An East African Stock Exchange on the Horizon

More positive sounds have been made in the process of East African economic integration.

Last week I posted on the launch of One Network by cell phone company Celtel International. The service will offer the same local rate to users travelling between Tanzania, Kenya and Uganda, a move which could play a significant role in facilitating trade within the customs union.

Two days ago there was a hint that this economic bloc will soon be further strengthened: The East African Standard reported on the possible merger of the Nairobi and the Dar-es-salaam Stock Exchanges and the Uganda Securities Exchange, based on remarks made by the NSE chairman during Wednesday’s official inauguration of the automated trading systems. The state-owned Kenya Broadcasting Corporation reported a similar story.

There has been much debate over the years regarding the benefits of a regional capital market in East Africa, which some have argued is difficult if not impossible due to the varied capital development of the three countries. The dominant view, however, seems to be in favour of this kind of move, based on the belief that:

"on an individual country basis, the investor base is too narrow and small to support the emergence of a truly dynamic capital market in any of the three countries.” Godfrey Tumusiime of the East African Development Bank

In the short- and middle- term at least, an East African stock exchange would remain modest in comparison to the major world exchanges. But it would likely attract more foreign investment than Kenya, Tanzania or Uganda could individually, bringing all three countries into the global capital market.