Francois Kanimba, the Central Bank Governor has commended the new concept of credit rating that is being established by the Capital Markets Advisory Council (CMAC) as a milestone in the development and deepening of the capital markets.
The Governor made the remarks yesterday while officiating at the opening of a one day workshop on the credit rating system in Rwanda that was organized by CMAC.
“Although this concept is new in Rwanda, I expect it to develop the capital market and overall financial sector in Rwanda,” said Kanimba.
Credit rating is an evaluation of the credit worthiness of an individual or business enterprises used to estimate the amount of credit that can be extended to a company or person without undue risk.
Kanimba also said that today, credit rating affect securities market in many ways including an issuer’s access to capital and the structure of transactions.
The governor also encouraged all participants to appreciate the benefits of credit rating and hence consider undertaking rating for their businesses.
“The more credit rated institutions we shall have in future, the more efficient the financial sector shall become,” explained Kanimba.
The capital markets regulator says the system defines the financial strength of borrowers and their capacity to meet their financial obligations. The East African region has got only one credit rating institution (Global Credit Rating) that is based in Kenya.
This process is very important for Rwanda capital markets because it provides market confidence among investors in Rwanda and attracting foreign investments.
Credit rating provides opinion on the general creditworthiness of a borrower with respect to a particular debt security or other financial obligation.
CMAC says that the project is purely a private sector initiative. However, any one planning to open a credit rating agency must be licensed by the capital market regulator.
The workshop has attracted over 100 private Rwandan companies including Small and Medium Enterprises (SMEs)and Government agencies.