Taking stock of the kigali Bourse

Sitting in the heart of Kigali is the capital market authority; it is still in its beginning phase, having been in existence for less than two years now.

Sitting in the heart of Kigali is the capital market authority; it is still in its beginning phase, having been in existence for less than two years now.

On the computer monitors you see flashing updates of stocks around the world as well as regionally, blips of the Dow Jones and the FTSE.

I read into why stock exchanges succeed or fail, and I wondered what lay in store for the Kigali Stock Exchange.

The number one reason stock markets stagnate is failure to connect their own market with the world and that is the problem with our stock exchange.

Our stock exchange is connected to NYC but the wrong NYC; not New York City but Nyabugogo city.

The distance between the KSE and Nyabugogo is as far mentality as between Kigali and New York ; how we connect our capital market with our regular market will determine our economic success.

A stock market is many things; a trading floor, a reflection of investor confidence, an economic indicator among other things.

The oldest stock markets are still the best known; it was in the coffee shops of Manhattan , London , Amsterdam that we saw the gradual evolution into what we know today.

In the old days actual stock was sold on the floor, so you would have wheat, pork, oranges all strewn on the floor; soon traders began to trade notes which symbolised the stock instead of the actual pig itself. 

With world trade booming, people were able to buy shares in ships cargo and therefore share the profits; it would be like buying shares on a cargo shipment from Dubai , it spreads the risk and increases the capital available.

Our stock exchange must find a way to facilitate in development, to connect with the Nyabugogo market down the road, they need to find a way to connect to the Rwandan economy.

We are an agrarian society, with 90% rural farmers; they usually plant the same crops, harvest at the same time, therefore the prices crash at harvest time and only the middle-men profit.

Farming cooperatives need to float on the stock exchange immediately; that is the only way they will be able to get the capital required to invest for increased capacity.

We have been trying to float our bigger and well established companies in banking and insurance but these companies are conservative dinosaurs from a by-gone era; the real growth and innovation is happening in agriculture and they would be more willing to float. 

I like to watch the real Dow Jones of Rwanda; the ‘Itangazo’ scroll of food prices, beans up 7 francs, potatoes down 4, ‘biringanya’ is up 30 francs due to cold up in Ruhengeri killing the crop.

A stock market is just a weather gage for an economy normally 100 biggest companies; but our street market is still the barometer of the economy.

A market needs to be responsive and our street market has all the tactile reflexes of New York; the weather affects our prices, rises in oil prices instantly translate to our market, changes in the dollar are also instantly felt at Nyabugogo, good or bad financial news affects Nyabugogo.

When we enter our age of privatisation, the stock market will come into its own, when hedge-funds enter the fray and our social security fund diversifies into stock.

Sadly, looking at the western global markets, there is no company owned by small shareholders; they are mostly owned by hedge funds or rich individuals.

The average man has an interest in the stock market because his/her pension is invested in it.

So let’s go back to basics at the KSE; next time I walk in there I want to be able to buy “Bijumba” not individually but by the tonne and future harvests so it becomes a commodity market.

Let our market be responsive and innovative; let us put our capital market in a context that people can understand.

The capital market will never replace Nyabugogo but it can enhance it; both need each other and have the other piece of the jigsaw.

ramaisibo@hotmail.com

 

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