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Capital Market Infrastructure in East Africa

Common Capital Market Infrastructure for East Africa: Options for the Way Forward

Jan 24, 2018

Carole Biau


Growth in capital markets in the East African Community (EAC) has not kept up with the pace of economic growth.

Rwanda, Kenya, and Tanzania all posted annual growth rates above 5.4 percent over 2015-2017. This makes East Africa the fastest-growing region in sub-Saharan Africa over the period.

Nonetheless, East Africa’s lack of deep, liquid capital markets has had a dampening effect on private-sector-led growth and long-term development and all countries in the EAC recognize the need for regional integration of capital markets.

Gridlock on several necessary central components has slowed the process of integrating regional capital markets. In particular, EAC countries have been unable to maintain consensus on how to build and share infrastructure around a regional central securities depository (CSD).

This paper provides greater perspective on the implications of an impasse of an ongoing project led by the EAC Secretariat on capital markets infrastructure (CMI) with the support of the World Bank and suggests options and models that exist for moving forward while outlining relative pros and cons.

The paper also highlights essential points of debate that need to be resolved in order to prevent EAC countries from losing potential investors and resources due to further hindrances to capital market integration and development.