BEAC announces progress in marketable securities in CEMAC

At the end of a meeting which was held 19 December 2014 in Douala, the economic capital of Cameroon, the Central Bank of the six CEMAC member countries adopted the legislative framework on the establishment of a market of marketable securities in the sub-region.

The text thus announced should still subject to approval by the Council of Ministers of the Monetary Union of Central Africa and validated by the heads of State of the sub-region. With this new legal instrument, the ambition of BEAC is to broaden the base of funding within the economies of the countries of the CEMAC zone.

Progress towards the establishment of the market of marketable securities in Central Africa comes as the Cosumaf (regulator of the financial market in the CEMAC zone) is in full in the process of implementation of the process of dematerialisation of securities in the sub-region, an initiative that is expected to make it easier, for the circulation of securities among investors and thence to open new opportunities for financing for companies.

This formulation of a legislative framework for the establishment of a securities market is a further step in a process which, on October 31, 2008, has been a significant step forward, with the decision by the monetary policy Committee to admit as collateral for Central Bank refinancing the debt securities issued by different economic actors in the sub-region.

The challenges are many and the consideration by the Council of Ministers is not likely to be a formality. The first challenge that the text will have to overcome, is its ability to not position itself as a substitute for the two markets in the sub-region (the regional BVMAC and the Douala Stock Exchange), engaged a strong competition to the detriment of a strong stock market.

The other challenge will be the class of the securities admitted to the market, where, next to a regional approach to dematerialization, Cameroon once more took the option to pursue a solitary path in the same segment, which makes two legislative frameworks of dematerialisation to a same sub-region.

If the legal framework of this market is finally adopted, a critical situation will be that of its effective implementation. If many banks already offer conservation services, dematerialised securities management requires specific skills, for which few financial institutions are ready in the sub-region. BEAC also proposed to convene timely meetings with stakeholders in the process to promote its appropriation.