Burundi is getting ready to launch its first stock exchange market
Briefing Issue #79, Thursday, April 23, 2020
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Dear Readers,
The Burundi Investment Promotion Agency (API) in collaboration with the Bank of the Republic of Burundi (BRB) organized this week (April 20, 2020), an awareness workshop on the capital market and investment opportunities for investors, bankers, financiers, and journalists. During the session, it was explained how the capital market works and the investment opportunities that it can generate in Burundi.
"The capital market is a financial market that brings together buyers and sellers to trade stocks, bonds, currency, and other financial assets”. He added that this market helps people with ideas to become entrepreneurs and small businesses to become large businesses. “This market also gives people the opportunity to save and invest in their future, "said Pierre Damien Mpawenimana, Head of the Stock Exchange Unit at the BRB.
The Head of API, Mr. Désiré Musharitse pointed out that corporate finance and maintaining savings liquidity are the key roles of the capital market. It makes possible huge investment opportunities that economic operators and potential Burundian investors should discover, know, and certainly exploit. He added
The capital market offers advantages to the national economy by facilitating exchanges between economic agents and the intermediation of the financial system.
The law on the capital market was promulgated in Burundi on February 27, 2019. This law also establishes supervisory mechanisms with a focus on protecting investors, guaranteeing fairness, efficiency, and transparency of the market and reducing the systemic risk.
Burundi is the only member state of the East African Community which does not have a stock market.
There are 23 stock exchanges in Africa today, up from 18 a decade ago. The newest is the Rwanda Stock Exchange, which officially opened its doors to the public about a few years ago.
The small size of African stock markets and the absence of liquidity are often cited by foreign investors as the major impediments to investing in the region. Experts have recommended merging them into regional exchanges as one solution.
“A regional exchange should mean more liquidity — the lifeblood of exchanges — by making stocks available to a wider range of investors,” argues The Economist, a British weekly magazine.
Elsewhere in Africa
The development of stock markets in Africa tends to show a process of evolution in several stages characterized by the type of regulatory system, modalities transactions, and scope of market participation.
In general, most of the major markets in Africa started without formally established rules and regulations; trading activities were based on interpersonal relationships. Formal markets were then created, motivated either by the desire of negotiators to diversify the sources of investment funds or by the need for governments to establish a formal market for issuers of debt securities.
The formalization and revitalization process has undergone changes in the regulatory framework, the trading system, and the composition of market investors.
As experts recommend , for the potential of African capital markets to unfold, the governments of all countries on the continent must build and strengthen the capital market infrastructure. They must ensure that economic conditions remain stable to allow investors to confidently commit to longer-lived assets.
This applies to the political and business environment, budgetary management, monetary policy, and the whole of economic policy which must be geared towards growth. States must also be proactive in implementing reforms that strengthen institutions and the market structure.
Thanks for reading!
Fabrice Iranzi,
Editor, RegionWeek.com
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Notes and Ressources
https://tel.archives-ouvertes.fr/tel-01921507/document
https://www.afdb.org/fileadmin/uploads/afdb/Documents/Knowledge/09484315-FR-CAPITAL-MARKETS-ROLES-CHALLENGES-FRE.PDF
https://www.un.org/africarenewal/magazine/august-2012/harnessing-african-stock-exchanges-promote-growth
http://www.lafriquedesidees.org/des-marches-financiers-en-afrique-absolument/
https://www.cairn.info/revue-d-economie-financiere-2014-4-page-165.htm#
IN THE REGION
The Kenya Ministry of Health has reported 17 new coronavirus cases in the country, bringing the total number of cases in Kenya to 320. The cases were confirmed after 668 samples were tested in the last 24 hours. During the 37th coronavirus briefing at Afya House on Thursday afternoon, Health CAS Mercy Mwangangi said all the patients were Kenyans. (Standard)
The Uganda Minister of Trade, Industry and Cooperatives, Amelia Kyambadde revealed that Uganda's exports declined from USD 383.62 million in January 2020 to USD 352.91 million in February 2020. The Minister who was addressing the media about measures the trade ministry is implementing in light of the COVID-19 outbreak also said imports had declined. Minister revealed that cargo trucks carrying exports to Rwanda are being allowed to enter through Mirama Hills, but there are reports of denial of entry to Ugandan trucks transiting to Burundi. "We will engage Rwanda at the political level to allow Ugandan trucks transit to Burundi, after all, we are allowing theirs to transit through Uganda," she said. Uganda's cases of COVID-19 rose to 61 on Tuesday after another Kenyan truck driver tested positive. So far, 5 cargo truck drivers have tested positive. (SoftPower)
Tanzania cannot afford to impose movement restrictions to fight the coronavirus pandemic despite a sharp increase in infections over the past few weeks, President John Magufuli said.“There are calls to lock down Dar es Salaam we will never do that. This is our main port city and accounts for around 80% of government revenue,” Magufuli added in a televised address to defense and security chiefs on Wednesday. Magufuli urged international financial institutions, particularly the World Bank, “to forgive debt owed by African countries instead of giving them new loans to fight the coronavirus.” (Bloomberg)
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