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Kenya returns to regions unified stockmarket project

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By JAMES ANYANZWA

Kenya is back to a unified stockmarket for the region, seven years after it declined the project over procurement concerns.

Nairobi Securities Exchange chief executive Geoffrey Odundo told The EastAfrican that negotiations are on-going with the East African Community Secretariat for Kenya to return to the World Bank-funded East Africa Capital Markets Infrastructure (CMI) project.

“I can’t give details at the moment because we are still in early days but Phase 2 of the project is really what we are going to roll out and we (Kenya) are keen on getting back on this,” Mr Odundo told The EastAfrican in an interview last week.

“Our involvement will be ideally to have it (project) reactivated. So Phase 2 is more like a reactivation with Kenya on board. That is the position.”

The East African Capital Markets Infrastructure Project aims to connect regional stockmarkets electronically so as to operate as a single market with a view of reducing the cost and time of trading in shares of companies listed on markets across the borders.

Financial sector integration

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It is part of the World Bank’s $26.18 million project which was approved in March 2011 to lay a foundation for the financial sector integration among the EAC member states

The nine-year project referred to as “Financial Sector Development and Regionalisation Project 1” came to an end on December 31, 2020, after the EAC Secretariat requested for the extension of the programme by six months to complete activities whose implementation was disrupted by Covid-19 Pandemic.

The project consists of six components, including integration of market infrastructure ($3.75 million), development of regional bond market institution building ($12.1 million) and project management ($1.1 million).

Others are financial inclusion and strengthening of market participants ($4.3 million), harmonisation of financial laws and regulations ($4.23 million) and mutual recognition of supervisory agencies ($700,000).

Connecting software

Pakistan-based InfoTech Private Ltd had been contracted to provide the software connecting the trading platforms of the Uganda Securities Exchange (USE), Dar es Salaam Securities Exchange (DSE) and Rwanda Stock Exchange (RSE) to enable them to run as a single market in real time. Burundi is expected to join once it sets up its own exchange.

The project’s implementation has been slowed down largely due to payment dispute with the software provider and lack of integration between CMI software and the trading systems of the participating member states —Uganda, Tanzania and Rwanda

However, The EastAfrican has learnt that Uganda, Rwanda and Tanzania have already interconnected their trading systems and hooked to the EAC Capital Markets Infrastructure (CMI) information technology platform.

But the project is yet to go live.

Across the continent, African stock exchanges have started the implementation of seamless cross-border trading of securities among seven stock exchanges as part of efforts towards promoting liquidity in African stock exchanges.

Market capitalisation

The seven markets represent 2,000 companies with an estimated $1.5 trillion market capitalisation.

The African Exchanges Linkage Project (AELP), a joint initiative of the African Securities Exchanges Association (Asea)and the African Development Bank (AfDB) went live on November 18.

The United Arab Emirates- based software firm DirectFN was contracted to design and implement the software linking trading systems in the seven markets. The first phase of the project connects seven stock exchanges across 14 African countries. These are Morocco, Egypt, Nigeria, Kenya, Mauritius, South Africa and the West Africa Economic and Monetary Union, which comprises Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo.

“With AELP, we are entering a new era of African capital markets where all our members will gradually transact cross-border trades from one African securities exchange to another. This project represents a great opportunity for investors and issuers across the continent,” said Edoh Kossi Amenounve, Asea president.

Pilot phase

About 30 broker firms confirmed participation in the pilot phase.

It is part of the World Bank’s $26.18 million project which was approved in March 2011 to lay a foundation for the financial sector integration among the EAC member states

“Financial Sector Development and Regionalisation Project 1”

Uganda, Rwanda and Tanzania have already interconnected their trading systems and hooked to the EAC Capital Markets Infrastructure (CMI) information technology platform.

Jay Ndungu

Jay is a computer scientist and journalist with a passion for the intersection of technology and society. He has a background in computer science, developing a deep understanding of the technical aspects of the industry, including programming languages and software development methodologies. Currently, He writes for Nairobi Times, covering a wide range of topics including technology, politics, sports, and entertainment. With his unique combination of technical knowledge and journalistic experience, Jay brings a unique perspective to the stories he covers, able to explain complex technical concepts in an easy-to-understand manner. His work is dedicated to bridge the gap between technology and society, and to make people more aware of the potential of technology to make the world a better place.

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