CMA decries effects of global politics on regional integration

CMA acting chief Paul Muthaura. Politics is underming capital markets in East Africa. [PHOTO: FILE]

BY JAMES ANYANZWA

NAIROBI, KENYA: International politics is weighing heavily on plans of an integrated capital markets within the East Africa Community (EAC).

Capital Markets Authority acting chief executive Paul Muthaura said issues related to the regional trading bloc are much underpinned by foreign politics.

“On our part we are agreeing on protocols which are setting targets and direction but EAC related issues are underpinned by international politics,” Muthaura told a media briefing in Nairobi yesterday.

“We have already put in place a regional debt issuance framework enacted in July 2013 and we are getting close to the delivery of the EAC common market.”

 The integration of the East African capital markets, which is in line with the provisions of the EAC Common Market Protocol provides for the free movement of capital in the region.

 However, the stand off over the structure and modalities of operation of a unified securities market has also been another thorn in the flesh.

 It is also argued that the realisation of a joint East African Stock Exchange will depend on the goodwill of regional leaders and their ability to move things forward.

The region’s head of stock ex changes also reckoned that the delay in the automation of the Ugandan Securities Exchange (USE) and the sluggish pace of the demutualisation process have further slowed down the progress towards a unified equity market.

Promote growth

 The East African Securities Exchanges, namely the Nairobi Securities Exchange (NSE), Ugandan Securities Exchange (USE), Dar-es-salaam Stock Exchange (DSE) and Rwanda stock Exchange have established a working relationship among them in the spirit of integrating and developing capital markets in the East African Community (EAC).

 The exchanges operate under the umbrella of the East African Securities Exchanges Association (EASEA).

 The integrated regional securities market is expected to promote faster growth of East Africa’s stock markets, enhance global competitiveness of the markets and reduce operating costs of the stock markets.

 The integration of EA’s stock markets has been in the pipeline for more than a decade with the Parliament of Uganda delaying in the passage of a Securities Central Depository Bill.

 The sluggish progress towards harmonisation of financial sector laws and regulations among the East African Community (EAC) member states remains a major impediment to the process of regional integration.

In addition, synchronisation of major tax laws and procedures still remain a headache to regional leaders, reports the World Bank.

According to the Bank’s Doing Business Report 2013 the region has substantially improved its business regulatory environment over the years but challenges still remain.

The integration of the East African capital markets, which is in line with the provisions of the EAC Common Market Protocol, is expected to provide for free movement of capital in the region.

Increase efficiency

“The co-operation and collaboration of regional exchanges would continually increase efficiency and liquidity of the regional capital markets,” said Pierre Celestin Rwabukumba, chairman, East African Securities Exchange Association (EASEA).