MAPUTO, A study requested by the Mozambican Stock Exchange (BVM) and unveiled here this week claims that only a handful of companies have their shares quoted on the BVM because of competition from the country’s commercial banks.

The study, conducted by the United States Agency for International Development (USAID) at the request of the BVM, notes that although the Stock Exchange was founded 18 years ago, only six companies have listed their shares on the bourse.

One of the consultants who wrote the study, Mozambican economist Hipolito Hamela, stressed that, although the banks are the sole intermediaries in the capital market, they are also competing with the BVM.

Banks, he argues, have no interest in suggesting that people with cash to spare should buy shares listed on the BVM; instead, they urge such people to put their money in deposit accounts.

The banks tell potential clients that there is no certainty about the dividends that may be paid by CDM (Beers of Mozambique, the country’s main brewer), or by CMH (Mozambique Hydrocarbon Company), two of the companies quoted on the BVM, but they can offer an annual interest rate of 22 per cent on a deposit account.

Hamela argues that the banks also obstruct companies which are thinking of raising capital through the sale of shares on the BVM. They suggest that, instead of raising money on the capital market, they should simply take out a bank loan.

Other obstacles to the expansion of the BVM include the fact that many companies still do not have their accounts properly organized, and the sheer unfamiliarity of the concept of a capital market. Hamela recalls a businessman asking him: If my company is profitable, why should I put 20 per cent of the shares on the BVM, to divide the profits with other people?.”

Nonetheless, Hamela feels that the Bank of Mozambique and the Ministry of Economy and Finance are open to discussing expansion of the capital market.

BVM Chairperson Salim Vala hopes the study undertaken by USAID will become an instrument of reference which will help improve the overall indicators of economic stability in Mozambique, focusing on expanding the instruments to finance the economic activity of companies, particularly small and medium enterprises (SMEs).