Gov't formalises entry of UCITS on local financial market

After its adoption by Parliament during its ordinary session of June 2016, the Cameroonian Head of State, Paul Biya, promulgated on July 12, the law on undertakings for collective investment in transferable securities (UCITS).

This presidential act officially opens the way for these stock brokers on the Douala Stock Exchange (DSX), the local financial market.

The July 12, 2016, law acknowledges as UCITS open-ended investment trusts (Sicav in French), whose “minimum capital will be determined by a decree from the Minister in charge of Finance”; and collective investment undertakings (FCP in French), whose management regulations should have been validated beforehand by the Financial Markets Commission (CMF), the watchdog of the Cameroonian financial market.

According to experts, UCITS have at least two advantages for investors. In addition to being managed by professionals, we learn, their portfolio has the particularity of holding various financial securities (both obligations and shares), which offers more flexibility.

Moreover, the investment risk is shared in UCITS, as the investor only owns part of a portfolio common to many investors.

With the financial products diversification they provide, the flexibility and the level of risk sharing they offer, UCITS could help in further boosting the Cameroonian financial market.

For over 10 years, this market has listed only three companies and seems to be essentially based on the bonds which are regularly launched by States (Cameroon and Chad) and financial institutions such as IFC or BDEAC.