SADC races to integrate stock markets

CLOUDINE MATOLA

Southern African countries are accelerating plans to integrate their stock exchanges as part of efforts to deepen regional capital markets, boost cross-border investment and position the region as a more attractive destination for global investors.

Speaking on the sidelines of the Southern African Development Community (SADC) Committee of Ministers of Finance and Investment and Peer Review Panel meetings in Harare last week, Finance, Economic Development and Investment Promotion Minister Professor Mthuli Ncube said the regional bloc was moving to link stock exchanges, enabling investors and stockbrokers to trade seamlessly across SADC markets.

“We are linking our stock markets across the region so that shares of companies can be bought across various stock exchanges and stockbrokers can work across stock exchanges,” Ncube said.

The move is expected to transform the region’s fragmented capital markets by allowing investors to buy shares listed on any participating exchange while enabling brokers to operate across borders. Analysts say greater market integration could improve liquidity, widen access to capital and make Southern Africa more compelling to international institutional investors.

Professor Ncube said capital markets integration was part of a wider programme aimed at achieving greater economic convergence across SADC through coordinated policy reforms.

“We have targets, and we implement policies to meet those targets in order to achieve economic convergence. But our policy measures go beyond macroeconomic policies. They also include measures such as third-party insurance arrangements, investment protocols and other institutional reforms that create the framework for regional integration,” he said.

He said the region was making significant progress despite growing geopolitical tensions and increasing fragmentation of the global economy.

“There is increased global fragmentation. That means we must strengthen ourselves within our region, rely more on regional collaboration and build our economies together. That process is already underway,” Professor Ncube said.

Alongside capital market integration, SADC central banks are developing a cross-border multi-currency payments platform designed to facilitate trade using member states’ domestic currencies, reducing dependence on intermediary currencies such as the US dollar.

South Africa’s Finance Minister and chairperson of the SADC Committee of Ministers of Finance and Investment, Enoch Godongwana, said several countries had already begun joining the platform.

“One of the initiatives under way is a multi-currency platform being developed by our central banks, which will allow us to trade with one another using our own currencies rather than relying on a third-party currency. Several countries are already beginning to come on board, so monetary integration is also gathering momentum,” Godongwana said.

He said regional integration had become more urgent as global trade and investment increasingly coalesced around regional blocs.

“As the world becomes more fragmented, countries are organising themselves into regions. We therefore have to consolidate our regional integration efforts. A critical part of that agenda is resource mobilisation to finance the institutions and infrastructure needed to facilitate trade and investment across the region,” Godongwana said.