Country Report Central African Republic August 1997 Main report

Outlook for 1997-98: Regional electronic stock market is on the cards

There is growing expectation that the Central African Franc Zone will follow the lead set by its West African counterpart in preparing the establishment of a regional stock market, based on electronic screen-based trading. This would allow local companies in the CAR, which is probably too small an economy to support a stock exchange of its own, to raise capital through the equity market. The exchange would also provide a mechanism for government to sell shares in parastatals to a broad range of private investors, local and foreign. It would in addition help to soak up the excess liquidity in the region, estimated at CFAfr160bn ($256m) by one expert. At the moment, surplus capital tends to be transferred out of Central Africa, or invested in relatively unproductive sectors, such as real estate. Local firms frequently have great difficulty in obtaining loans from banks at affordable interest rates; the equity market could offer them a fresh avenue, where they might be able to raise funds at lower cost. Brokers in each country would be linked electronically. There would be no central open outcry floor, just a central computer operation through which all the trades would pass. The operation could be set up at relatively low cost. The two serious candidates for the home of the central technical and regulatory institutions of a regional bourse are Gabon and Cameroon. While advocates of the scheme speak with great optimism, it is at best a prospect for the medium and long term.

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