts of an aspect as significant as the
direct taxation. That is not exclusive with the UEMOA. For example, in the
European Union many attempts were made to re-examine the rule of the unanimity
that still governs the decision concerning the tax matter failed.
- However, without a harmonization of the taxations applicable to the incomes
of the transferable securities, the regional money market will continue to know
important distortions likely to disturb its operation and to mortgage its
development.
- Also, in spite of the difficulties encountered in its implementation, the
policy of harmonization of the taxations initiated by the UEMOA should not be
abandoned. It must simply be re-examined as well from the point of view of the
method used as compared to the degree and the contents even of the
harmonization.
- With regard to the method of harmonization, one would need that
coordination is privileged compared to centralization because, concerning
direct taxes, a thorough centralization would be likely to be dissuasive for
the States which, essentially, are very jealous of their sovereignty.
- Always concerning the method, it would more be necessary to privilege the
dialogue and persuasion to convince the States of the importance and the stakes
of this harmonization. However, instead of a timid initiative which consists,
by the way of a simple recommendation, to leave in the States all the latitude
as for the application of the recommended measures, coordination must be
reinforced; i.e. the Member States must accept "a common deliberation and also
limited their tax sovereignty for a collective decision".
- In addition, like legal instrument, the directive which binds the Member
States as for the results appears more suitable to us than the payment which is
more constraining because obligatory in all its elements and directly
applicable.
- As for its contents, the harmonization should extend, beyond the rates of
removal on the incomes of the transferable securities, with the national
systems of imposition of the incomes that must be re-examined in the direction
of their modernization and their simplification. But to be better perceived by
the States, the harmonization of the taxation of the transferable securities
should be accompanied by some measurements that appear essential to us.
- For the measurements of accompaniment in a concrete way, the first relates
to the need for the Member States of the UEMOA for signing a tax convention.
Tax conventions have as an aim to generally avoid the double taxations which
could result, for the people whose domicile for tax purposes is located in one
of the contracting States, of perception simultaneous or successive in this
State contracting and in the other (or the others) State contracting of the
taxes covered by the field of application of the aforesaid conventions.
- They can regulate, in particular. With regard to the imposition of the
incomes of a natural person or entity, the distribution of these incomes
between the States signatories according to precise methods'.
- Another object of tax conventions relates to the administrative assistance
between the Tax authorities of the contracting States. Thus, these
administrations will be able to be transmitted information of a Fiscal nature
at their disposal and which is useful to ensure the establishment and the
regular covering of the taxes covered by the field of application of
conventions.
- II also exists, in international fiscal law of conventions of assistance to
covering.
- The signature of a multilateral tax convention between the Member States of
the UEMOA would thus make it possible to avoid the doubles or multiple
impositions of the incomes of equity that constitute a factor of immobilization
of the investors.
- In addition, through this tax convention, one could envisage a key of
distribution of the taking away on the incomes of the regional market between
the Investor State of origin and The issuers State. The interest of such a
clause is double it at the same time makes it possible to hold account of the
existing economic disparities between Member States and to mitigate the
negative effects of a tax competition between them.
- Such a step is a pledge of success of the policy of harmonization because
it makes it possible to draw aside the reserves based on the budgetary
considerations. II should be stressed that two multilateral tax conventions
were signed by certain members of I' UEMOA it acts of the general convention of
tax co-operation between the Member States of the signed OCAM with Fort-Lamy on
January 29, 1971 and of the tax convention of the Member States of the CEAO
signed in Bamako on October 29 198412.
- Even if the OCAM and the CEAO were dissolved, the tax conventions signed by
the Member States of these two organizations remain in theory always in force.
- However, the application of these two tax conventions poses problems. As
regards tax convention CEAO, there are two Member States of the UEMOA, which
were never members of the CEAO to knowing Togo and Guinea Bissau.
- Also, the Benin one which adhered to the CEAO after the signature of tax
convention between the Member States of this organization is not link by this
convention.
- With regard to tax convention OCAM, certain Member States of this
organization would not have signed it. Moreover, a State as Mauritius Island
would have denounced it. Consequently, only the signature of a multilateral tax
convention between the Member States of the UEMOA will be able to eliminate in
a durable way the risks of doubles or multiple impositions. The second
measurement of accompaniment relates to the widening of the plate, which must
be concomitant with the implementation of the policy of harmonization.
- One of the characteristics of the finance public of the countries of the
UEMOA is the weakness of the level of the tax pressure. The average rate of the
tax pressure passed from 12,50% in 1993 (its level low during ten last years)
to 15,50% in l996.
- Since, it seems to be stabilized up to 15%. The variation noted between
1993 and the current years are explained by the actions which were carried out
by the governments and aiming:
- Ø The simplification of the tax legislation
- Ø Tariff dismantling on the level of the customs cords
- Ø The widening of the taxability in direction in particular of the
abstract sector - reinforcement of control and the fight against the fraud
- Ø And the limitation of the exemptions.
- In spite of the considerable efforts authorized by certain States and whose
principal objective is to balance the revenues from taxes compared to the
recurring expenses, it remains that the level of the tax pressure still
particularly low, is compared with that of the European countries the average
for these countries borders the 30%. This situation is explained, as we already
evoked, by the existence in all the countries of the UEMOA of an informal
sector that in spite of its dynamism and the distribution of its income escapes
from the tax officer.
- The stake of the control and the taxation of the abstract sector is so
important that the chances of success of the policy of harmonization of the
taxation of the transferable securities undertaken by the UEMOA depends on the
whole of the capacity on the States to accompany the measurements taken within
the framework of this harmonization by bold reforms going in the direction by
widening by the taxability.
- The reforms already undertaken in this field by a country as Mali could be
used as example with other Convention countries. Mali has just chosen, through
the law N°99-011 of April 01, 1999 for the institution of a synthetic tax.
This tax is due by the individual owners realizing more than 30 million annual
sales turnover. The tax liability synthetic, whose amounts are fixed and vary
according to the nature of the activity and the level of the sales turnover,
releases the company concerned of all other interior taxes or taxes direct or
indirect. That technical of imposition which has the simple merit and to be
adapted to the social and economic context of the countries of under area,
seems a beginning of solution with the thorn-bush problem of the widening of
the taxability.
C. Popularisation of the
Stock Market Culture
- The mechanisms of the money market are not well known by the economic
operators of the UEMOA. These economic operators are not aware of the current
of opportunities that the market offers to be able to take them.
- The stock exchange culture is almost non-existent under this area.
- Actions of promotion and education that must be carried out and should
allow:
- Ø A better knowledge of the market by the economic operators;
- Ø A more important recourse of the transmitters to the money market
for their financing;
- Ø An appreciable increase in the saving invested in transferable
securities with a mobilization of the abstract saving;
- Ø And a greater animation of the secondary market for a better
liquidity and a more increased efficiency.
- To achieve these goals, the actions hereafter can be carried out:
- Ø Open days in the National Antennas of Stock Exchange and the
Chamber of Commerce,
- Ø Meetings of information for the institutional transmitters and
investors,
- Ø Emissions broadcasted in the eight country of the UEMOA on topics
related to the money market,
- Ø Meetings of education of the particular investors,
- Ø Organization of recurring public demonstrations dedicated to the
industry of the transferable securities
- Ø Documentary on the money market to be diffuse in the various
countries.
- Ø Training session for the accountants, experts, consulting,
economic lawyers and economical journalists.
- In complement of the saving available in zone UEMOA, the attraction of the
capital coming from abroad is essential for the development of the Regional
Stock market, and consequently for the financing of the companies.
- This capital will contribute, in particular, with an increase in volumes of
transactions on the market, with the reinforcement of the credibility of the
Regional Money market and it's opening on the foreign money markets, with the
development of the products of collective saving, etc.
- The actions hereafter can be carried out:
- Ø The organization of the meetings of information for the Diaspora;
- Ø The participation in international forums organized on the
mobilization of the saving and the markets financial;
- Ø The creation of a window on the Web site of the Regional Council
and that of the BRVM for the foreign Diaspora and investors to answer their
specific questions; Co-operation with banks of the habitat for the creation of
transferable securities in the form of mortgage deeds.
B. Improvement of the
services of the BRVM:
- Section 1. Reduction of the access conditions to the market and promotion
of competition and equity in the treatment:
1) Reduce the
tariffs:
- One of the problems to which the Regional Money market must face is that of
its capacity to appear more competing than the other sources of financing in
particular those of the banking environment.
- Indeed, the market will not show any interest for the potential
transmitters if the tariffs which are applied there, are not attractive.
- And also, if the procedures of access to this type of financing appear too
constraining.
- It is the same for the investors who will not come on the market if the
costs of the transactions are high.
- Currently, the regional money market has a structure of costs high
comparatively at the other emergent markets.
2) Ease of the procedure
and the access condition:
- The conditions of access to the market are considered to be too
constraining in particular, the level of capital required with the companies,
which excludes a great part of the potential transmitters, which are the SME.
- The following actions must be carried out:
- - Identify through a study the suitable mechanisms to set up
- - Reduce the tariffs applied to the market without compromising the
viability of these various actors ·
- - Implement a good policy aiming at the increase in the number of companies
registered to the dimension;
- - Promote competition and equity enters the professionals of the industry
of the transferable securities;
- - Proceed to a revision of the regulation on the conditions of access to
the market by adapting it to economic realities of the Union;
- - Study the installation of a market directed by the courses to reduce the
expenses of negotiation on the BRVM;
- - Study the installation of a non-quoted market.
3) Innovative product
development
- Realities of the economic environment of the Union and the needs in order
to make the market more competitive.
- It is necessary to make the opening of a compartment to the companies of
modest size and innovating companies. This compartment will give an easier
access to the non-eligible companies to the official list by the decreasing the
admission requirements.
- The objective of to set up a new compartment of the BRVM consists in
answering the endemic problem of the weak accessibility to the long-term
financings by small and medium-sized companies and industries, of the UEMOA.
- This new compartment says "Compartment of growth" will have to be directed
towards the issues of titles of capital of SME/SMI, negotiable with the BRVM.
- Definite SME like "the young company with strong potential of development
characterized by a burning need for investment and having a good future
profitability".
- Acting of the lawful aspects, they will have to relate mainly to the
conditions of access to the Public Call with the Saving (APE) and the admission
to quotation.
- They are at the level of the Regional Council of the Saving Public and the
Financial Markets (CREPMF) like to that of the BRVM and the DC/BR.
- Inciting measurements will be also necessary to attract companies. The
regional Authorities will have to support the formation of fixed assets.
- Acting of the criteria of admission, we propose the following conditions:
- Ø Capitalization:
- More than 100 million Fife; ·
- Ø Profitability:
- It is not required on the last exercises. However, a plan of development
over three years must reveal the potentialities of growth and profitability;
·
- Ø Seniority:
- At least a exercise, with accounts certified by an Auditor, and a held
Ordinary General meeting; ·
- Ø Listing requirements:
- New issue of capital if the company has an existence of less than 2 years;
Transfer of old shares or new issue of capital if the company has an existence
of at least 2 years;
- Diffusion in the public from at least 20% of the capital;
- Signing of a contract of animation
- Ø The legal form: limited company.
- Ø Obligation of communication:
- Engagement to reveal information in accordance with the lawful texts of the
CREPMF, the BRVM and the DC/BR.
- The success of the "New Compartment" will also depend on the environmental
and commercial aspects:
- The environmental aspects consist with the adoption of incentives in favour
of SME eager to be registered on this new compartment.
- These reforms can be about the physicality on the initiative of the States
of the financial UEMOA and about financial such as the granting of the credit
limits in the short and medium term under preferential conditions, the
installation of privileged conditions of access to the guarantee funds, by the
regional and international organizations of development.
- These environmental aspects also relate to the supports and the technical
assistance to SME (organization legal, administrative, countable and financial;
feasibility study; formation; accompaniment in the process of introduction out
of Stock Exchange; follow-up after quotation; subsidy, etc).
- The installation of a bond market for the national debt and also a market
of mortgage bonds is also a path to be exploited.
C. The rating
A. Definition:
`The financial notation or rating makes it possible to measure
the quality of the signature of the borrower by technique of financial analysis
and scoring.
The agencies distinguish two types of notes: the traditional
notation which one applies to the short-term loans (less than one year) or in
the case of a long run issuing in the market and the other to the notation of
reference (in the absence of emission) in the short run and long-term which
measures the risk of counterpart that represents the borrower for an investor
(note allotted to a debt of first rank). The financial notation offers to the
investor reliable information on the risk of the credit'.
(c) Source Pierre Vernimmen corporate finance
B. Origin:
Ø Dow Jones Industrial Average: May 1896
Synthesized in one number the performance of 30 industrial
values.
Ø Moody's Investor service: 1900
Created by John Moody's, a journalist having doubt about the
capacity of the railway company to honour their incurring.
Ø Caisse Nationale des Télécoms: 1975
This organism started the rating in France.
Ø Agusto & co.: 1992
It is a Nigerian rating agency pioneer in this field but which
act on the Nigerian stock exchange only.
Ø Global Credit Rating: 1996
A South African rating agency and which is now, the biggest
one in Africa.
The rating concern different actors:
The issuers: the society issuing the bond.
The issue: the quote shares themselves and also the
financed project.
On the majority of the stock market, companies are rated by an
external agency (often compulsory) however lot of them (companies) are not
subject to the rating. In this case, we are talking about the `Blue chips'
here.
Blue chips are the big capitalization in the market.
----
`How to build a reliable relationship between the market
and the investor'
----
We described before the hypothesis for the lowering of the
admission requirement in a case of the building of a new compartment like the
alternext.
For sure the new compartment will be more risky for the
investor be we can secures it by an appropriate rating and watch over of the
company financial statement.
In order to facilitate the lookout of the companies we have to
build a listing according to the size and the objectives of the company, so the
need of ratings agency directly appears in this situation.
The rating aim to appreciate the capacity of the issuers of
the loan to honoured his commitment.
Able to refund the bondholders in time and also to paid the
interest.
In the case of the BRVM a conference takes place in Dakar
(Senegal) on the initiative of the CREPMF. The main topic was `The reform of
guaranties and the introduction of the rating in the regional market'
.
C. Advantages:
We can start by showing the political advantage from this
statement; a will by the UMOA stats to destroy the informal sector which is
almost 30% of the economy in some countries in this area.
Case of the Ivory Coast:
There is an initiative by the Ivorian Chamber of Treasure try
to set up the process of normalized billing in order to secure the facility and
to fight against the fraud.
The SME's represent a biggest part of the economy in those
countries.
To have a real transparency in their activity will help the
state the market and also the company.
We are going to develop three axes concerning the rating and
his utilities for the:
- SME's:
They aimed to attract a new source of fundraising, and also to
diversify their incomes.
It is also a marketing tool that they can send to their
partner.
To compare their own performs to competitors.
A quality tool enable the SME's to improve their business
efficiency, it enlighten strong and weakness and also gave a new statement
about the company strategy.
- Investors:
Identified the SME's able to fulfil their investment
requirements.
That provide to them a tool to evaluate companies, and also
which point out the quality of the information gave by the company. Follow the
situation of SME's, which have interest in the market and also how they manage
their finance.
- Financial sector
A better access to everybody thanks to the Internet (free
website access), broadcasting of detailed information.
`The rating is for sure a tool for the public
utility'.
It is important to notice that the rating is before everything
an `OPINION' it is not sale, buy or hold order.
The notation is developed under those followings
principles:
Ø A quantitative and qualitative analyses, concerning
keys financials ratio.
Ø A subjective analyse of the corporate strategy,
Ø A set up of an operational process,
Ø Analyse of the corporate board of director,
Ø Analyse of the competitor,
Ø And the regulatory environment.
The mark from that is predictive.
The models based on the quantitative method are for the short
term.
Only the structural modifications are considered. Are not well
thought-out, economical cycle and a cyclical variation
The difference between the financial analyst and a rating
analyst is that the first one uses only public information although the second
use both public and private information.
D. The initiative to be
rated:
This rating enterprise can be required by the issuers or can
be clamp by a rating agency in order to built a relation.
One time the relation is institute the company must be
constant in the share of the information.
The financial analyst formulates a judgment on the corporate
worth and the rating analyst on the corporate risks illustrates by a mark on a
normalized scale and a perspective completes every mark.
In the case of the UMOA area, it exist several IMF rating
agency.
A framework of a rating
process:
The G.I.R.A.F.E Method by planet finance.
Aim: evaluate the performance and the institutional risk.
Governance: Effectiveness of the ownership
structure, coherence in the strategies etc...
Interview the board of director's members.
Information: Evaluate the availability and
accuracy of the information.
Risks managements: If the companies have an
appropriate identification on the risk related to
their work.
Activities and Services: Quality of
management of the services.
Financing and liquidity: Capital structure,
financing strategies etc...
Efficiency and profitability: Is the financing
strategy sustainable or in a short-term strategy.
General conclusion
With the creation of the UEMOA area, we attend free movement
for the floating asset including a freedom of placement of titles on an
integrated money market gathering the Member States of the Union sharing same
currency, the FCFA.
However, in spite of the creation of the BRVM which aims to
contribute to the diversification of the financial sector, to mobilize the long
resources necessary to the financing of the production and the investment of
the companies and finally to support regional integration, we note a lack of
dynamism of the stock market
----
"How to make the BRVM more effective for the financing of
the companies in UEMOA? "
----
At the end of our study, we can note like strong points that
the BRVM supported:
Ø New financing offered to the companies.
Ø An increase in the resources mobilized by the
companies
Ø A geographical diversification of the issuers and
investors
Ø Reduction of the costs of financial intermediation
But this framework favourable to the development of the
companies remains disturbed by the following weak points:
Ø The insufficient number institutional investors;
Ø The limited number of products offered by the
BRVM;
Ø The market that is not very liquid.
Ø Conditions of introduction on the market;
Ø An unstable political situation;
Ø Non implication of the governments in the development
of the market;
Ø The not harmonized taxation and misses it suitable
legal device,
Ø Too constraining guarantees;
Ø Lack of stock exchange culture of the populations;
Ø Lack of dynamism and professionalism of the actors of
the market;
Ø Ignorance of the stock exchange market of the UEMOA
by the other money markets;
Several actions have to be taken for a true revival of this
money market and concern mainly:
Ø The diversification of the products offered by the
stock exchange market and the widening of the targets;
Ø The effective organization of the money market and
the revision of the conditions of access;
Ø The perception of the BRVM like structure of saving
and the contribution of the official institutions to the revival of the market
and the political stability of the area;
Ø The harmonization of the taxation and reforms it
guarantees
Ø The actions of development of the stock exchange
culture and promotion of the BRVM inside as outside zone UEMOA;
Indeed, the opening of a third compartment which would have as
a target the SME's, would have as an advantage the diversification of our
products and services but also the widening of our targets, and to make the
market more liquid.
Moreover, in order to respect the international standards, a
separation of the actors (public and private poles) should allow a better
management of the operations.
Furthermore, one revision of the conditions of access is
essential to make it possible more companies to have recourse to the market,
and a collaboration with the banks and establishments of saving which do not
have the same policy of retrocession of the saving collected near the agents
with capacity of financing should clarify the transmitters and investors on the
role of each actors and to harmonize the strategies which are more
complementary than concurrent.
Lastly, the BRVM constituting an adequate response of the
Member States of the UEMOA to the challenges of globalisation, by the
development assistance and with the growth at lower cost of the companies
installed on their respective territory, a greater implication of the States in
the process of privatisation should make it possible to accommodate a greater
number of companies to the listing, but also a revision of the regional
taxation and system of the guarantees.
To finish, actions of promotion, formation and information
must be undertaken in order to popularise the stock exchange culture and to
allow the companies, whatever is their size and their branch of industry, to
become aware of the tool of financing which the BRVM represents.
Bibliography
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IMPRISUD
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