Uganda backs single stock exchange By MARK KAPCHANGA THE EAST AFRICAN Posted Saturday, September 20 2008 at 14:44 Uganda will fully support the proposed integration of stockmarkets in East Africa, Simon Rutega, chief executive officer of the Uganda Securities Exchange, has said. In an interview with The East-African, Mr Rutega said the initiative should be fully supported by the East African countries as it will "create more scale in the markets, increase economies of scale and reduce the costs of managing trading, clearing and settlement infrastructure in the region. "When our markets integrate, we shall be able to share licences and maintenance costs of information technology hardware. Investors will also have more financial instruments at their disposal to invest across the region," he said. A fortnight ago, the East African exchange authorities held a consultative meeting in Nairobi attended by chief executives of the Dar es Salaam, Nairobi, Uganda and Burundi stock exchanges. The meeting, at which the main item of discussion was the proposed integration of the trading platforms for the four exchanges, agreed to adopt the Smart Order Routing System, a software that will link all stockbrokers across the region. Under the new initiative, whose implementation deadline has been set for December, securities will be traded anywhere in the region, using local currency. According to Mr Rutega, the initiative will demystify cross-border investment across the region and encourage more co-operation and investment. "We will also be able to co-operate with brokers across the region and expedite the economic integration agenda of the East African region." Already, a request for proposals for potential suppliers of the software has been sent out. Tender winners are expected to be announced early November in Kampala when the association will be holding another conference. According to Chris Mwebesa, chief executive officer of the Nairobi Stock Exchange, who is also the association's head, the project implementation will take no more than six months before the actual launch. Mr Mwebesa said integration of the exchanges will benefit the East African region through consolidation of market liquidity and increasing visibility of East Africa Community's capital markets to foreign investors hence attracting capital inflows. Challenges, however, lie ahead of the implementation process of the new system as some individual countries still have foreign exchange regimes in place. Tanzania, for example, does not allow its citizens to invest in other countries due to its foreign exchange restrictions. In the biggest initial public offering for Safaricom early this year, Tanzanians were denied the chance to buy the stocks. Mr Mwebesa, however, says the new initiative will not be hindered by the foreign exchange regimes in individual countries, an assertion his Tanzanian counterpart, Jonathan Njau supports. The restrictions put forth by the Tanzanian government are political." Njau said the restrictive policies put in place by the Tanzania government had hindered citizens from the East African Community member states from participating in its shares offerings. He said the government was considering liberalising the market so that Tanzanians could freely invest in other countries in the near future.