The CEO of the Mozambique Stock Exchange (BVM), Salim Valá, lamented on Thursday 25 July the fact that most national private companies and economic agents are still not making proper use of the capital market.
Speaking on the panel on ‘Evolution and Trends in the Financial Sector in Mozambique’ at the Arab-Mozambique Investment Forum, Salim Valá pointed out that, in terms of new products to be introduced in the future, ‘we are preparing university bonds, municipal bonds, sustainable bonds, investment funds and certificates of deposit. We are also working with our partners and the regulator (BdM) to introduce Islamic bonds to the capital market.”
The head of BVM emphasised that through the capital market, entrepreneurs can diversify and reduce investment risk. “It’s a very important bet for business development, not only because the cost of money is relatively cheaper, but because it allows for longer periods of time.
We have 20 stock exchange operators in Mozambique and 15 of them are banking financial institutions. We already have five autonomous stockbrokers, which didn’t exist four years ago. We have 15 real estate custodians, 18 prime dealers, over 26,000 investors with securities registered with the central real estate securities office and a market capitalisation of 28.5% of GDP,’ he said.
BVM’s CEO
What are the reasons for a company to finance itself on the stock exchange? ‘To summarise, the cost of financing is lower, but there are trade-offs, as you have to have good governance and management. Financing through the BVM promotes good governance and attracts investors, including foreign ones, attracts more business to the company and increases its visibility. When a company is listed on the stock exchange, it presents its basic information to the entire public and not just to investors,’ explained Salim Valá.
Through the capital market, entrepreneurs can diversify and reduce investment risk
BVM
For his part, the monetary stability administrator at the Bank of Mozambique, Jamal Omar, explained that the institution’s conviction is that macroeconomic stability is an important condition for attracting domestic and international investment. “That’s why the success of our mission to combat inflation not only protects the purchasing power of citizens, particularly those on lower incomes, but also favours savings and investment in the private sector. It is with great satisfaction that we can say that, as a result of the policy measures taken, inflation today stands at around 3%,’ he said, pointing out that despite the transformations that the financial system has undergone over the last ten years, the national banking sector, which is the dominant part of the financial sector, remains solid and well capitalised, with the solvency ratio remaining above the minimum required, rising from 15% in 2014 to 26% today.
In terms of new products to be introduced in the future, we are preparing university bonds, municipal bonds, sustainable bonds, investment funds and certificates of deposit.We are also working with our partners and the regulator (BdM) to introduce Islamic bonds to the capital market.
BVM
“In the last ten years, we have seen a slight reduction in the number of institutions supervised by the Bank of Mozambique. The number of banks went from a total of 19 in 2015 to 15 in 2024, reflecting the merger of two banks and the downgrading of three others. In terms of capital structure, by December 2023 the banking sector was mostly made up of foreign capital, at around 83%, signifying greater openness and favourable conditions for foreign investment. In the same period, there was significant growth in microcredit operators and payment system providers, in the context of the explosion of fintechs,’ he added.
