KIGALI - President Paul Kagame has urged Rwandans to pool financial resources in order to form companies that will invest in capital markets. Kagame said the move would help foster growth and sustain the capital market in the country. He was speaking during the launch of the Rwanda Capital Market yesterday at Kigali Serena Hotel. The capital market was launched with a Treasury bond and a corporate bond being the first products to be listed on Rwanda Over-The-Counter (OTC) market. These two financial instruments were issued by Government and the Banque Commerciale du Rwanda (BCR).
The Government bond was issued through the National Bank of Rwanda (BNR). It is a two-year bond with a fixed coupon rate of 8 percent interest rate paid every six months.
The BCR corporate bond has a maturity period of five years and interest rate of 9 percent, also compounded twice a year.
The President said that since their inception in Europe in the 11th and 16th centuries, capital markets have played a significant role in boosting economic growth, and therefore Rwanda’s should also be expected to grow.
The President however noted that there are still challenges ahead to make the market reach international standards.
“The challenge therefore lies in doubling our efforts in building a Rwandan private sector that sees value in the culture of shared ownership of productive assets,” he said.
Another challenge is the issue of the eligibility to trade.
The President said that listing companies must adhere to higher standards in terms of transparency and accountability to shareholders to ensure the safety of well as higher return on investment.
The third challenge, the President said, revolves around lack of a saving culture. “Obviously due to low income in our country, not many people save. But even for those with disposable incomes, their saving rates are not what they should be,” he noted.
Finance and Economic Planning minister, James Musoni, said creation of a capital market in Rwanda is a result of fundamental reforms, stable macro-economic environment, sound fiscal policy, good regulatory legal network and political stability.
“We are developing the bond market first, then the equity market and later provide the missing link in our financial sector,” Musoni said.