Challenges ahead of efforts to integrate East Africa bourses
The move towards integrating East Africa’s capital markets took a significant step forward after regulators agreed on a modality for joint supervision of cross listed companies.
Through their umbrella body, the East African Securities Regulatory Authorities (EASRA), the member states said they will form joint committees to monitor activities of listed companies whose operations spill across borders.
“In recognition of increased regional activity by capital market participants in (East Africa), EASRA members agreed to amend their Memorandum of Understanding (MoU) to allow for the creation of Supervisory Colleges that will administer joint inspection programmes and investigations within regional operators and coordinate surveillance for cross-listed companies where need arises,” said EASRA in a statement released on Thursday.
Kenya has six companies that are cross listed on the Tanzania, Uganda, and Rwanda stock markets.
They include Equity Bank, KCB, Kenya Airways, Nation Media Group, Centum Investment, and East African Breweries.
Ugandan power distributor, Umeme, has announced plans to cross list at the Nairobi Securities Exchange (NSE) upon completion of its ongoing initial public offering (IPO) which will see it listed at the Uganda Securities Exchange.
Other integration proposals have included plans to sell IPOs in local currencies and to also introduce regional bonds. Regional exchanges have also introduced courses that will be used as a qualification benchmark for EASRA member states.
The Kampala-based Securities Industry Training Institute (Siti) has been mandated to train professionals whose certificates will be recognized regionally.
Kenya Capital Markets Authority acting chief executive Paul Muthaura said EASRA and the East Africa Community (EAC) secretariat were working to have mutually recognised licences and approvals.
The biggest challenge, however, remains the creation of a single, inter-connected market.
“Undoubtedly, greater integration of markets introduces new challenges with regard to the strengthening of market infrastructure to ensure the effective inter-connection of trading, clearing, settlement, and payment systems across the region and to the wider financial markets,” said Mr Muthaura at Wednesday’s Stanlib rebranding occasion in Nairobi.
EASRA has the mandate to develop a common market for members and to harmonize laws that would allow for seamless regional trading.