Tanzania has reassured the EAC it will open up its capital markets for investors in the bloc to trade freely from next year. The region’s second largest economy has committed to lift all restrictions in its capital markets ahead of the East African Community’s 2015 deadline for the five member States to eliminate barriers on movement and capital raising.
This is in line with the Common Market Protocol, implemented in July 2010, to facilitate free movement of goods, labour and capital in the 130-million-people trading bloc.
Paul Muthaura, acting CEO of Kenya’s Capital Markets Authority, yesterday said the commitment would treat investors from the rest of East Africa just as Tanzanians once enforced.
Kenyan investors, for example, would freely trade on the Dar es Salaam Stock Exchange, buy government bonds, and lend and borrow from Tanzanian financial institutions without restrictions.
Investors from other East African States are presently classified as foreigners who are allowed up to 60 per cent participation in primary and secondary trading on the Dar bourse.
Although Kenya restricts foreign participation at 75 per cent, EAC investors are treated as citizens. Muthaura said Tanzania’s move would enable the EAC to attract foreign direct investments to a single market.
“International investors would bring in money through any of the countries and move it around the rest of the EAC without restrictions. We are creating a single destination for their capital,” he said.
The region would however have to wait for “five-six years” to have a single legislation guiding operations of the four bourses, with Burundi still working on her own market.
These set of guidelines will later in the year be presented to the EAC council of ministers for adoption, after which the member countries will be allowed a year to domesticate them. “We are at different level of development and that’s why we are developing the minimum standards,” Muthaura said.
Source: The Star
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