On January 28 Rwanda’s stock exchange, Over the Counter Trade (OCT), is to be officially launched. It has been decided that OCT will begin with bonds.
A bond is simply a loan but in the form of a security. The issuer (borrower) owes the bond holder (lender) a debt and is obliged to repay the principal and the interest (the coupon) at a later date, termed maturity.
Robert Mathu, the Executive Director of Capital Markets Advisory Council (CMAC), said in an interview that OCT will begin with debt securities (bonds) because it is easier to structure a debt than bring companies on board to issue equity securities.
Mathu is sure that there will be at least two products on offer come January 28; a treasury bond issued by the government and a corporate bond.
The Frw5b treasury bond will be issued with a maturity of two years and an interest rate of 8 percent per six months. The director said the corporate bond will be issued by one of Rwanda’s leading banks but he did not reveal the details.
Many countries in Africa have set up stock exchange markets in order to boost their financial sectors. Throughout East Africa stock exchanges are growing rapidly.
Ugandan, Kenyan and Tanzanian stock exchanges are all performing well. The idea of a Rwandan stock exchange was proposed in 2005 by the Government of Rwanda to be put in place through BNR.
It is hoped that in setting up a savings fund Rwandese will learn about the uses and benefits of financial products in the economic sector.