2018 outlook positive for local exchange, says capital market regulator

Rwanda’s Capital Market Authority is working to create an ecosystem to fast-track and sustain economic growth by attracting more people to save and invest through the local bourse.
The equity market value rose 2.6% in 2017, boosted by I&M Bank listing in March. / File.
The equity market value rose 2.6% in 2017, boosted by I&M Bank listing in March. / File.

Rwanda’s Capital Market Authority is working to create an ecosystem to fast-track and sustain economic growth by attracting more people to save and invest through the local bourse. This is besides its mandate to facilitate the development of an orderly, transparent and efficient capital market in the country.

The New Times Stephen Nuwagira caught up with Eric Bundugu, the CMA acting executive director, to discuss how the regulator is working to achieve these objectives, among others.


As the regulator and key financial market stakeholder, how would you categorise 2017 in terms of stock market development?

I consider 2017 as being a successful year for the capital market industry in Rwanda. At least we had one of the only initial public offerings (IPOs) in the region.

I&M Bank Rwanda was listed on the Rwanda Stock Exchange through the government privatisation programme. The IPO was subscribed by 209 per cent. In addition, the market is growing as the number of active investors is gradually increasing.

It is also significant to note that two important stock market laws were published last year: the new law establishing CMA; the law on commodities trading, and seven new EAC directives on capital market.

In addition, the EAC regional integration initiative’s legal and regulatory framework is now harmonised. The next level will be integration of markets, which regional exchanges are currently working to implement.

During the year, we also conducted various public education sessions across the country targeting retail investors.

Remember, investor education and public awareness are key elements in increasing financial markets and investments literacy. This is part of investor protection that is a key mandate of CMA. Besides, a well-informed investor is a well-protected investor.

CMA chief Bundugu. The regulator is confident that the capital market 10-year master plan will take exchange to the next level of growth.

Therefore, we are hopeful that this campaign will eventually bear fruits in future by helping bring more local investors to the market.

What are some of the big developments by the local and EAC exchanges?

EAC directives were issued in line with the regional integration agenda. One of the greatest achievements is the kick-off the integration process of EAC markets to attract more investors and increase their liquidity levels. The integration of markets will be so helpful to achieve East African region’s development goals.

What should sector players expect this year in terms of RSE automation?

Rwanda Stock Exchange (RSE) is the primary stakeholder in that initiative for automation. So far, securities transfers between Rwanda Central Securities Depository (CSD) and the Nairobi CSD is possible and only multilateral connectivity is remaining and we hope this will happen soon.

In addition, one of our key priorities for 2018 is the implementation of the 10-year Capital Market Master Plan.

The strategy will cement efforts by the CMA to position Rwanda’s capital markets as the preferred financial economic centre for domestic, regional, and international fund flows.

It is also expected to position the capital markets to play a pivotal role in mobilising long-term funding to support the development of Rwanda.

The regular awareness campaigns and initiatives like the University Challenge seem not to be making a lot of impact according to some sector players. What is your comment on such view?

So far, we conducted four editions of the Capital Market University Challenge and we have reached thousands of university students.

Each edition brought forth many success stories of students in various universities that have formed investment clubs.

One of the investment clubs started by students has even transformed into a micro-finance bank, an indicator that the university challenge is effective and a success.

Remember, the main objective of the challenge is to create awareness among students while they are still in school so that they save money they will use later to start their own businesses. The campaign will continue because the feedback from potential investors has been positive, indicating that the campaign was helpful to them.

What is being done to attract more local investors to participate on the equity market?

We continue to conduct awareness on available products on our local market. So far, retail investors are able to save and invest through RNIT Iterambere Fund and we shall continue reaching out to retail investors through our campaigns which are being conducted by CMA and RSE.

Are we seeing local governments coming to raise development finance through municipal bond issuances this year?

Legal and regulatory framework is already in place. CMA issued guidelines for issuance of municipal bonds and also conducted a series of awareness campaigns in all districts and the City of Kigali. So, we are hopeful some will come to the market once they achieve all the necessary requirements to issue bonds.

The alternative market segment (for SMEs) has not attracted interest as envisaged by CMA and RSE. What are you doing to change this?

This will not deter our effort and we will continue with our sensitisation drive until we start seeing SMEs access long-term capital through the local exchange. Note that it takes time for SMEs to embrace reforms, especially on the issue of improving their governance structures and the culture of opening up to external investors.

We are continuously conducting awareness and public education campaigns targeting SMEs, which we hope will soon bear fruits.

What is your last word?

We are confident in the developments on capital market as it is the way to support the private sector and economic growth in future. We want to encourage all Rwandans to save and invest on the stock market, besides raising affordable finance to inject in



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