(Ecofin Agency) – Following the extraordinary meeting of the Ministers of Justice and Finance of the member countries of the Organization for the Harmonization of Business Law in Africa (OHADA), held on January 26, 2017 in Brazzaville, Congo, the accounting system in force in this legal area was updated.
Among the three major adjustments, "entities listed on a stock exchange or making a public appeal for savings are now required to produce, in addition to their individual financial statements in SYSCOHADA standards or according to the accounting framework specific to their activities, financial statements in International Financial Reporting Standards (IFRS) in order to guarantee the quality and comparability of the data produced."
The implementation of this measure should fundamentally change financial communication, particularly on the WAEMU Regional Stock Exchange, the Douala Stock Exchange and the Central African Stock Exchange.
Until now, and with the exception of Sonatel (Orange Senegal) which produces more detailed financial results, companies listed on these three markets often limit themselves to publishing elements relating to turnover, expenses and two or three other elements of the income statement.
With the new OHADA instruction, they will now have to publish the balance sheet statement (Liabilities and Assets), the detailed income statement, the cash flow statement which shows cash movements, and the dynamics in the shareholding. In addition, they will be required to accompany these results with explanatory notes and comments from managers.
The OHADA press release was unclear about the implementation timeline for this measure. However, for the BRVM, the largest of the three markets, starting its implementation as soon as possible would be best. Since the last quarter of 2016, this financial market has been part of the Morgan Stanley Capital International Frontier Market group, which opens the door to a broader and more liquid basket of international investors, who are more demanding in terms of financial information.
The DSX and BVMAC, two still very weak financial markets, seem to be collateral damage to their Abidjan-based counterparts, which are reaching a new stage of maturity every day. The three companies listed on the Douala Stock Exchange are also making the minimum effort to publish their results, while the one listed on the BVMAC is not providing financial information commensurate with the ambition of this market, namely Central Africa.
Publishing accounts according to IFRS standards is not new in sub-Saharan Africa, and many countries are successfully experimenting with this method of providing companies' financial information to investors or potential investors. This is the case in Kenya and Nigeria, two important financial markets in the region. In the Maghreb, Tunisia and Morocco are good examples in the French-speaking world.
