Financial markets have become real barometers of the global economy since the beginning of the health crisis. After a stricken month of March, the recovery is underway according to Félix Edoh Kossi Amenounve, the Director General of the Regional Stock Exchange (BRVM) who is betting on a rapid recovery in regional growth.

What does the BRVM represent in terms of number of companies, development and weight in regional GDP? Félix Edoh Kossi Amenounve: To date, the BRVM represents 46 listed companies, including 35 companies in Côte d'Ivoire, 3 in Burkina Faso and Senegal, 2 in Togo and one company respectively, in Benin, Mali and Niger. It is also a market capitalization of the equity market of 4,139.157 billion CFA francs, a bond market capitalization of 5,196.908 billion CFA francs for 68 bond lines, including 47 sovereign loans, 14 loans from regional organizations, 3 private sector loans, 4 sukuks and a total capitalization of 9,336 billion CFA francs, i.e. 12% of WAEMU GDP. Some 33.4 million securities have been traded since January 2020 - 14% more, compared to the same period in 2019 - and a transaction value of 47.99 billion CFA francs, over the period under review, a decrease of 16%. What were the growth forecasts in the WAEMU zone at the end of 2019 and what are they to date, after the arrival of the Covid-19 pandemic in Africa? At the end of 2019, the BCEAO forecast growth of 6.6% in waeMU economies for 2020. According to IMF estimates, the Union's economic growth would be 2.5% in 2020 and rise to 6.8% in 2021, if the health crisis ends quickly. At the moment, we are not in a long cycle or even in a great economic depression, given the current forecasts. How is the capital market doing and do companies continue to list, despite the current health context? Capital markets have been a real barometer of the global economy throughout this crisis [...] The BRVM Composite Index fell by 13.49% from January to June 12, 2020, a smaller decline compared to what is observed on the continent, in Egypt for example with a decline of around 20%. Since January 2020, no new company admissions - IPO - have been recorded on the BRVM share market, on the other hand, the bond market has been dynamic with 9 bond line admissions, from January to May 2020, for 1,057 billion CFA francs, an increase of 198% compared to the same period in 2019. The coronavirus has pushed companies and institutions to reorganize their activities. The BRVM has also innovated by celebrating on May 26, the launch of a first virtual listing. What are the main initiatives taken since the arrival of the pandemic by the BRVM? On May 26, 2020, the BRVM effectively organized its virtual first listing ceremony with the Treasury of Côte d'Ivoire, the reference issuer on our bond market. The Covid-19 pandemic has led the BRVM to adapt. We activated the Business Continuity Plan as soon as the first cases of contamination on the continent were confirmed. We have adjusted the listing schedules to adapt to the measures taken by Côte d'Ivoire and recommended that issuers communicate their exposures and prospects following the pandemic situation. Finally, we have developed a number of educational communication tools for our partners and stakeholders to reassure them of our ability to continue our activities during this period of crisis. What are the first lessons learned from the Covid-19 pandemic? Technology, especially digitalization, will have a strong influence on the conduct of companies' activities in the coming years. In addition, companies need long-term capital to strengthen their financial structure and withstand crisis situations. Finally, it appears that new sectors of activity are attracting the appetite of investors such as technology, health, education or the environment [...] Since the arrival of the pandemic, investors have reaffirmed their confidence in listed companies, otherwise the consequences on the decline in indices would have been much more drastic, and would have been accompanied by high volatility. In general, how can financial markets be strengthened in Africa? In my opinion, we must accelerate the de3 development of bond markets, through a better development of traditional financing instruments: conventional bonds, municipal bonds, project bonds,... There is still room to deepen the markets with bond issues of more than 15 or 20 years, and to capture the resources of insurance companies and pension funds, which have seen their reserves increase in connection with the rise of the middle classes. Bond markets could also promote innovative instruments, such as Diaspora bonds, green bonds, climate bonds, sanitary bonds, social bonds, and education bonds,... It seems essential to facilitate the access of SMEs and startups to the bond markets, through the issuance of Basket bonds. It should also contribute to the long-term development of the equity market (...) In addition, African capital markets need to accelerate their integration to offer a broader resource raising platform for governments and companies as well as a more liquid continental market. On what levers is the attractiveness of the WAEMU zone based? The WAEMU is a community area of 8 States for a population of 127.4 million inhabitants, with a GDP of 80,367 billion CFA francs, or about 7% of the continent's GDP. It is a fully integrated economic and monetary zone and a member of ECOWAS. The WAEMU is characterized by the same monetary unit, the CFA franc, which is in fixed parity with the Euro. At the same time, economies are diversified [...] the financial system is dynamic and relies on an ecosystem composed of a central bank - BCEAO -, a development bank - BOAD - 130 banks, 21 financial institutions, 108 insurance companies, 508 microfinance institutions but also a Regional Financial Market organized around a Regulatory Authority (CREPMF), two central structures - BRVM and DC/BR -, 30 stock exchange companies and 105 UCITS. Finally, the WAEMU regulatory provisions authorize, for international investors, the free repatriation of funds (dividends, interest, etc.). How can international players be more interested in portfolio investment in the region to support private equity funds and develop FDI? Portfolio investment flows in the WAEMU stood at CFAF 1,181.4 billion in 2018 compared to CFAF 1,333.4 billion in 2017, a net decrease of CFAF 152 billion. As for foreign direct investment (FDI), it amounted to 2,300.7 billion - 3.1% of GDP - at the end of 2018, against 2,156.1 billion - 3.1% of GDP - at the end of 2017 (or 12.2% of the total stock of capital received). In my opinion, several levers could promote increased portfolio investment in the region to support private equity funds and to develop FDI. The introduction of a tax incentive for the development of the private equity industry in the zone, the strengthening of the solicitation of the Regional Financial Market of debt by the States of the Union to the detriment of Eurobond issues, to cover their financing needs and finally, the facilitation of the outflows of private equity funds by African stock exchanges. International investors need reassurance. How to mobilize diaspora funds for sustainable projects? According to the BCEAO, net inflows under the Union's secondary income (current transfers between residents and non-residents) increased by 5.2%, from CFAF 2,508.6 billion in 2017 to CFAF 2,639.9 billion in 2018. Net transfers to the private sector amounted to CFAF 1,681.1 billion in 2018 compared to CFAF 1,577.8 billion in 2017, an increase of 6.5%. This evolution is explained by the increase in net remittances from migrants, which rose from 1,211.9 billion CFA francs in 2017 to 1,317.9 billion CFA francs in 2018, an increase of 8.7% [...] It is now necessary to direct the resources collected towards products of general interest such as public-private partnerships (PPPs) or the creation and financing of SMEs. As such, Diaspora bonds are a financing channel that must be exploited by national treasuries and the private sector. Let us also highlight the success of the Diaspora bonds of the Banque d'Habitat du Sénégal (BHS) which raised 20 billion CFA francs in 2019. This is an example that should be followed in the Union. Interview by Marie-France Réveillard