Analysis of the West African Regional Stock Exchange (brvm)

Abstract

The purpose of this contribution is to analyze the opportunity of investing in the West African Regional Stock Exchange (BRVM). Using an analysis of the market economic conditions and regulations, we will first draw out the advantages for foreign investors and after explain the way by which they can invest in the BRVM. During the course of our analysis, we will also compare the BRVM to other emerging markets to show the benefits of holding a position on BRVM’s securities.

Analysis of the West African Regional Stock Exchange (BRVM)

Introduction

BRVM is a regional stock exchange serving eight West African countries. It was legally constituted on December 18, 1996. The stock exchange is headquartered in Abidjan, Cote d’Ivoire. It also has Market offices in each of the countries member. BRVM is a private corporation with 3 062 040 000 F CFA in capital, of which 13.50% come from the West African Economic and Monetary Union (WAEMU) (About BRVM). Due to the liberalization policies in WAEMU, BRVM is, since its creation, a market open to foreign investors. In fact, more than half of the companies quoted on the market are subsidiaries of international companies like “Bollore Africa Logistics”, “Nestle” (listing). The exchange even gives the opportunity to foreign investors to invest in West African Securities through the creation of brokerage accounts. However, foreign investors are very skeptical of investing in BRVM. In this paper, we attempt to show the opportunity of investing in the West African Regional Stock Exchange (BRVM). The paper is organized in four sections. The first section will present the West African Monetary Union WAEMU and analyze its currency. The second section will describe the West African Regional Stock Market (BRVM). The third section will compare the BRVM to other emerging markets in term of economic conditions and regulations. The fourth section will explain the tools that foreign investors can use to invest safely in the BRVM. We will end by a summary and discuss a financial strategy that can be appropriate.

A. Analysis of the system socio economic in West Africa

The West African Economic and Monetary Union (WAEMU) is an organization regrouping eight countries categorized by the use of a single currency, the Franc de la Communauté Financière Africaine (F.CFA). This currency is issued by the Central Bank of the West African States (BCEAO). The eight countries are Benin, Ivory Coast, Togo, Mali, Burkina Faso, Senegal, Niger and Guinée Bissau.

1. The organization of the WAEMU

The West African Economic and Monetary Union (WAEMU) were created in January 1994. The principal purposes