‘Organisational challenges keeping SMEs from listing on the bourse’


Students of Lycee de Kigali ring the bell at the beginning of a trading session last month as Celestin Rwabukumba (right), the RSE chief, cheers. There are ongoing sensitisation campaigns to encourage Rwandans to save and invest on the stock market. / File

The local exchange recently welcomed I&M Bank Rwanda, which listed on the bourse at the beginning of April 2017. The lender joined other three local and four cross-listed firms that are listed on the Rwanda Stock Market (RSE).

The development boosted efforts by the Capital Market Authority, RSE, and government encouraging Rwandans to save and invest on the stock market.

However, the listing comes at a time when regional and global exchanges are experiencing a downturn because of the current challenges in the global economic arena. Business Times caught up with Robert Mathu, the Capital Market Authority chief executive, to discuss this and other issues concerning the local and regional exchanges.


How do we see the capital market turning out this year?

We are looking forward to an exciting year with prospects for additional products and investment funding on the domestic market. We have just concluded the fourth domestic IPO (initial public offering) and listing on the RSE.

CMA chief Robert Mathu. / File

With regard to secondary market performance, much will depend on the state of the global commodity prices which have more or less shown clear signs of stabilizing and for some even recovery.

Sub-Saharan economies are very much driven by commodity prices, and also exposed to currency fluctuations and other international events like free flow of these commodities. These are mainly agricultural crops, minerals and oil.

So far, most of these commodities have trended out of the declines we observed up to the end of 2016 and, if this is maintained, then recovery of sub-Sahara African economies’ stock markets, including the RSE, would be in the horizon.

What became of the small and medium enterprises (SMEs) that had expressed interest in coming to the market last year?

The alternative market window on the capital market is very new and businesses are still familiarising with it. The first two SME firms that had expressed interest to raise new capital for expansion have since gone silent due to organisational challenges and change of their own strategies. We are, however, working with others optimistically.

It is important to understand that the SME market takes time before trooping into the securities markets. The promising sectors are those that are emerging as new asset classes through information technology, communication and innovation.

As the economy transforms through new industries, new businesses will provide opportunities for investors.

The electronic trading programme is almost a year behind planned schedule of June 2016. Is it dead and buried?

The electronic trading platform had been targeted to be in place in 2016. However, this is a regional initiative aimed at integrating the East African securities markets, making it easier and faster for the capital markets in Kenya, Uganda, Tanzania and Rwanda is supposed to transact and make settlements.

Therefore, RSE wants to avoid duplication by implementing its own platform while the regional project that seeks to link all the exchanges in these countries is ongoing. So, the automation project hasn’t ‘died’ as you put, but still on course.

Regional capital markets have experienced low turn over the past two years or so. Do we see change of fortunes in near future?

The future is bright given that events that pushed markets down have since changed. Commodity prices are stabilising and expected to recover for those that are still in the lows, currencies have stabilised and given that EAC was the fastest among regional economic blocs recovery, it could be comparatively more spectacular and hence attractive to investors.

What do you think are some of the (investor) pull factors this year and beyond?

There is a bright economic outlook as a result of emerging investment opportunities from the many years of sustained investment in both physical and soft infrastructure.

Sectors such as energy and, specifically, power generation and distribution, have high prospects for growth.

What is your last word?

Regional exchanges have come a long way and, indeed; the capital market is one of the most integrated sectors under the regional integration programme. I expect a very dynamic year both in terms of new and innovative capital products across the region.

RSE 2016 performance

According to the Rwanda Stock Exchange (RSE) annual report for 2016, the Rwanda Share Index (RSI) for domestic counters dropped to 119.91 points in 2016, down from 146.89 points recorded in 2015 on account of value lost by all the three local counters over the past year. The All Share Index (ALSI) that includes all listed firms on the local exchange, declined from 130.61 points recorded in 2015 to 127.26 points last year. ALSI recorded a decrease of 3.8 per cent in 2015, while the RSI was down 37.5 per cent over the reporting period.

Bank of Kigali was the biggest loser last year, shedding close to Rwf52 to Rwf228, down from Rwf280 on December 31, 2015, while Bralirwa lost Rwf34 value to close at Rwf140 from Rwf174 on December 31, 2015, and Crystal Telecom declined from Rwf99 to Rwf90 at the end of December 2016.

The decline in share prices of the three counters affected returns with RSE total turnover for both the equity and bond markets dropping 55.6 per cent to Rwf17.14 billion, from Rwf38.54 billion recorded in 2015.

Market capitalisation was at over Rwf2.748 trillion in December 2016 compared to Rwf2.820 trillion as at December 31, 2015.

On Thursday, Bank of Kigali closed at Rwf245, I&M Bank Rwf107, Bralirwa at Rwf137, Crystal Telecom Rwf90, Equity Bank Rwf334, NMG at Rwf1,200, KCB Rwf330 and Uchumi Supermarkets at Rwf104.

RSE did not trade on Friday and yesterday as they were public holidays.