Stock exchange’s “Segundo Mercado”


Belmiro Miguel Nhamithambo (FSDMoç Knowledge, Monitoring and Learning Analyst) and Dércio de Celestino Pedro (FSDMoç Investment Analyst).

Why SMEs Are Not Listing on Mozambique Stock Exchange?

 Why are the 95 out of the 100 SME’s on the KPMG 100 Biggest Companies list, which are actually eligible, are still not listed in the Stock Exchange’s primary market? Mozambique Stock Exchange (BVM) is the entity responsible for the management of the centralized primary and secondary market for debt and equity titles and is operating for 17 years.  Since its inception only four companies were listed.

It’s a fact that, no SME’s has been listed in or even transacted through the “Stock Exchange”, despite the relaxation of listing criteria for SMEs by BVM, in a move to attract SMEs to the stock exchange. Some voices argue that the current minimum capital to access the “Segundo Mercado”, although lowered to MZN 7 million, is still prohibitive, but further market insights point to other reasons:

  • Little knowledge by the public on how to use the stock market, and on its advantages as an alternative investment opportunities;
  • Insufficient and perhaps “digestible” information on BVM, what it is, its activities, and terms and conditions of engagement;
  • Lack of independent intermediaries, in other words brokers to facilitate the buying and selling of shares, and listing. The main brokers operating in the Mozambique Stock Exchange are commercial banks. As such, and to a certain extent, they are natural competitors to the stock exchange and therefore lack incentive to advocate for the use of BVM;
  • Lack of SME’s compliance with required financial reporting and unwillingness of SMEs to make public their financial information. There appears to be a reluctance on the part of SMEs to expose financial accounts for public scrutiny;
  • Reservations from SMEs on opening their capital to new shareholders, for fear of losing control of their businesses.

 But why would one bother pushing SMEs to list on the BVM in the first place?

SMEs are key to sustainable economic growth. They create jobs, innovate, and provide goods and services for consumers, private and public sector. SMEs require finance for startup costs, to run their operations, for cash flow management, capital expenditure and growth.  Finance terms needs to match the need/use, and thus there is a role for different forms of debt and equity. The Stock Exchange is one alternative for SME growth capital, and also provides the mechanism whereby shareholders/investors can realize returns on their investments by selling their shares in an open market.

So, are our SMEs not ready or simply not keen?

There is an understanding that it is both. We believe that a broader awareness should result from effective financial education activities and would ultimately create appetite among SMEs poised for growth, and those eligible to be listed in the Segundo Mercado and thus access the relatively competitive terms of equity financing.  It will also inform the public on alternative saving instruments and ways to invest their money.

In the view of the above few solutions are proposed by FSDMoç:

Financial Sector Deeping Moçambique has been in the market since 2014 and has a number of interventions in this area:

  • Institutional development and strategy support to the BVM;
  • Review of the regulatory environment for private equity and capital market development;
  • Producing market insights on capital market development for SMEs in Mozambique; and
  • Partnerships with key public and private sector players on a nationwide financial literacy campaign targeting schools, universities, media, private and public sector.

FSDMoç in partnership  with New Capital is organizing a series of workshops on ABC of Capital Markets in Maputo, Nampula, Tete and Quelimane cities from August 18 to 26 , 2016. For more details and free participation on the workshops:


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