Washington Gikunju
7 August 2007
Nairobi — Stock exchange heads from the Common Market for Eastern and Southern Africa (Comesa) region have agreed to work towards integrating their securities markets.
Bourse chief executives from Egypt, Kenya, Uganda, Zambia, Zimbabwe, Mauritius and South Africa met in Egypt last month and agreed on an action plan for the development and integration of the eight securities markets in the Comesa region.
Nairobi Stock Exchange (NSE) Chief Executive, Mr Chris Mwebesa, attended the conference and says integration would give investors easier access to investment opportunities in all the member countries.
"The integration would give local investors the opportunity to invest in stocks in all the member countries from the convenience of their brokers' offices while also giving the listed companies a wider base for raising capital," said Mwebesa in a telephone interview on Monday.
He said that though no resolutions have been passed yet, the most likely form of integration would be through a wide area network in which all member stock exchanges would be have a common trading platform through the Internet.
The executives agreed that the deepening of existing stock exchanges and elimination of investment barriers would ensure the availability of long-term financial resources for the region while minimising the risk of financial instability.
The roundtable also emphasised the need to eliminate barriers to cross-border investment and cross listing of Securities by way of harmonizing investment rules, legal and regulatory frameworks.
Comesa director of trade, Dr Charles Chanthunya, said that integration of markets into large regional entities would aid in tapping additional savings and hence improve the allocation of scarce resources.
He also said that the resultant improvement of external financing would encourage the creation of regional projects with foreign equity participation.
The Comesa region has eight stock exchanges including Swaziland and Malawi. A number of these exchanges recorded an impressive performance last year an example being the NSE which recorded gains of 42 per cent and the Mauritius' SEDMEX in which investors gained 50 per cent.
According to the latest Comesa newsletter for the month of July, the Kenyan and Egypt exchanges are now classified as the new frontier markets.
Many of the member countries, however, do not have capital markets while some are very small and still in the early stages of development.
Other factors discussed in the meeting were the need to have uniform compliance with international financial reporting standards, the need to harmonise tax policies, trading rules and procedures across countries, to instill corporate governance guidelines and create a framework for dispute settlement.
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