Small-and-medium enterprises (SMEs) have shied away from the local bourse eight months since the Rwanda Stock Exchange created an alternative market segment for them and eased requirements to allow SMEs list on the stock market. 

Though the Rwanda Stock Exchange created the SME alternative market segment in August last year, no firm has taken advantage of the opportunity that presents them huge funding opportunities, Robert Mathu, the Capital Markets Authority executive director, said in an interview on Monday.

Mathu attributed the SME firms’ reluctance to list on the bourse to fact that most of them are family-run, making it hard for them to readily embrace the initiative, saying "they are not used to having outsiders examine their businesses”. 

He noted that owners of small-and-medium firms needed to change the old business culture and embrace modern principles that will help them grow, especially by listing on the stock exchange to access cheap capital and fund their enterprises. 

"We have already put in place flexible and easy-to-follow guidelines for the SME market segment, which we hope will attract them to the stock exchange. 

"However, they must have clear governance structures in place to ensure proper accountability and disclosure,” he explained.

He noted that because most SMEs are run as family businesses, there was need for a paradigm shift and change of culture to allow outsiders oversee the running of the enterprise. 

Mathu said when a company is listed on the stock market, its accounts become public, noting that many SMEs are not comfortable with such an arrangement. He, however, revealed that they were sensitising SME owners so they understand the benefits that come with listing on the bourse, including accessing affordable capital to expand their businesses.”

SMEs are exempted from the Rwf500m capital requirement; they are just required to release their prospectus. 

Celestin Rwabukumba, the RSE chief executive officer, is  optimistic some SMEs will list this year. Currently, the bourse has two domestic firms and three Kenyan cross-listed companies. 

The Rwanda Stock Exchange recorded a total turnover of Rwf25.8b from 42.2 million shares traded compared to around Rwf11b traded over the same period in 2012. This was a 133.18 per cent increase in turnover, and decrease of 27.44 per cent in shares.