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Kenya wants bourse integration hastened

NAIROBI, Kenya Jun 28 – The Capital Markets Authority (CMA) is seeking to fast track integration of regional bourses to take advantage of the commencement of the East African Common Market Protocol.

The Chief Executive of the CMA Stella Kilonzo said on Monday integration of regional stock exchanges was inevitable as it gave investors in the East African Community a larger market in which to invest.

Mrs Kilonzo said regional bourses had seen renewed enthusiasm for regional investment, which she said, was likely to grow as companies seek to expand production to meet rising demand from an integrated regional market.

“The coming into effect of the Common Market Protocol provides an opportunity for investors to seek a larger base from which to choose from,” Mrs Kilonzo said.

Under the East African Securities Exchanges Association (EASEA), bourses in the East African Community have been working on creating a legal framework for regional stock exchanges to operate.

The process has however been sluggish with Mrs Kilonzo saying it was likely to extend into 2011.

“It will not happen on July 1st but is a step by step process of systems, people and recognising licenses of other markets,” she said.

Calls for integration have been rife with many analysts prescribing rationalising the number of securities exchanges in order to boost the appeal of the regions markets as a viable investment destination.

Kenya has the most advanced capital market in the region. Uganda and Rwanda are the other countries with fully open capital markets that allow free movement of capital.

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The Uganda Stock Exchange is the smallest in the region with only 11 listed firms compared to Kenya’s NSE, which has 55, and Tanzania with 15 listed firms.

However, Tanzania has been considered as a major obstacle to integration of the regional bourses but the government has announced it will remove restrictions on movement of capital across its national borders.

A number of Kenyan companies have already cross-listed on regional stock exchanges in an effort to overcome challenges of movement of capital as they expand into the East African market.

Kenya Airways, East Africa Breweries, Kenya Commercial Bank and Jubilee Holdings are cross-listed in the three markets.
 

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