(Ecofin Agency) – Once operational, this market will represent a complementary source of financing for SMEs, the engine of economic growth in the WAMU zone.
The West African Monetary Union (UMOA) could soon welcome a bond market dedicated specifically to small and medium-sized enterprises (SMEs). A feasibility study concerning this project started on Tuesday 1is October 2024. It will be led by the Financial Markets Authority of the West African Monetary Union (AMF-UMOA), regulator of the regional financial market, in partnership with the Spanish government.
This SME bond market aims to diversify the sources of financing of these companies by offering them access to financial resources via the issuance of bonds. “The creation of a bond market specifically dedicated to SMEs presents itself as a credible alternative in addition to bank loans to support the development ambitions of our SMEs, the lungs of our economies”confided Badanam Patoki (photo), president of the AMF-UMOA.
Barely announced, this project is received differently by financial players in the area. Some, like Maxime Lokossi, consultant in mesofinance and digital finance, and former bank executive residing in Benin, see it as an interesting prospect in terms of access to financing for SMEs in the Union. “ I’m looking forward to seeing this study provide avenues for setting up a dynamic bond market for SMEs in WAMU. It offers significant growth potential for these companies”he confided.
Other more cautious financial players are wondering about the interest that the establishment of this market could generate. “Any initiative towards expanding funding dedicated to SMEs should be supported. We still need to define SMEs and define what can attract SMEs to this type of financing. Access to financing is easier from commercial banks. Access to long-term financing is already available from commercial banks. Access to fixed rate financing would be possible if banks wanted it, but this is not proven”underlined Clive Wykes, senior bank management consultant. And to add: “eIn conclusion, banks may not be aggressive investors in SME bonds, especially since they have the ability to offer long-term, fixed-rate financing to SMEs. However, their reluctance to do so demonstrates their shortcomings and weaknesses.”
Note that the WAMU regional financial market allows companies, states and local authorities to raise funds by issuing financial securities. It currently consists of a money market within which financial institutions exchange short-term liquidity with the Central Bank or with each other, and a medium and long-term capital market within which they meet on the one hand , the demand for capital materialized by the issue of securities by issuers and, on the other hand, the supply of capital which is expressed by the purchase of these securities by investors. It is divided into two compartments which are the stock market and the bond market or bond market.
Chamberlain Moko
