When it becomes operational, this market will provide additional funding for SMEs, which are vital to driving economic growth in the UMOA region.

The West African Monetary Union (UMOA) is set to create a bond market specifically for small and medium-sized enterprises (SMEs). A feasibility study for this project began on October 1, 2024. The study will be conducted by the UMOA Financial Market Authority (AMF-UMOA), the regional financial market regulator, in partnership with the Spanish government.

This bond market aims to diversify funding sources for SMEs by providing access to financial resources through bond issuance. "Creating a bond market dedicated to SMEs is a credible alternative alongside bank loans to support the development ambitions of our SMEs, the backbone of our economies," said Badanam Patoki, president of AMF-UMOA.

The announcement has received mixed reactions from financial players in the region. Some, like Maxime Lokossi, a consultant in meso-finance and digital finance residing in Benin, see it as a promising opportunity for SMEs in the Union. "I hope this study leads to a dynamic bond market for UMOA SMEs. It offers significant growth potential for these businesses," he noted.

Other financial experts are more cautious about the interest this market might attract. "Any initiative to expand funding for SMEs is worth supporting. However, we need to define what constitutes an SME and what could attract them to this type of funding. Access to funding is generally easier with commercial banks. Long-term financing is already available from these banks. Fixed-rate financing would be possible if banks were willing, but that is not proven," emphasized Clive Wykes, a senior bank management consultant. He added, "In conclusion, banks might not be aggressive investors in SME bonds, especially since they can offer long-term and fixed-rate financing. However, their reluctance to do so highlights their shortcomings."

It is important to note that the UMOA regional financial market allows businesses, states, and local communities to raise funds by issuing financial securities. It currently consists of a money market where financial institutions exchange short-term liquidity with the central bank or among themselves, and a capital market for medium- and long-term financing. The capital market includes both an equity market and a bond market.