Africa Capital Markets East African Community Finance Investing Rwanda Securities Stock Tanzania Uganda

Rwanda, Uganda and Tanzania single stock market

Rwanda, Uganda and Tanzania have joined forces to connect stock markets electronically.

The project, which is funded by World Bank, means that the three countries will operate a single market with a view of reducing the cost and time of trading in shares of companies listed on markets across the borders.

The three states are to start trading before the end of this year after interconnecting their trading systems and hooking it to the EAC Capital Markets Infrastructure (CMI) Information Technology platform.

With this new single stock market, investors in the three states will buy and sell shares of companies listed in any of the countries without going through different stockbrokers.

Taking 3.28 per cent of the value of the transactions, Ugandan stockbrokers take the largest share of the stock trading commission not only within East Africa but in the entire African continent.

Brokerage commission on equity trading in Rwanda and Tanzania are regulated at 1.5 per cent while in Kenya the applicable commission is limited to US$1 for odd-lot transactions up to US$30 and 1.8 per cent for odd-lot transactions in excess of US$30.

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According to the East Africa Securities Exchange Association (EASEA) the project has delayed for more than five years largely due to payment dispute with the software provider and lack of integration between Capital Markets Infrastructure (CMI) software and the trading systems of the participating states.

The East Africa Securities Exchange also added that the project will remove obstacles on stock trading in regional markets, boost liquidity in underperforming markets once operational and spur activities.

Pakistan-based InfoTech Private Ltd had been contracted to provide the software connecting the trading platforms of the Rwanda Stock Exchange, Uganda Securities Exchange and Dar es Salaam Securities Exchange to enable them to run as a single market in real-time.

In 2015, Kenya pulled out of the project after expressing dissatisfaction on how the Pakistan firm was awarded the contracting citing procurement irregularities.

Kenya has the largest stock market in the East African region in terms of market capitalisation and number of listed companies.

The EAC Capital Markets Infrastructure project is part of the World Bank’s US$26.18M projects which was approved in 2011.

Original article on The Exchange

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