Benin: Companies Shy Away From Stock Markets

Casablanca — Benin, a neighbouring country to West Africa’s economic giant Nigeria, has just a single company listed on the regional stock exchange, 700 kilometres along the coast in Abidjan, Ivory Coast.

This is despite the existence of four brokerage firms dealing in securities in Cotonou, Benin’s commercial hub. And the one company to have its shares traded on the market – Bank of Africa-Benin – is actually controlled by a Moroccan group, BMCE Bank.

Benin’s situation is similar to most African countries where the overwhelming majority of companies are slow to have anything to do with the stock exchange. The lack of enthusiasm on the part of companies in Benin is generally explained by the fears of businesses reluctant to disclose their secrets and at the same time hand over vital information to their competitors.

These fears are ill-founded, according to Karim Hajji, chief executive of the Bourse de Casablanca in Morocco, the largest stock exchange in French-speaking Africa. He told a group of journalists earlier this month that cultural and other factors created a block for companies hesitant to go the stock market.

“Entrepreneurs want to carry on controlling their companies,” he said.

Companies reluctant to have their shares listed in the market were often those with problems of governance and transparency. Concerns about not giving information to competitors, he added, led companies to turn in on themselves.

On the other hand, he pointed out the advantages quoted companies can enjoy, above all the free publicity and visibility they obtain as a result of having their share price on display.

“On the New York stock exchange you have to pay $500,000 to be listed,” he pointed out, citing this as a demonstration of the value of joining the stock market.

In Benin’s case, the type of company that predominates in the country may be the root of the problem. Most businesses are small, usually run by a family or one person, while the stock market attracts large companies. The Abidjan exchange, which serves eight mostly French-speaking countries in the region, might have scope to lighten its conditions for small companies. Benin’s companies might then no longer be on the margins of the stock market at a time when Africa is grappling with the impact of the global economic crisis.

This story was written under the auspices of the TRF/NORAD Journalism Training project.