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Badilisha Lugha KISWAHILI

EAC needs to sustain financial markets – Governor

3rd March 2012
Governor of the National Bank of Rwanda, Claver Gatete

The East African Community needs to sustain its financial markets in order to make it operate with more efficiency, Governor of the National Bank of Rwanda, Claver Gatete has said.

Presenting a paper at a two-day regional conference on financial sector integration organised by the EAC Secretariat in collaboration with the International Monetary Fund in Arusha recently, he said for financial markets to improve their competence they need to do many things.

They have to put a stable macroeconomic environment which is fundamental in promoting cross-border investment because of fluctuating interest rates and exchange rates, he said.

The other measure is to have effective regulatory framework and institutional investors (insurance companies, pension funds, mutual funds and unit trusts) to provide more benefits to the market, he added.

According to him, financial disclosure and timely information play an important role in the evaluation and monitoring of the financial sector soundness, he said.

EAC need for more well trained professionals such as dealers, brokers, investment managers, security analysts is another aspect, he said.

Governor Gatete said effective tax policies are needed to treat incomes of all types of investments and savings fairly.

However he said domestic debt markets in the region still face problems in meeting international standards.


“They are characterized by short term maturities, low savings rates, underdeveloped bond markets, illiquid secondary markets and limited investor base,” he noted. 


According to him, stock markets are viewed as a medium to encourage savings, improve the efficiency and productivity of investments.

He added that secondary markets are illiquid and do not exist in some countries while bond markets are dominated by government bonds and very few corporate issuances.

EAC financial markets integration is identified as one of the key pillars of establishing the region’s monetary union.

Its objectives are to contribute to mobilisation of domestic savings and investments, efficient allocation of resources, which contribute to accelerate economic growth increase competition and innovation, and harmonised regional laws and institutions.

The integration of EAC capital markets began in 1997 with the establishment of the East African Securities Regulators Association (EASRA).

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