The upcoming establishment of the Mozambique Stock Exchange (BVM) as a publicly traded company is a far-reaching economic reform within the financial system, particularly in the Mozambican capital market.
This reform will directly enhance the engagement of entrepreneurs and investors with the stock exchange while enabling better coordination and integration with stockbrokers.
With a stock market capitalization ratio of 25.43% of GDP, the BVM exhibits the characteristics of an emerging market stock exchange, albeit with limited liquidity, trading volume, and depth, as evidenced by the presence of only 13 listed companies. In comparison, South Africa boasts a stock market capitalization of 300.58% of GDP, highlighting how many entrepreneurs in the country utilize the capital market as a financing instrument for their business plans.
Aligning Mozambique with global stock exchange trends
The transformation currently underway is part of a global movement within stock exchanges, allowing Mozambique to align itself with its counterparts. The rationale behind private stock exchanges stems from the positive relationship between the capital market and economic development, as well as the fact that more developed capital markets serve as the primary source of financing for the business sector and the main destination for citizens' savings.
The changes will encompass not only the legal framework of the BVM but also governance and management models. This will involve a profound alteration of the business model, leading to significant advantages in terms of autonomy, flexibility, and institutional efficiency.
Governance and Efficiency to mobilize Financing and attract foreign investors
Profound changes will also take place in terms of transparency and accountability, commercial dynamism, financing mobilization, attraction of foreign investors, incentives for innovation, and the attraction and retention of talent. Additionally, representatives of entrepreneurs and stockbrokers will be included in the strategic management bodies.
The government will cease to allocate budgetary resources to the public institution BVM and instead generate significant revenue from BVM SA through the payment of corporate income tax (IRPC). Moreover, in the medium term, the government intends to publicly list the company, thereby generating financial proceeds from the operations.
The reforms are part of the Economic Acceleration Package (PAE) launched by the Government of Mozambique in August 2022 to improve the country's business environment and promote stronger transparency and governance to attract and retain investments.
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