Kenyans to buy shares in EAC bourses
What you need to know:
- The relationship is spelt out in draft regulations released by the Capital Markets Authority (CMA) Tuesday and aimed at ensuring harmonisation of operations across the bloc as well as easing cross-border capital mobilisation.
East African Community member country citizens could be considered local investors across the five member states ensuring that Kenyans are reciprocated for the equal treatment of her neighbours.
The relationship is spelt out in draft regulations released by the Capital Markets Authority (CMA) Tuesday and aimed at ensuring harmonisation of operations across the bloc as well as easing cross-border capital mobilisation.
If it becomes law, countries including Tanzania, which has jealously guarded its capital markets, will have to open up.
Kenya has regarded investors from EAC as local investors since the Safaricom IPO, securing the allotment at par with that of citizens. Their ownership of listed companies is also not capped at 75 per cent.
“Local investor in relation to an individual means a natural person who is a citizen of an East African Community partner state,” reads part of the directives which are open for public debate till October 18.
During the Safaricom offering, East African investors were invited as locals contrary to what has transpired in other issues in the region.
The Umeme offer last year was open for all East Africans. “There have been no initiatives for Kenyans to buy in Tanzania so it was one way,” said Job Kihumba, a director at Standard Investment Bank.
Stockbrokers will not require licences in all the other countries in order to operate but will rely on the licensing in their mother country to carry out regional operations.
“Partner states should not introduce additional requirements for market intermediaries operating in more than one EAC partner state,” reads part of the directives.
The same will apply for collective investment schemes such as unit trusts which will only be required to seek recognition in the new markets they seek to operate in.
The statutory fees for companies listing across borders have also been standardised, ensuring that individual countries do not bar entry by setting higher fees.
The amount is set at 0.1 per cent of the value of shares to be listed subject to a minimum of $20,000 and a maximum of $200,000.
Integrating operations
Capital markets regulators across the five East African countries have been working at integrating their operations so as to ensure wider access to capital.
But they have been progressing slowly mainly due to the different stages of development of their respective markets.
Transaction of cross-listed shares used to take about three months until last month when the Regional Inter-depository Transfer Mechanism went live, slashing it to four days.
The long transaction period was said to be the cause of low activity on the cross-listed counters.
The Nairobi Securities Exchange, established in 1954, has the longest history and is by far the largest and most active in the region.
