Integration of regional exchanges’ infrastructure will boost activity and create more interest among East Africans to trade and invest in shares, sector players have said. They add that interlinking the region’s bourses will enable investors to buy shares of different companies across East African Community (EAC) as it will make clearing and settlement easier and more efficient. 

Celestin Rwabukumba, the chief executive of Rwanda Stock Exchange (RSE), said partner states are now working to ensure the project of integrating stock market exchange infrastructure systems is fast tracked.

He said a $3.8 million software to facilitate the process has already been bought and is awaiting installation after due procedures are completed.

"The software is already in place and what we are discussing now is the modalities on how the project can be fast-tracked and implemented to benefit our people,” Rwabukumba told The New Times in an interview on Monday.

He added that the priority will be on interlinking ICT systems across regional exchanges to create interface so that dealers across partner states can communicate and trade among themselves electronically.

"This will enable Rwandans or any other investors across the EAC to buy shares in a Nairobi Stock Exchange-based company without having to go through a broker,” Rwabukumba explained.

The ongoing initiative will allow a seamless movement of securities and payments between the different EAC capital markets, compatible at the regional level, thus creating a regional financial market in the EAC when completed.

Presently, the clearing and settlement process takes about two weeks if one buys shares of cross-listed firms, and they need to go through brokers. This is one of the reasons cross-listed counters are largely inactive on the local bourse as the settlement process discourages potential investors. Four of the five EAC member countries – Rwanda, Uganda, Kenya and Tanzania – have stock markets. Burundi is yet to start one.

The capital markets infrastructure technical working group has already reviewed the work done on central securities depositories and trading platforms and identified gaps, as well as developed recommendations to ensure their implementation as per regionalisation of the capital markets infrastructure.

Analysts say creating vibrant capital markets in East Africa will help accelerate economic development and promote savings in the region.

However, Patrick Bizimana, an independent financial economist in Kigali, said to achieve this objective, partner states should build a more robust infrastructure for efficient financial markets, and invest in skills to enhance competitiveness.

Kenya concerns

Despite earlier fears that Kenya had some reservations on the project, Rwabukumba said they are confident that they will be on board. It was reported last week that Kenya, the main player, was pulling out from the project.

However, Paul Mathaura, Kenya’s acting Capital Markets Authority (CMA) CEO, confirmed that despite reservations over its quality as well as compatibility of the software with the Nairobi Securities Exchange’s clearing and settlement system, the country is ready to participate.

"The discussions on the way forward are still going on. Infotech informed market participants about the software, which will inform how to move forward,” Muthaura told media in Nairobi last week.

businesss@newtimes.co.rw