REGIONAL: African sates urged to increase intra-trade

Africa is considered to be very vulnerable to the crisis and recent indicators show that the continents’ stocks have fallen due to information from the international markets The African Stock Exchanges Association (ASEA) has advised African states to increase trade volumes amongst themselves, if they are to minimise the global financial crisis’ impact on the continent. Robert Mathu, Executive Director, Rwanda Capital Market Advisory Council (CMAC), said yesterday that though the African stock markets are not strongly correlated to the international financial market, they are the same investors trading across the globe. Mathu attended ASEA’s 12th annual meeting which ended Wednesday this week in Kampala, Uganda. He added that intra Africa trade may boost the continent’s export receipts by reducing the risk associated with expected low demand of Africa’s exports on the international market, a result of the possible recession of the global economy. The global financial crisis started in the US markets last year and has already led to the collapse of some financial institutions in the US. It has also spread to European economies, where banks and insurance companies are feeling its pinch. Africa is considered to be very vulnerable to the crisis and recent indicators show that the continents’ stocks have fallen due to information from the international markets. Stocks in South Africa, Uganda, and Kenya among others have registered significant fall in the recent weeks. “I personally maintain that we need consistent diversification of our economic activities. If you spread your investments across different sectors, you diversify risk,” he explained. Mathu said that one reason why African stock markets have not been strongly affected is because they lack sophisticated financial products like the ones on the international market. Adding: “Our derivative market is very small.” The African economy is not yet hit directly by the crisis but experts say that if it (the financial crisis) persists and the global economy enters into a recession in the long run, there will be a drop in the continents export and tourism revenue, and remittances from abroad.Germany is already in the recession. The meeting in Kampala attracted financial analysts, stock brokers, bankers and policy makers from over 27 African countries. It was aimed at forging a single Pan African Stock Exchange ahead. “It is beneficial to all stock exchanges because it allows exchanging ideas and information,” Mathu said of the meeting. Though there is a vision of integration, Mathu said that to integrate doesn’t necessarily mean becoming one, but being connected to ones systems where stake holders can share information instantly. Ends

News

REGIONAL: African sates urged to increase intra-trade