WORKSHOP TO DOMESTICATE COUNCIL DIRECTIVES ON EAC SECURITIES MARKET INTO NATIONAL LAWS CONCLUDES IN ARUSHA

A three-day regional workshop to domesticate the EAC Council of Ministers’ Directives on Securities Market in the regional bloc into national laws has concluded in Arusha, Tanzania. The 31 July to 2 August workshop was organized by the EAC Secretariat in collaboration with the World Bank, as part of the financial sector integration and regionalization agenda.

The workshop reviewed modalities for domesticating the Council Directives on Securities Market into national laws of the respective Partner States. The workshop was held under the ambit of the EAC Financial Sector Development and Regionalization Project I (FSDRP I).

Speaking at the workshop, Dr. Enos Bukuku, the Deputy Secretary General in charge of Planning and Infrastructure noted that development of the Council Directives was an approach the EAC Securities Market Regulators had opted for as the most feasible strategy.

This took into consideration that the Capital Markets in the Partner States are at different levels of development and an overarching Community Law would only be feasible in the long-term after a high degree of convergence between the 5 different Capital Markets has been attained.

Dr. Bukuku said it was in this regard that a Technical Working Group (TWG) was established to develop EAC regional securities laws. The TWG progressed the development of the Council Directives and the first set of seven was approved by the EAC Council of Ministers in April 2014 and these included; the Council Directive on Public Offers for Equity Securities; Council Directive on Public Offers for Fixed Income Securities; and Council Directive on Public Offers for Asset Backed Securities (ABS).

Others were; Council Directive on Collective Investment Schemes (CIS); Council Directive on Corporate Governance for EAC Market Intermediaries; Council Directive on Regional Listings in the Securities Market; and Council Directive on Admission to Trading on a Secondary Exchange.

Dr. Bukuku emphasized that it is of significant importance that all stakeholders start to shape outputs towards the ultimate goal which is a developed and integrated EAC Securities Market. This will include creating structures and systems that can attract a large pool of funds to finance long-term projects particularly infrastructure development and also create opportunities for mobilization of long term resources, noting that “an EAC integrated market will provide wider scope and depth to leverage its competitive advantage from a global perspective”.

The current Chair of the Council Directives’ Technical Working Group, Mr. Daniel Warutere the Legal and compliance Manager at Kenya’s Capital Markets Authority, reiterated that the transposition process of the Council Directives was elaborate and involved extensive stakeholder consultations at the national levels.

He noted that the market players were eager to see the process concluded and implemented as this would lead to increased business opportunities for intermediaries as well as enhancing the investment spectrum for issuers and investors.

A consultant from the World Bank, Ms. Mavis Marongwe made a presentation at the workshop on the Experience from the European Union drawing lessons relevant to the EAC region.

Participants at the workshop underscored the need for a smooth and timely transposition process as the adoption of the Council Directives is not an end in itself. They noted that the ultimate objective can only be seen to have been achieved once the Council Directives were domesticated into national laws and regulations in order for investors and issuers to benefit from the market.

All the Partner States made presentations on the mechanisms and timelines for implementing the Council Directives as directed by the April 2014 Council of Ministers meeting.

The workshop was attended by a Team from the World Bank, Chairpersons of the Law Reform Commissions, and representatives from the five Partner States drawn from the Judiciary; Securities Market Regulators, Attorney Generals’ Offices, Parliamentary Services Commissions and Ministries of East African Community Affairs and Finance, among others.

FSDRP I is a collaborative initiative between the EAC Secretariat, the World Bank and other development partners aimed at supporting the development of the financial sector through establishment of a single market in financial services among the EAC Partner States. The project objective is to create the foundation for financial sector integration among the EAC Partner States.

The project is structured in six components namely; Financial inclusion and strengthening market participants; Harmonization of financial laws and regulation; Mutual recognition of supervisory agencies; Integration of financial market infrastructure; Development of the regional bond market; and Capacity building.