The capital market which is a market through which shares and bonds are traded or a market for financial assets with a long or indefinite maturity period (above one year) is gradually taking shape in Africa.This growth is premised on the realisation that lack of an advanced and vibrant capital market can lead to underutilisation of financial resources with its development providing access to foreign capital for the overall economic growth.Classified into a primary market for new shares and a secondary market to trade in existing securities, the capital market provides long term debt and equity finance for governments and the corporate sector.According to Shehzad Noordally, the Chief Executive Officer of CDH Capital Ltd, a locally registered stockbroker, Africa is an emerging market."The US is struggling with the subprime crisis. Europe is in recession. Fund managers have been turning to the BRICS (Brazil, Russia, India, China and South Africa) countries to get higher return on investments. Africa is a target for international fund managers as the continent has been performing well in terms of economic growth – 8-9 per cent on average, enough to attract big international investors,” Noordally explains.The current Sub prime crisis, a situation largely created due to sub prime lending resulted in banks lacking enough money to lend."The stock market in Africa has been following an upward trend. Exception is made to the Ivory Coast crisis, the Arab spring, and of course the Kenyan market when the Kenya shilling lost 15 per cent of its value. Elsewhere, it has been some good years. Kenya is picking up, Ivory Coast is picking up too, Egypt is still on a low note, but with the advance of democracy and stability, the Cairo Stock Exchange will pick up too.”Technology making a differenceNoordally says technology is significant as it removes trade barriers and helps investors to diversify their portfolio by investing across borders."Moreover, technology allows information to flow rapidly and be available to many. This leads to more efficiency in the market. Technology also increases competition among brokers, hence reducing transaction costs. With technology, transactions are done more quickly and settlements are done in a minimum number of days,” Noordally notes."Many African countries are interested in stock exchange as it is another opportunity to raise capital at a lower cost. Secondly, it allows firms to raise capital locally, hence not being affected by foreign currency fluctuations, and thirdly, it boosts economic activity in the country, while at the same time increasing investment choices.”Stressing that there is "no single country that has progressed without the stock market,” Central Bank Governor Amb. Claver Gatete notes that he has no doubt that Africa’s continuing information technology explosion is playing a significant role. "The capital market is the only way to raise long term resources. But for it to grow, there are many things that must be in place, the most important being that all the stakeholders understand the business.” "Technology has really made a big difference. If for example, clearing takes a day instead of 10 days, it makes a huge difference as technology has removed human errors, made things easier and faster too,” Amb. Gatete says.According Amb. Gatete, the presence of flourishing business is another favouring factor besides a population that is increasingly becoming aware of the business opportunity.In the East African Community (EAC), apart from Burundi, which is yet to establish a stock market, the rest of the partner states, (Rwanda, Uganda, Kenya and Tanzania) have one. The Nairobi Stock Exchange (NSE) which uploaded all government bonds on its automated trading system (ATS) has 50 cross listings. Its system has the capability to facilitate internet trading which has improved the integrity of the exchange trading systems and facilitates greater access to the securities market.The Uganda Securities Exchange (USE), founded in June 1997, now has 17 listings and counting. It opened to trade in January 1998 with just one listing, a bond issued by the East African Development Bank. As of June 2011, the USE traded 14 listed local and East African companies and has started trading of fixed income instruments.The Dar es Salaam Stock Exchange (DSE) was incorporated in September 1996 and trading started in April 1998. Like the USE, it also operates in close association with the Nairobi Securities Exchange and the Uganda Securities Exchange.As of August 23, the DSE website had a total market capitalisation of $8,174.52 million (TZS 12,835.34 bn). In Rwanda, the RSE is making steady progress with plans to automate it. The RSE replaced the Rwanda Over-The-Counter Exchange which started operating in January 2008. Currently, only two domestic companies, Bralirwa and Bank of Kigali are listed. However, the local bourse also has two cross-listings from Kenya, the Nation Media Group and Kenya Commercial Bank (KCB).Other Kenyan companies – Centum Investment Company Limited (Centum), an investment company, KenolKobil, a fuel retailer and Equity Bank, a bank with operations in Rwanda, are reportedly looking to cross-list locally.Role of stock exchangesLike the money market, the capital market is also very important as it plays a significant role in the national economy. A well developed, dynamic and vibrant capital market can immensely contribute to speedy economic growth and development.Stock exchanges have multiple roles in the economy, including raising capital for businesses, directly or indirectly in four ways – going public, limited partnerships, venture capital, and corporate partnerships.SomaliaIn early August, the NSE entered into a Memorandum of Understanding (MoU) with war ravaged Somalia’s Stock Exchange Investment Corporation (SSE) for technical support in setting up a stock market in the war ravaged country. Under the arrangement, the NSE shall have primary responsibility for the technical development of the SSE including identifying the most suitable partners and expertise for the operations of the nascent Somali bourse.