OPERATE OVERSEES STOCK EXCHANGE

Week before last, the Minister of Finance and National Economy (MFNE), Mr. Zubeir M. Hassan, withdrew the regulatory powers over Khartoum Stock Exchange (KSE) delegated by him to the Central Bank of Sudan (CBS) in January 2006.Such regulatory powers were passed to the CBS on the request of the CBS and on the basis of the recommendations of a joint IMF/World Bank. No reasons were given for such withdrawal .KSE has been overseen by a board headed by the Minister of MFNE and the deputy is the governor of the CBS, in addition to other members. This board was supervising the operation of KSE for the last 12 years and very successfully. During the tenure of this board KSE by cross listing Sudan Telecommunication Co. (Sudatel) in the Gulf markets was able to attract a considerable size of Arab investment into Sudatel as well as the banking sector. These regulatory powers were given to the CBS and taken away from it without any visible reasons. However before proceeding to analyse the nature of these changes, it will be of both academic and practical interest to provide a background to the establishment of KSE which is now one of the most important and visible financial institution in Sudan and also an important emerging market in the Arab and African regions. . Thinking about establishing a Securities Market in Sudan started as early as 1962 during the regime of late General Abboud. A good number of studies were undertaken and were initially started by the MFNE at that time in consultation with the Bank of Sudan and the cooperation of the International Finance Corporation (IFC) which is an arm of the World Bank. The idea did not get through and it was abandoned. In 1976 during the regime of Nimeiri an act to establish a Securities Market was prepared and was handed over to the Peoples’ Assembly which passed such an act to the Attorney General’s Chamber.. Ironically enough this Act remained in the offices of the Attorney General’s Chamber and was only passed in 1982!! Obviously the act could have come to the surface during Nimeiri’s time because from its very inception Nimeiri started with nationalization of the banking and trading system in 1970 and the adopted socialist planning. A decision which left its mark on the course of Sudan’s economy for many years to come. In such a situation the idea of a Securities Market which is a capitalist instrument would not have found its way to application. Therefore, the Act to establish a Securities Market was only passed in 1982. Even then and with the prevalence a heavily loaded public sector culture the idea of a Securities Market would not have found its way to the surface. Between 1962 when the idea was first conceived and 1982 when the Act for a Securities Market was conceived nothing came through because of the unstable economic policies during the period and the continuous changes in governments alternating between military and civilian rule. From then on and until 1992, no attention was given to the idea of establishing a Securities Market because the whole environment was preoccupied with the problems of governance and political stability which is a precondition for any meaningful development.