The surprise success of the first-ever sale of corporate stocks to the public in Burkina Faso has forced a rethink about African attitudes to investment and opened new possibilities for financing private sector activities.
When the management of Burkina Faso’s premier telecommunications company decided in December to offer shares for sale to the general public, the timing did not appear especially favourable. The global financial crisis, which was already slowing down the growth of the domestic economy, led a number of local analysts to wonder whether enough people would be willing to put their limited funds into such a new form of investment. But by the time the sale was over at the end of January, the doubts had been swept away as domestic investors sought to buy more shares than were actually available. “We were the first to be surprised by the number of shareholders, by their eagerness,” admitted Alexis Lourgo, head of the financial services company that managed the sale.
The public share offering — the first ever in Burkina — was the second step in the privatization of the Office national des télécommunications (Onatel), the national phone company, after 51 per cent was sold to Maroc Télécom of Morocco in December 2006. In an effort to widen the company’s capital base, an additional 20 per cent of the shares (680,000) were slated for public sale, at a discounted rate of CFA42,000 per share for Burkinabè nationals and CFA45,000 for others. Worried that the sale might be under-subscribed, the authorities made an arrangement in advance with the World Bank’s International Finance Corporation, which had previously agreed to take a 3 per cent stake in Onatel, to increase its future holding to 5 per cent if the public shares were not all sold.
But in the end, the total demand for shares reached 957,820, nearly 41 per cent more than the number available. To manage the situation, a cap was placed on the number of shares that could be sold to an individual or institution and preference was given to Burkinabè citizens. Ultimately, the shares went to 4,122 subscribers, of whom 3,243 were nationals. The sale brought into the national treasury CFA29.1 bn (US$61.7 mn). “Popular shareholding has begun,” commented Mr. Lourgo. “It is now up to the government to keep our compatriots interested when there are privatizations by allocating a portion of the shares to nationals, so that they can participate in the economic and social development effort.”
Then in late April, Onatel became the first company based in Burkina to be listed on the Francophone West African regional stock exchange in Abidjan, Côte d’Ivoire. The listing made it possible for those who had previously acquired shares to sell them, and for those who had missed out in the initial offering to pick some up. On the first day of trading, some 1,200 Onatel shares changed hands, selling at CFA47,900 each, notably above their initial price.
The strong response to the sale of Onatel shares suggests that the lack of a tradition of public shareholding may not be an insurmountable obstacle to this means of mobilizing domestic investments. But other companies may not find it so easy. As elsewhere in Africa, telecommunications is an especially dynamic sector in Burkina. Mobile phone subscriptions jumped by nearly 63 per cent in 2008, from nearly 1.9 mn the year before to more than 3 mn (far beyond the number of landline subscribers, of which there were 145,301). Onatel’s mobile phone subsidiary accounts for 34 per cent of that market share, coming in second after Zain of Kuwait, which has half of all subscribers.
Mr. Ernest Harsch is the managing editor for United Nations Africa Renewal magazine.