East Africa is working to establish a single integrated capital market. At a recent meeting in Arusha Tanzania, the East African Community Capital Markets Infrastructure (EAC CMI) meeting at the East African Community Headquarters, CEOs and senior leaders from exchanges, depositories, central banks and the East African Community Secretariat came together to chart the next phase of regional markets integration.
All the 8 East African Community Partner States, plus Ethiopia, are at the table, where the foundations are being laid. The high level meeting placed special focus on: Interoperable market infrastructure Seamless cross-border investment Deeper liquidity across EAC Partner States Capital markets that truly power regional trade, growth, and resilience.
While the Nairobi Securities Exchange(NSE) is already advanced, with links to other regionals such as the Johannesburg Securities Exchange, most regional markets are still in its back mirrors, including the Ethiopian Stock Market that is still in infancy stages.
The meeting firmly established the foundation for an integrated East African capital market, marking a shift from vision to delivery in East Africa’s capital markets integration.
The Capital Markets Infrastructure(CMI) is a technology platform designed to link capital markets of the East African Partner States.
East African Partner States plan to ease Equity Trading Across Borders
CMI plans to simplify the process of trading across the borders of the East African Community, with a larger pool of equities and bonds to investors in the region. With a population of over 300 million, young demographics and increasing consumption, the East Africa region has the potential to pull in international capital. What is lacking is a deeper integration of capital markets.
Kenya, with a robust Nairobi Securities Exchange(NSE), is poised to lead this integration, attracting regional as well as global actors.
Kenyan Companies, including banks, has been leading the integration onslaught, capitalising on untapped opportunities in banking, telcos and retail. Investors from Uganda and Rwanda are also active in Kenya, riding on its deep financial infrastructure and a robust Nairobi Securities Exchange(NSE).
A fintech in Uganda could attract investors from Ethiopia. A geothermal plant in Kenya can attract attention from the region. This exchange of capital and expertise could speed up development that isolated domestic markets cannot achieve.
The NSE, the most developed and sophisticated bourse in the region closed last week, with an uptick in key indices, an indication of improved investor confidence.
BOC Kenya was the week’s top gainer, rising 13.66% followed by Diamond Trust, Orchards, EABL and BK Group, all recording gains during the week.
At the end of January, Kenya Airways was the monthly top gainer, up 36.83%, followed by Diamond Trust, Absa New Gold ETF and Car& General. A total of 13 counters led the January rally with double digit share price increases.
Featuring prominently was the East African Breweries Limited half year results, with profits growing faster than revenues, supported by margin expansion, reduced leverage and stronger cash generation, Earnings for the East African brewing giant was driven by core operations rather than one-off forex gains, improving predictability and sustainability.
EABL has been able to cut its net debt from KSh 29 billion to KSh 22.2 billion, with strong operating cash flow reducing the brewer’s reliance on borrowing.
“The business is transitioning from balance sheet repair to value delivery. Baring a sharp consumer slowdown or policy shock, earnings momentum looks defensible,” said CFA Dedan Maina.
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