Tanzania, Rwanda & Uganda to connect regional stock markets electronically

Tanzania, Rwanda, and Uganda are on track to establish a unified stock market before the year concludes. This ambitious initiative stems from a collaborative effort fueled by a World Bank-funded project aimed at electronically connecting the regional stock markets. Celestin Rwabukumba, Chairman of the East African Securities Exchange Association, sheds light on the Capital Markets Infrastructure (CMI) project during a recent CNBC Africa interview. The CMI project is part of a broader integration agenda within the East African Community, encompassing all member states including Kenya, Tanzania, Uganda, Rwanda, and potentially Burundi and South Sudan in the future. The integration project, under development for a span of five years, focuses on consolidating the East African stock exchanges and capital markets. By creating a unified capital market, companies will have access to a shared pool of funds, investors can seamlessly navigate across markets, and businesses can engage in cross-listings. The first phase of the project centers on establishing a legal framework, marked by the adoption of capital market directives. These directives, comprising approximately 24 regulations, govern cross-border transactions within the capital market industry. From an infrastructure standpoint, the project is fast approaching implementation. Rwanda, Tanzania, Uganda, and Burundi, the latter of which is still in the process of developing its stock market, are actively preparing to launch their stock exchanges. Notably, Kenya, while currently observing the project, remains engaged due to its prominence in the regional capital market. Rwabukumba emphasizes the collective push towards operationalizing the project, with optimism towards its imminent launch. Addressing concerns about varying levels of engagement among participating countries, Rwabukumba elucidates that bilateral agreements can facilitate the integration process, allowing for a staggered entry into the unified market. Despite disparities in readiness and development, the operational and legal frameworks are adaptable to accommodate evolving participation. The prolonged timeline for project completion is attributed to challenges such as interoperability issues across different vendors and the formulation of a comprehensive legal framework. With these obstacles now surmounted, the project is poised to commence, with an expected rollout prior to the close of 2020. As the project nears fruition, stakeholders anticipate enhanced operational efficiency, streamlined investment avenues, and increased cross-border collaboration. The initiative, embedded within the World Bank's wider financial support, has seen a substantial investment, estimated to be between three to four million dollars designated towards enhancing capital market infrastructure. The impact of a united stock market on the region's GDP is projected to be significant, bolstering efficiency, promoting investments, and fostering economic growth. Moreover, the automation of processes introduces robust data security measures and enhances risk management protocols, ushering in a new era of technological advancement and operational resilience within the capital market landscape. The imminent launch of the electronic stock market integration heralds a new era of collaboration, efficiency, and growth across East Africa. With shared goals of economic prosperity and regional cohesion, Tanzania, Rwanda, and Uganda stand at the forefront of a transformative financial landscape, poised to redefine the future of capital markets in the region.