A burning desire to cut reliance on foreign investors within East Africa’s stock markets has compelled the exchanges to expand their retail investor base of late, but hard questions surrounding the procurement of new trading platforms, the passing on of costs to local users, and the tackling of rising cybercrime risks associated with financial services remain unresolved.

Foreign investors currently account for 40 percent of the investor pool available in East Africa’s stock markets — a factor that exposes regional bourses to sudden episodes of capital flight attributed to financial and economic shocks experienced in developed economies.

The latter include changes in Central Bank Rates (CBRs), fluctuations in key commodity prices, trade wars, and fears of economic recession, among others.

Incidents of capital flight usually translate into volatile trading movements in stock markets that are reflected in lower trading turnover and volumes, falling share prices, diminished stock market indices, and shrinking commission fees earned by stockbrokers and stock market supervisors.

The launch of a retail investor trading platform at the Dar es Salaam Securities Exchange (DSE) a few years ago has attracted 100,000 new retail investors, while the number of Central Depository System (CDS) accounts registered on this platform has risen to 120 per day, according to data released by the DSE. Total equity turnover attributed to this platform is estimated at Tsh7 billion ($2.8 million) to date.

In comparison, a retail investor trading platform unveiled by the Uganda Securities Exchange (USE) in 2018 has seen equity trading turnover grow from Ush6 billion ($1.7 million) to Ush51 billion ($14.6 million) by the end of June 2025, amidst strong uptake by young, digitally savvy investors venturing into the stock market for the first time.“The level of financial inclusion in Tanzania is determined by growth in mobile money services, insurance product penetration, and microfinance players, among others. Tanzania’s financial inclusion rate stands at 76 percent, while the growth in retail investor numbers at the DSE stood at less than one per cent last year. We are currently working on the integration of the DSE’s trading platform with mobile money platforms and mobile banking apps in order to expand our retail investor base,” said Peter Nalitolela, Chief Executive Officer at the DSE.

But the cost of new technology platforms passed on to local users by stock market operators remains unclear. Technology platforms deployed by stock markets for trading and settlement activities usually cost millions of US dollars, while software licence renewal fees are estimated at roughly $200,000 per year for each user package, local sources indicated.

The fast-growing uptake of digital transaction platforms has triggered higher cybercrime risks amidst rampant hacking activities targeted at banks, telecommunications companies, and financial technology firms that handle massive financial transactions throughout the year, technology experts say.

Latest findings contained in the PwC 2026 Global Digital Trust Insights Report show 60 percent of technology executives surveyed by the audit firm were in favour of increased cyber risk investments, while 41 percent were in favour of changes in critical infrastructure locations for their businesses.

Around 39 percent of technology executives were in favour of changes in cyber insurance policies secured by firms, while 26 percent supported changes in vendors hired by companies as technology support partners, the findings show.“Managing the costs of new technologies deployed for the mobilisation of retail clients is not easy. Financial Sector Deepening Tanzania provided a grant for the development of the retail investor onboarding platform, but it was not enough to cover all the investment costs. The DSE decided to recover its investment over a period of five years, but it was not possible. As a result, all stockbrokers are required to pay Tsh1 million ($405.9) per year for using that platform. Tanzania’s economy is still cash-heavy, and that means there’s a big burden of settling transactions between commercial banks and the DSE’s Central Depository System,” noted Ramadhan H. Kagwandhi, CEO at Exodus Advisory Limited, a Tanzanian stockbrokerage firm.

Expansion of the retail investor base is a clear-cut issue for us. We badly need them to grow our stock markets to another level. It is good to invest in new digital trading platforms targeted at retail investors,” observed David Mitali, Manager for Risk and Compliance Affairs at the RSE.

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