At the end of last year, stock markets in the region completed the process of interlinking their central depository systems, which allows investors to carry out transactions with ease. Unlike before when it used to take a minimum of two months to transfer shares of cross-listed companies, it now takes two hours to do so electronically. The initiative was expected to attract investors, especially those that used to go to Nairobi to buy shares of say, KCB or NMG.

However, the response seems sluggish at the moment despite the innovation.

In fact, cross-listed companies are recording few transactions at the bourse this notwithstanding. Sector players had envisaged that the operationalisation of the regional inter-depository transfer mechanism would facilitate easier movement of shares across the region and therefore attract investors.

Cross-listed counters like Nation Media Group have spent over a year without trading.

Edwina Mulanga, the manager of custodian services at KCB Bank Rwanda, blames the situation on lack of awareness, saying some shareholders are not yet aware about the development, which is one of the factors contributing to the low activity at the local bourse.

According to her, the company has only 20 shareholders who when they are not holding onto their shares, prefer to trade on the Nairobi exchange.

The Kenyan bank group cross-listed on the local bourse in 2009 and it was joined the following year by Kenyan media giant, Nation Media Group. Uchumi Supermarkets became the third Kenyan company to cross-list in the Rwandan Stock Exchange in October last year.

Bank of Kigali and Bralirwa counters are the most active, pushing large volumes almost daily.

From January to June, the RSE equity market recorded a total turnover of Rwf17.7 billion from 45.8 million shares traded in 853 transactions, mainly from the two domestic firms’ counters.

"It is a question of sensitisation and moreover there are usually issues whereby the volumes are still very low, causing scarcity, a reason that could also be keeping away would-be investors.

Davis Gathaara, the managing director of Barak Capital, a brokerage firm in Kigali, noted that it is easier for one to open a central securities depository account in Kenya, and buy or sell Uchumi shares on the NSE than it is at the local exchange.

Gathaara said the majority of shareholders are Kenyans, with few Rwandan shareholders – those who bought shares during the initial public offerings in Kigali or had bought shares from Nairobi before the companies cross-listed in Kigali.

"During their listings, they had to create a special vehicle so that some Kenyans could sell from here. So the fact that the majority of the shares are held by non- Rwandans could also be having a negative impact on the local exchange’s trading.

Gathaara also said counters’ share prices change daily, meaning that brokers have to ‘lock in’ an exchange rate which people don’t like.

"Investors could be buying shares at a loss here than compared to the price in Kenya because of the exchange rate.

"Maybe with the harmonisation of the regional stock exchanges and the one East African currency in a few years will be able to ease the situation,” he explained.

The Uganda Securities Exchange too has seen most cross-listed firms have their shares traded only once in a while, according to reports.

Gathaara points out that most companies don’t consider the market mechanisms for trading before cross-listing in other markets, which is why not trading is not an issue for them.

Celestin Rwabukumba, the RSE chief executive officer, says cross listed counters haven’t been ‘that active’ because of the small size of the Rwandan economy.

"Cross-listed securities do not trade not only because of settlement issues, but many other reasons including the fact that many Rwandans don’t have central securities depository accounts since we are still a small market.”

Rwabukumba says even the few who have the accounts, do so in order to buy Bank of Kigali or Bralirwa shares or the listed bonds.

"We need a culture change in Rwanda. Otherwise, we cannot force people to come open accounts, trade and invest in shares,” he says.