Rwanda Capital Markets Advisory Council (CMAC), a body responsible for the development of the capital in the country has asked government to liberalise the pensions scheme.
Bourse experts say private pension schemes have positive economic effects, contributing to the development of financial institutions and the availability of investment capital.
The authority strongly believes the private sector is crucial if the Rwanda stock market is to grow, attract more investors and become competitive in the East African region.
Currently, it’s only the Social Security Fund of Rwanda—a government agency managing the pension scheme.
CMAC’s call comes at a time securities authorities in the region are moving into encourage the cross listing of government and corporate bonds to bolster the industry.
During the 25th East African member states meeting in Kampala, it is reported that Securities Regulatory Authorities (EASRA) approved the adoption of the proposed amendments in the member’s legislation to create a smooth trading environment of securities within the region.
The regulation would then expedite the use of automated trading systems and issuing of long term securities by both government and the private sector - a prerequisite for technical integration of the region’s capital markets.
Government however seems ready to start with incentives for listed companies.
James Musoni, Finance Minister said the incentives are aimed at attracting many companies list on the Rwanda Over-The-Counter (OTC) market.
Tax incentives have stimulated the development of the Nairobi Stock Exchange the oldest stock market in East Africa.
The executive director CMAC Robert Mathu said they have drafted incentive proposals and that government is to decide on which ones to adopt.
In Kenya companies that successfully apply for listing get a tax amnesty on their past omitted income, if they make full disclosure and oblige to pay all their future taxes.
The IPO-related costs are tax deductible. The Rwanda OTC market trades debt securities with equity securities yet be listed.
Musoni called upon CMAC to start massive public awareness campaign so as to get more private participation on the Rwandan bourse.