Barely five years old, the Rwanda stock market, the youngest in East Africa, has raised US $91M through equities and US $85M through debt instrument issuance.
According to the Celestin Rwabukumba, CEO of the Rwanda Stock Exchange (RSE), the capital market recorded a total turnover of Rwf 46.3 billion (US$66M) on both Equities and Bonds market from 135.2M shares traded in 2014 alone.
The four-year-old stock market has six listed companies, whose shares trading contributed 55.5% to the market’s total turnover.
According to Rwabukumba, domestic investors occupied a high portion of market participation with 77%, compared to East Africa’s 20.6% and the rest of the world’s 2.4%.
But stockbrokers say the market is still too small and needs more products to trigger activity, earn decent revenues for shareholders and more capital for listed companies.
In response, the government is mobilizing Small Medium Enterprises (SMEs) to list on the stock market to increase activity and raise more capital for investment.
Emmanuel Mugiraneza, Public Relations Officer at Capital Markets Authority, the regulator of the industry, says the market needs more bonds too.
The government has pledged to release quarterly bonds in response.
“There is less cash in the market,” Isabella Ingabire of Africa Alliance, a brokerage firm, told KTPress before the campaign.
Rwabukumba says the campaign will also promote a savings culture and ensure trust for the investments that retail and SMEs could bring to the market.
“When locals participate in the capital market, there is a sense of ownership for their economy,” he adds.
As an incentive to attract SMEs, the government has lowered taxes and made listing requirements flexible compared to large corporations.
For example, trading and buying shares at the stock market is open to anyone with simply a minimum of 100 shares.
Davis Gathaara, the Managing Director of Baraka Capital, which accounts for more than 60% of RSE stock transactions, says mobilizing SMEs would help in capital generation.
He says this helps SMEs and retail investors increase activity at the RSE and promote investment with fewer risks, especially since “Donor funding is running out.”
Olivier Muneza, a stockbroker, says, “It’s never a question of money, but knowing where to invest it. When people know how it works, they will definitely invest.”