Bank competition limits expansion of the Mozambique Stock Exchange

7 July 2017

Competition for customer funds in the banking system in Mozambique is the main reason why the country’s stock exchange has only five listed companies, according to a study commissioned by the Mozambican Stock Exchange (BVM), the Mozambican press reported.

The study, conducted by the US Agency for Development’s (USAID) Supporting the Policy Environment for Economic Development (SPEED +), sought the reason or reasons why the BVM has only five listed companies in the stock market, despite the economic development of the country, with average growth rates of 7.0% in two decades.

Economist Hipólito Hamela, consultant in the drafting of this study, said that the main conclusion is that the BVM has its own competitors as capital market operators, that is to say, banks and “they are more interested in inviting a person who has excess liquidity to make a time deposit than to buy shares.”

Hamela, quoted by daily newspaper O País, also said that banks can encourage companies that want to expand their business by opening up their capital to new shareholders through stock exchange operations to take on bank loans instead.

The BVM, established in 1999, currently has five companies listed on the stock market – Cervejas de Moçambique, CETA – Engenharia e Construção, Companhia Moçambicana de Hidrocarbonetos, Empresa Moçambicana de Seguros and Matama – Matadouro de Manhiça. (macauhub)