The capital market is still far from the reach of Small and Medium Enterprises (SMEs). Business model issues, lack of audited accounts and business volume are pointed out as being the major obstacle for them to access the capital market.

The Mozambique Stock Exchange (BVM) was created in 1998 by the Government. But it was precisely in 1999 that it began its activities with the objective of being an alternative to other financing modalities existing in the market. 

The way to do this is by capturing the savings of investors and channeling them to the productive agents of the economy, which are the companies. However, this has not been a financing alternative for the national business community. Why is this so? 

For Gervásio Lifaniça, financial consultant, the problem comes from the base of operation, the constitution of the great majority of national companies, which does not comply with the basics. 

Data from the National Institute of Statistics (2017) indicates that of the 43,000 registered companies, only 1.3% are incorporated as public limited companies, which is one of the requirements to access the capital market. 

"Now, if you have only 1.3% entities registered as a public limited company, out of a universe of 43 thousand, it means that very few companies will have access to the capital market," maintains Gervásio Lifaniça.

Listing requirements are necessary to give investors greater confidence about the company being listed on the exchange."

But "the sea" of requirements for accessing the capital market does not end there. Companies need to have properly audited accounts. What's more, a "robust" business volume is required, (4M meticais) something that only a few, but very few companies would be able to meet. 

"Our small and medium-sized companies are made up mostly of equity that is still symbolic," he says. Lifaniça believes that on these terms, these companies are unlikely to have access to the capital market. 

Salim Valá, chairman of the board of the Mozambique Stock Exchange, says that the listing requirements are necessary to give investors greater confidence about the company being listed on the exchange. 

Lifaniça agrees that all of this is part of good management practice, but warns of the need to look at the reality of our companies. 

"The genesis of our companies is very much tied to specific accents of power. It has very little to do with those basic principles of creating the companies themselves. It has a lot to do with the maturity of our financial system, including the companies," explains the financial consultant in an interview with MZNews. 

Massify the information

More than inserting themselves in the capital market, advances the consultant, "it is necessary to create conditions so that these small and medium-sized companies understand the benefits of having an organized company. 

It advocates the creation of clear policies to support small and medium-sized companies. However, BVM created a Third Market in November 2019 for those companies that at the time of listing do not have the full requirements to be listed, giving them a 2-year term. 

"The third market is a good window, yes, but it needs a series of information and training campaigns to these small and medium companies, otherwise it will be very difficult to achieve the intended goals," predicts the consultant.

Our small and medium-sized companies are mostly made up of still symbolic equity capital".

And touching on this aspect, "I must inform you that the CTA has been holding meetings with companies that aim to disseminate the various mechanisms of access to credit, whether traditional credit through the financial market, or through the capital market," he confides. 

Outside of the requirements, which, it seems, are far from the reach of most national companies, there are advantages that small and medium-sized companies could have if they were listed in the capital market. The statistics shared by BVM indicate that the average interest rates of commercial banks last year was around 22.3%, while in the capital market it was around 17%. 

"In terms of credit cost, that difference would represent a saving," Lifaniça noted. Not only that, the consultant explains that companies can also have access to capital through the entry of new shareholder partners.