The Rwanda Stock Exchange (RSE) hosted the 26th East Africa Securities Exchange (EASEA) at the Kigali Serena Hotel last month, where the association members charted ways on integrating the regional stock markets to attract more investments to the region.
In addition to that, the RSE signed a Memorandum of Understanding (MoU) with the Nairobi Securities Exchange (NSE) to enhance trading of securities between the two exchanges.
According to Celestin Rwabukumba, the Chief Executive Officer of The RSE and current Chairman of the EASEA, the deal benefits Rwanda in terms of information, experience and expertise sharing, and opens more trading opportunities for Rwandan companies.
“This gives us an opportunity to attract more investors from Nairobi and vice-versa,” he said.
The regional stock markets officials present at the consultative meetings were in agreement that fast tracking the integration process would attract more foreign capital investments needed to finance the major infrastructure projects, and called for all effort to be made to complete the exercise.
They agreed on a roadmap harmonisation of the stock markets “to create strong sustainable markets that are relevant enough to support growth of the regional economy.”
Rwabukumba said partner states have agreed to make more consultations on how to establish a strong legal framework that will guide the implementation of the regional stock markets integration process by the end of this year.
“The technical working group will report back within one month if we are to meet the deadline,” Rwabukumba said after the consultative meeting on Friday.
The EASEA also agreed to draft a new strategic plan covering the next five-years by the end of this quarter.
Stock market experts say the integration of the EAC exchanges has the potential of attracting foreign direct investments into the region, which will translate into faster growth of East African economies.
“There is a challenge of finding long-term capital to finance the various infrastructure projects on the agenda.
This project is, therefore, important to help attract the needed capital to finance these projects,” Geoffrey Odundo, the NSE Chief executive officer, said.
He said the move is also instructive, noting: “We can’t afford to compete among ourselves, but rather work together as a region to boost our stock markets.” He argued that international investor’s no longer look at individual countries, but rather the region when making investment decisions.
“This is one more reason why we need to integrate faster enough…”
Mary Mniwasa, the In-Charge of Legal and Corporate affairs at the Dar es Salaam Stock Exchange, said it is critical to accelerate the process, arguing that it will create a strong foundation “for us to negotiate strong partnerships with other global trade blocs.”
Integrating EAC markets is expected to increase efficiency and the clearing and settlement process that now 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.