A month after indicating it was on its way to re-join The East African Capital Markets Infrastructure Project, Kenya has tabled new conditions for that to happen. It is demanding fresh procurement of a software that would link regional stock markets, besides asking for clarity from the East African Community Secretariat on the modalities of financing maintenance of the system.
The EastAfrican understands that the African Development Bank (AfDB) is considering funding the second phase of the project on condition that Kenya — which runs the largest stock market in the region — re-joins.
The latest turn of events has put the EAC Secretariat, which is implementing the project, in a difficult position largely due to the cost implications of fresh procurement and the likelihood of legal suits from termination of the existing software contract, awarded to Pakistan-based InfoTech Private Ltd.
An industry source privy to the on-going negotiations told The EastAfrican that Kenya has demanded the EAC Secretariat replaces the current software, which is more than six years old. Nairobi also wants an agreement reached on which country will bear the cost of maintaining the system.
The source also revealed that AfDB was invited to the meeting with a view of helping fund the second phase of the project. The multilateral lender demanded that Kenya re-joins the project.
“Yes, we have been in discussion. We have told them (EAC Secretariat) that this system was acquired in 2015. These systems are usually not very relevant after six years.
“Do we now have a financier for the maintenance?” said the source, who cannot be named due to the sensibilities surrounding the discussions.
“We had our position and we said, one, we need to ask whether we are going in the same system or we can negotiate for another system and get someone who can give us that system but more importantly we need to understand how to sustain that project. So, I guess those are some of the things that are not yet very clear.”
The AfDB is currently funding the African Exchanges Linkage Project (AELP), which connects continental bourses, where Kenya is a member.
The first phase of the project, which went live on November 18, connects seven stock exchanges across 14 African countries – Morocco, Egypt, Nigeria, Kenya, Mauritius, South Africa and the West Africa Economic and Monetary Union, which comprises Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.
In East Africa, the Pakistan-based InfoTech Private Ltd had been contracted to provide software connecting the trading platforms of the Uganda Securities Exchange, the Dar es Salaam Securities Exchange and the Rwanda Stock Exchange to enable them run as a single market in real time. Burundi is still developing its stock market.
Kenya pulled out of the project in 2015 after expressing dissatisfaction with how the Pakistani firm was awarded the contract.
“The African Development Bank is willing to fund the second phase of the project but you see they have a condition that Kenya must join in and we said yes, we don’t have a problem but we need to go back to the government then it can undo what happened earlier,” the source said.
According to the source Kenya does not want to invest money in an outdated system.
“We are still waiting to hear the way forward from the EAC Secretariat,” the source said.
EAC Secretary-General Peter Mathuki did not respond to our emails by press time.
In December, NSE Chief Executive Geoffrey Odundo said Kenya had agreed to re-join the second phase of the project.
“We are in discussion with the EAC Secretariat on Phase 2 of the project. I can’t give details at the moment because we are still in early days,’’ he said.