Developing a vibrant capital market is a marathon

Although we have recorded a slight decline in prices, there was 63.90 per cent growth in trading turnovers.

Last week’s editorial in The New Times urging Rwanda’s capital market to up its game caught my attention.

It is true, we still have a long way to go, particularly in educating the general public about the capital markets industry and increasing product offerings on the Rwanda Stock Exchange (RSE).


However, it’s important to provide some context when analysing the development of the capital markets industry in Rwanda.


The capital market in Rwanda was created for three reasons: To provide a platform for long term capital mobilisation for the economy (for both government and the private sector), promote the savings culture among Rwandans, and act as a centre of reference for fostering good corporate governance practices and accountability among businesses.


Thus far, I can confidently say that our market has come of age. Since the official launch of its operation in 2011, the RSE has registered at least Rwf1.19 trillion or $1.2 billion in transaction value.

The market capitalisation, the value of all the 10 listed companies, is $3.7 billion. If you add $623 million in fixed income outstanding, the total value of all listed securities is 43 per cent of GDP. 

The market has attracted over 21,000 active investors of whom at least 83 per cent are domestic retail investors. This number does not include those who come through Collective Investment Schemes (CIS) such as Iterambere Fund, Ejoheza among others, which comprise of over 800,000 people.

Globally, the Covid-19 pandemic has hard far-reaching consequences on stock markets.

In our case, for instance, although we have recorded a slight decline in prices, there was 63.90 per cent growth in trading turnovers. This is a demonstration that our market has remained resilient.

In addition, this year, we have so far attracted two new listings, Cimerwa and South Africa’s RH Bophelo—which reflects a vote of confidence in our market from domestic and continental corporations. 

As the economy recovers from the Covid-19 pandemic, we expect more listings and improvement in the activities on the market.

On the issue of public awareness and understanding, however, we still have a long way to go.

The major challenge we face is that technical terms used in the trade are still complex for the ordinary person to understand.

On this note I should borrow from the Cimerwa listing by introduction, which sparked serious debate in mainstream media and on social media platforms.

Cimerwa did what we call listing by Introduction which is a method where the company basically decides to list its shares without marketing prior to the listing.

This is done normally for marketing purposes of the company itself due to the exposure that comes with a public listing, price discovery given by the market place which simply gives a chance to existing shareholders to do an exit through the market without any pressure or deadlines.

This is different from what we are used to in the popular Initial Public Offers (IPOs) that Bralirwa, Bank of Kigali and others have done before. 

These companies do offer their shares for subscription to the public at the primary market where they can either be an oversubscription or an under subscription during the Offer Period after which the company shares are officially listed on the exchange for trading.

Therefore, the fact that the over 340 million shares of Cimerwa were floated on the RSE and only 6,000 were traded on the first day of trading was just meant to mark commencement of trading of the company shares.

This hopefully should remove speculation and misunderstanding on what the reality and standard practice is. 

We also still have to demystify the misconception about the stock exchange and the capital markets in general.

Public education will continue as we continue to build our market, but we need everyone if we want to succeed. 

The author is the Chief Executive Officer of Rwanda Stock Exchange.

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