East Africa’s stock markets Chief Executive Officers have called for the development of infrastructure bonds to ease the financing of the region’s infrastructure projects.
The call was made through their association, the East African Securities Exchanges Association (EASEA), during the 16th meeting in Nairobi, Kenya last week.
In a joint statement at the end of the meeting, members said infrastructure is a crucial “non tariff barrier” to optimizing the benefits of EAC’s integration.
“Infrastructure bonds can be a more efficient form of financing as they meet the long term nature of infrastructure financing which is often not available from the banking system,” the statement reads in part.
In an earlier interview with Business Times Robert Mathu, Executive Director of the Rwanda Capital Market Advisory Council (CMAC) also echoed the critical role of regional infrastructure bonds.
Mathu observed that with the upcoming big infrastructure projects including development of highways, utility and power generation, regional infrastructure bonds would ease sourcing funds from the public.
“We have relied on international funds but of late we have realized that it is possible to raise most of these funds domestically,” Mathu told the East African Legislative Committee on communication, trade and investment in Kigali.
The regional stock market executives from Kenya, Uganda, Rwanda and Tanzania also called for further pension sector reforms in member countries to facilitate a steady supply of capital for development.
They agreed on the domestication of regional Initial Public Offerings (IPOs) by proposing the development of practical strategies, which would address or ease some the challenges that such issues face.
For example, they could seek to leverage on regional financial institutions as receiving banks to provide a more efficient service during regional IPOs.
It was also agreed that the region should carry out a harmonized regional awareness programme to ensure that the same message is delivered to all the markets.
This is to facilitate the equitable distribution of information.
Burundi, which is a member of the EAC, was not represented since it is yet to set up a functioning capital market.