East Africans planning to fast track integration of capital markets
Posted on : Wednesday , 14th October 2015
The East African Community (EAC) member states are fast tracking the integration of the capital markets in order market the region as a single investment destination, Kenyan officials have confirmed. The Capital Markets Authority (CMA) Acting CEO Paul Muthaura said there is a clear road map for the harmonization of legal frameworks of the five EAC member states.
"The first batch of seven EAC Council of Ministers directives have been adopted currently and will soon be domesticated by national governments," Muthaura said during the launch of the Nairobi County Capital Markets University Challenge.
Muthaura said another two directives are currently being subjected to public consultation before they are adopted by the EAC council.
He said currently the size of the capital markets of the individual states are small and not very liquid.
"As a result large global institutional investors are locked out of investing in the region," he said.
After full integration is achieved, companies will be able to issue pan EAC securities and bonds without having to undergo cumbersome procedures. CMA said that the market platforms, exchanges and central depositories will also be linked.
"There are currently ongoing discussions with key players of the exchanges on the best way to achieve value to all members’ states equally," he added.
The CEO said the Nairobi Securities Exchange will soon begin trading in derivatives as part of diversification strategies.
"The more products available, the more investments will flow into the country," he said.
CMA Acting Director of Regulatory, Policy and Strategy Luke Ombara said a single EAC capital market will expand the scope of products and scale of investments available.
Ombara said cross listing across the EAC capital markets is currently possible, but actual trading has faced challenges.
He said a single regional market will allow domestic investors to seamlessly identity investment opportunities in the other EAC states without going through many intermediaries.
According to the CMA, Kenya has a one of the lowest savings rates in the region.
Ombara said his organization is therefore planning to roll out a campaign to sensitive the public on how to use the capital markets to save for retirement.
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