The presence of a stock exchange is generally considered to be vital if a country wants to be seen as having a genuine financial market. Many Sub-Saharan Africa jurisdictions have bourses, namely Botswana, Cameroon, Cape Verde, Ghana, Kenya, Malawi, Mozambique, Namibia, Nigeria, Rwanda, Somalia, South Africa, Sudan, Swaziland, Tanzania, Uganda, Zambia and Zimbabwe. One notable absence, however, is Angola.
“Angola is a mature economy, much more mature than many other African nations, but it has yet to establish a stock exchange,” explains Miguel Castro Pereira, Managing Partner of Abreu Advogados. “While Mozambique is less developed than Angola, it has a stock exchange. A bourse is an attractive alternative to the big banks and loans.”
Castro Pereira says the oil and gas markets can benefit from capital markets, but says initial public offerings would not be the priority. Mozambique launched its exchange in 1999 but just three companies are listed. More significant is to use the markets as a vehicle for placing debt.
“Mozambique may only have three listed companies but that is not really relevant because the exchange is generally not used to sell equity in a company,” Castro Pereira continues. “A bourse would allow the biggest companies to place securities internally, which would be critical in helping to diversify from the rather narrow banking market that currently operates. In the case of Angola, it has wanted an exchange for many years and recently there have been moves to establish a structure.”
Castro Pereira says his firm helped two clients establish real estate funds in Angola, with two more matters ongoing.
“Some big Angolan companies, like Sonangol, may decide to float,” Castro Pereira says,” but the real benefits are not opening share capital to investors but the chance to buy bonds and securities.”