The activities of the Rwanda Stock Exchange (RSE) have largely been a preserve of the elite, with minimal or no participation of ordinary Rwandans and small businesses.

However, this state of affairs has started to change over the past 11 months, thanks to the government’s resumption of the quarterly Treasury bonds (TBs) issuance to fund infrastructure projects.

To raise awareness about TBs and the stock market in general, the government carried out numerous road shows across the country, educating Rwandans about the bourse and the benefits of investing in shares. It urged the public, especially small-and-medium enterprises (SMEs), to invest in bonds as an alternative avenue for wealth-creation.

The result – 10 Savings and Credit Co-operatives Societies (Saccos) bid for the Treasury bond that was listed on the RSE’s secondary market early this month, up from three Saccos in August. This is an indicator that the grassroots people have started to understand how they can benefit from the capital market.

However, much more needs to be done to develop the market. And the other reason the government resumed bond issuances was to provide a benchmark for pricing of credit (for banks), which today stands at an average of 17 per cent per year.

"If you don’t know at how much the central bank is borrowing, you can’t bargain for cheaper loans,” said Celestin Rwabukumba, the RSE chief executive officer.

Benchmark pricing of credit is usually given by government debt paper, often those with long-term maturity periods.

If the government had not participated in the debt market, it would most likely have failed to meet the June 2015 East African Community monetary union protocol deadline to have "proper yield curve on the price of money for up to 10 years”. Rwanda now looks set to beat the deadline with a 10-year TB to be issued in May next year.

The three bonds issued this year are of 3-year, 5-year and 7-year tenures, respectively. They have yield rates of 11.625 per cent, 12 per cent and 12.5 per cent, respectively.

"These issuances have increased activity at the secondary market. It’s a new era for our market,” Rwabukumba noted.

A total of Rwf1.02 billion was traded at the RSE from bonds in the first 11 months of this year, the highest ever traded from bonds since 2008 when the government started issuing TBs.

Market analysts project the resurgence in activity of the secondary market to continue next year, which could inspire private companies and municipalities to issue bonds to raise investment funding.

Access to finance is one of the major impediments pulling down SMEs. SMEs constitute 90 per cent of total businesses in the country and are the biggest employer (informal sector), according to the Ministry of Finance.

The secondary market currently has seven bonds trading, with two corporate bonds - the Rwf15 billion International Finance Corporation bond issued in May and I&M Bank Rwf1 billion, 10-year bond issued in 2010 – and five government bonds. There are five firms listed on the bourse, Bank of Kigali, Bralirwa, Nation Media Group, KCB and Uchumi Supermarkets.

Though enabling guidelines and regulations for issuing municipal bonds were published by the Office of the Prime Minister in April, the local authorities have not showed a lot of enthusiasm about them.

Never mind that most face funding challenges, especially development finance to fund infrastructure projects like feeder roads or markets in the districts.

Robert Mathu, the Capital Markets Authority executive director, is optimistic that the coming year holds better promise, saying that they have sensitised district mayors and "soon we will have a municipal bond listed on the bourse”. Mathu is bullish that some SMEs could list on the alternative market, adding that the minimum requirements for SMEs were eased to encourage them to list shares at the bourse to raise capital and expand their businesses.

"It’s a process which takes time. The government started planning the 2013 Eurobond issue in 2009. They had to carry out several credit ratings they could be able to raise funding from the international debt market,” Rwabukumba said.

He encourages municipalities and firms to engage a qualified credit ratings agency to evaluate them and certify their credit worthiness to assure investors and get cheaper debt through the stock market.

Global Credit Rating, a South African agency and Augusto, a Nigerian agency are the only licensed credit rating agencies in the country.

On the whole, the bourse is tipped to do better next year, with many saying new mechanisms and structures have been put in place to attract individuals, firms and local governments to participate.