November 7, 2018 / 12:32 PM / 9 months ago

CORRECTED-Burundi to set up capital market for firms this year

(Corrects surname of central bank official in paragraphs 4, 5, 7 and 8)

BUJUMBURA, Nov 7 (Reuters) - Burundi plans to establish a securities exchange before the end of this year for companies to raise funds after a slowdown in commercial bank lending, a senior central bank official said.

Economic growth output in the East African nation has slowed down since a political crisis in 2015 sparked by President Pierre Nkurunziza’s decision to seek a third term.

The aid-dependent central African nation has lost direct financial support from key donors, such as the European Union, over accusations of human rights violations and a crackdown on opponents, which Burundi rejects.

Arsène Mugenzi, the head of the central bank’s Capital Market Regulatory Department told Reuters, there were several pension funds and insurance firms that were ready to back companies which will seek capital on the market.

“We have many companies which want to widen their shareholder base in order to buy new materials and increase production,” Mugenzi said late on Tuesday.

He did not give details of the companies which will offer their shares or details of the slowdown in private lending.

“What is needed now is to set up a capital market which will boost economic growth and create jobs,” Mugenzi said.

Mugenzi said the central bank had set up a team in 2009 to try to establish the financial market and that they expected it to start late in November or early December.

Local social security firms such as the state-owned National Social Security Institute and the National Pension and Professional Risks Office, are interested, he said.

The central bank had initiated talks with U.S-based funds interested in investing in developing countries, he said, without providing any names.

The rift with donors was sparked by Nkurunziza’s decision to ignore the constitution’s provisions on term limits and run for a third term in April 2015.

In June, he promised to step down when his term ends in 2020, easing fears of fresh violence in the impoverished country.

Writing by Omar Mohammed; Editing by Alison Williams

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