EAC report calls for swift capital markets harmonisationnisation

East African Legislative Assembly has approved a report on Capital Markets’ Regionalisation imploring the region to expedite the harmonisation of regulatory frameworks in securities market.

The report conducted by the Committee on Communication and Trade sought to assess the status of implementation of capital markets’ regionalisation projects in EAC. The assessment is among the steps undertaken by the community to harmonise capital market regulations to ease the movement of money across national borders and make it easier for investors looking for expansion cash.

The first phase of the project would be to come up with a single financial market, which is expected to be completed in the first quarter of 2014 with a World Bank grant of about Ush36.9 billion.

This is expected to lay the ground for the second five-year phase which seeks to give the region its common stock exchange. The project will also come up with common regulatory and accounting frameworks, allowing investors to operate with ease in the five member countries.

The report findings indicate that capital markets are important in encouraging local savings and channeling them to productive enterprises. This, the report suggests, would foster growth of related financial services like pensions and provident fund schemes, offering companies a choice of sources for long term-capital.

The Committee, however, cited disparities in trading, clearing and settlement infrastructure that have made market access difficult for investors, lack of harmonised legal and regulatory framework, common tax regimes and investors policies as some impediments to the otherwise thriving capital markets sector.

Through its chairperson, Dr James Ndahiro, the committee recommended that the Council of Ministers works on a roadmap to regionalise the capital markets under the Financial Sector Development and Regionalisation Project and to align the same with the Common Market Protocol.


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