A new entrant in the market, Kenya Commercial Bank (KCB) has taken the lead in requesting Capital Markets Advisory Council (CMAC) for an approval to cross-list its shares on the Kigali bourse.
Running into its second year of operations, our capital market has only been trading bonds, both treasury and corporate with no equity trading taking place.
Traditionally, and most especially in the developed world, financial institutions like capital markets form the bedrock of the economy and are engines of growth.
They are the heart and lungs, breathing life into the economy and without such instruments, the global economic order would crumble.
Therefore, stock markets remain an integral part of a functioning economy mainly due to their prime function of equity mobilisation.
Simply put, stock markets provide the financing required by large businesses to expand their enterprises and adopt innovative measures.
This has a trickledown effect to the entire economic system in the form of increased employment opportunities, widened tax base and other accruing benefits.
And equally important, publically traded companies are the best governed. They put accountability at the footprint of their work because they under-go periodic checks and balances from their shareholders.
Therefore, the step taken by KCB to request for cross-listing on our bourse is a welcome piece of news. Rwandans will now be able to buy ownership into KCB through her stocks traded either in Nairobi, Kampala or Dar-es-Salam.
Given the anxiety that greeted Safaricom shares when it launched its IPO late last year, there’s no doubt that once KCB is given a go-ahead, its shares traded by its existing shareholders will attract massive response from Rwandans.
But the KCB move should send out a strong message to other corporates in Rwanda. Many of them have shied away from equity trading on the OTC citing various reasons. Equally, government has been slow in listing shares it owns in private companies as had earlier been promised.
There needs to be a breakthrough in this arena. Our local companies need to expand and adopt competitive measures if they are to survive the ever growing competitive market place.
And one strategy for this survival is to seek more equity to finance their expansion programs. The stock market provides a solution.