Volume 4, Number 1

Globalisation, which has made competition for the limited financial resources in both local and global markets stiffer, resulting in tumultuous economic conditions for both developed and developing countries, has left a capital market as the only dependable source of long-term capital. Taking into consideration the predicament surrounding the other known sources of financial resource mobilisation, namely foreign direct investment, external borrowing, and external trade, among others, the capital market should be enabled to play its traditional role of mobilising and allocating financial resources effectively and efficiently from within and outside the economy. Stock exchanges augment low domestic savings and serve to stimulate investments in development country context, hence creating more employment opportunities while minimising income gaps. Using a descriptive and moderate qualitative approach, this article, with data mainly from the East African Community (EAC), regional stock exchanges such as the Uganda Securities Exchange (USE), Nairobi Stock Exchange (NSE), and Rwanda Stock Exchange (RSE) stock markets, clearly spells out the role played by capital markets in the overall economic development of a developing country.a

Keywords: Capital markets; Resources mobilisation; EAC economies; Resource allocation efficiency