The Nairobi Securities Exchange (NSE) now says it is rejoining the East African Capital Markets Infrastructure (CMI) platform after nearly a decade of boycott over procurement of the software connecting the exchanges.

The move marks a key milestone in implementation of the project, considering that Nairobi is the biggest stockmarket in the region, with 64 listed companies and a portion of them cross-listed in Rwanda, Tanzania and Uganda.

The CMI project, initially funded by the World Bank, is meant to connect regional exchanges electronically to operate as a single exchange to save on time and cost of trading in equities across the bloc.

Kenya pulled out during the initial stages of the project in 2015 after the tender for the supply of the software was awarded to a Pakistan-based technology firm, with Nairobi reading procurement irregularities.

The unified stockmarket opens a window for more cross-listings and creates a huge pool of retail investors to boost trading on the Nairobi bourses.

The NSE is eyeing to list about 40 new companies as part of its five-year strategic plan (2025-2029), with hopes that some of them will be cross-listings from regional markets.

The addition of stockmarkets in Eastern Africa, including Somalia and Ethiopia, comes with a diversified pool of investors and investment products.

Of the 64 listed companies on the NSE, five -- Marshall East Africa Ltd, Hutchings Biemer, A. Baumann, KenolKobil Ltd and National Bank of Kenya -- have been delisted and four (Deacons, ARM Cement, Mumias Sugar Company and Bamburi Cement) have been suspended from trading.

Kenya's boycott left Tanzania, Uganda and Rwanda to proceed with the project, as other EAC member then, Burundi, did not have a functional exchange.

Later, Nairobi issued tough conditions to return, including a demand for fresh procurement of the software and that the EAC Secretariat, the project implementing agency, provide clarity on modalities of financing maintenance of the system, and which country would bear the cost.

But now, the NSE has waived these demands, eyeing the window for increased business that comes with the project. Rwanda Stock Exchange (RSE) CEO Celestin Rwabukumba and former chairperson of the East African Securities Exchanges Association (Easea) says the second phase of the project entails bringing on board all exchanges. Newer markets such as Somalia, Burundi, Ethiopia, and other East African markets may launch their exchanges later.

Uganda Rwanda and Tanzania already interconnected their trading systems and hooked them to the CMI information technology platform.

In April this year, the Easea officially launched the East Africa Exchanges (EAE) 20-Share Index, marking a major milestone in integration and development of the region’s capital markets. The index is expected to track price movement in market capitalisation of its constituent firms, offering a transparent benchmark for investors, analysts and policymakers.

Introduction of the regional index boosts growth and deepening of East African capital markets and their economies and bolsters on-going efforts towards integration of regional stockmarkets.

The EAE 20-Share Index is a market capitalisation-weighted index, comprising top 20 listed public companies from multiple sectors across Nairobi, Tanzania, Uganda and Rwanda stock exchanges. Collectively, these companies represent over 85 percent of the region’s equity market.

The companies are Safaricom, KCB Group, Equity Group, Co-operative Bank, Absa Bank Kenya, CRDB Bank Plc, NMB Bank Plc, Tanzania Breweries Ltd, Tanga Cement Company Ltd, Tanzania Cigarette Corporation, Bralirwa Ltd and BK Group Plc.

Others are I&M Bank (Rwanda) Plc, Cimerwa Plc, MTN Rwandacell Plc, MTN Uganda Ltd,Stanbic Uganda Holdings, Bank of Baroda (Uganda), Airtel Uganda Ltd and Quality Chemical Industries Ltd. 

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