In November 2004, Kenya, Tanzania and Uganda signed a Memorandum of Understanding to promote cross-border listing of securities among other processes that will integrate the three markets.
This week, reports say Tanzania and Uganda are teaming up with Rwanda to set up a single stock market platform.
The benefit of this World Bank-funded financial project is reduced cost and time of trading in shares of companies listed on markets across the borders and more access to debt and higher liquidity in the market.
Another advantage of implementing this is that investors in these three countries will buy and sell shares of companies listed in any of the countries without going through different stockbrokers.
Meanwhile, East Africa’s biggest stock market – Nairobi Securities Exchange – with a market capitalization of about $19.376 billion, have decided not to join the new common single market.
George Bodo, an analyst and Director at Callstreet Research & Analytics told Arise News that “Kenya is out of the deal because they are not comfortable with the supplier doing the job and the linkage doesn’t have the value proposition of cross listing that the country needs.”
Bodo further said East Africa’s biggest stock market is hesitant to join the single stock market because the infrastructure is not up to date, common registries to move securities are not available and currency issues and bilateral differences have not been addressed.
There are calls for more collaboration and integration in the African stock market which has a stock market capitalization of about $1.25 trillion, in order to increase the investment depth and boost competition with other Exchanges around the world.