Three East African countries, Uganda, Rwanda and Tanzania are coming together to implement a World Bank-funded financial project that will connect regional stock markets electronically
The partnership will enable the three countries to operate as a single market and also, reduce the cost and time of trading in shares of companies listed on markets across the borders
Three East African countries, Uganda, Rwanda and Tanzania are coming together to implement a World Bank-funded financial project that will connect regional stock markets electronically. The partnership will enable the three countries to operate as a single market and also reduce the cost and time of trading in shares of companies listed on markets across the borders. After linking up their trading systems and hooking to the EAC Capital Markets Infrastructure (CMI) Information Technology platform, the process is expected to be completed before the end of this year. The system will enable investors in the three countries to buy and sell shares of companies listed in any of the countries without going through different stockbrokers.
Ugandan stockbrokers reportedly charge the highest stock trading commission at 3.28 per cent of the value of the transactions, not only within East Africa but in the entire African continent. In Rwanda and Tanzania have regulated brokerage commission on equity trading at 1.5 per cent while in Kenya the applicable commission is limited to Ksh100 (1$) for transactions up to Ksh3,000 ($30) and 1.8 per cent for transactions in excess of $30.
The Project has been under discussion for more than five years. East Africa Securities Exchange Association (EASEA) said the95 per cent of the work has been done and the launch is expected to take place before December. It added that the project largely got delayed due to payment disputes with the software provider and lack of integration between CMI software and the trading systems of the participating states.
Kenya, which has the largest stock market in the region with the highest market capitalisation and number of listed companies withdrew from the project in 2015 after expressing reservations over the contract awarded to the Pakistan firm citing procurement irregularities. Pakistan-based InfoTech Private Ltd has been hired to provide the software connecting the trading platforms of the Uganda Securities Exchange, Dar es Salaam Securities Exchange and Rwanda Stock Exchange. Geoffrey Odundo, chief executive, Nairobi Securities Exchange (NSE) said that they have not made any decision yet to go join the project
The markets Infrastructure project is part of the World Bank’s $26.18 million project approved since March 2011 to facilitate the financial sector integration among the EAC member states ahead of the implementation of a single currency regime.
