The Rwanda Stock Exchange (RSE) has seen increased activity in the first half of 2024 both in equities and fixed markets.

The New Times’ Tesi Kaven had an exclusive interview with Pierre-Célestin Rwabukumba, the company’s Chief Executive Officer, on the performance of the bourse, as well as his priorities as the President of the African Securities Exchanges Association (ASEA).

Below are excerpts;

How has the bourse performed in the first half of 2024?

We have had a good run so far. We have seen an increment in our trading activity for both equities and bonds. The equities market turnover between January and June this year increased to Rwf58.6 billion from Rwf2.1 billion in the same period last year.

The indices have slightly gone up. Between January and May 2024, the All Rwanda Share Index (ALSI) – which measures performance of all listed companies – went up by 1 per cent, while the Rwanda Share Index (RSI) – which measures performance of domestic listed firms – went up by 4 per cent.

However, we have seen a reduction in issuances in the first half of this year, which was expected, because the government is trying to contain the borrowing in the market.

On the other hand, we have seen renewed activity and interest from corporate companies who have applied to list and raise money in the market.

What has been the investor sentiment towards the market?

Investor sentiment can be gauged by reviewing the trading activity, which has increased in our market, pointing to positive investor sentiment.

We are seeing a lot more trading in equities. I remember a time when the market could go for a month or two without any transactions. But today, we trade daily.

However, we cannot ignore the fact that our market is not so liquid, especially on the equities side. The stock market has ten companies, five of them local, so the float is not that big.

What are some of the initiatives in place to attract more investors to the stock market?

We are working on providing a variety of new products in the market that will appeal to different investors.

We will introduce the Real Estate Investment Trusts (REITs) that will allow investors to earn income from real estate without having to buy, manage or finance properties themselves.

We are also looking to introduce the Exchange-traded funds (ETFs), a collective investment vehicle where investors can earn interest from the fund.

Finally, we are working to provide a framework that will allow people to issue Sukuk or Sharia compliant products. All these new product offerings, which will be launched soon, will make our market more attractive to investors.

Apart from the new products, we are appealing to policy makers to push for privatisation and encourage more companies to come to the market or issue corporate bonds. This will definitely grow the stock market.

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Since the inception of the Investment Clinic, what has been the progress so far?

We had created a market segment for small and medium sized enterprises (SMEs) in 2018, but we quickly realised that most of these small companies were not investor ready. That is why we came up with the Investment Clinic in 2020 to help prepare SMEs and ensure that they could talk to investors.

We attracted 45 companies in the first cohort. 12 out of the 45 companies made it to the next phase and only 3 made it to the profiling stage.

One of the three companies has already raised money through a corporate bond, another has applied for listing by introduction, and the third company is preparing their documents so they can raise funding in the next few months.

The three profile-listed companies – which are listed on the RSE SME special board – are from the energy, agro processing, and export sectors.

From the second cohort, which attracted 10 companies, one has already applied for a bond issuance. Getting the SMEs investor-ready has not been easy, but we are making progress and seeing tangible results.

How are you leveraging technology to ease market access?

Currently, the stock market is not fully automated, but we are working on it. Unfortunately, there has been a delay because we are part of the wider East African Community Capital Markets Infrastructure project, which is a technology platform to link the capital markets of the East African Partner States.

That has slowed down the process, but now the project is back on track and soon the market will be automated. That will allow direct market access for investors in the diaspora as well as local investors.

We are also looking at the use of phones, USSD codes and other technologies that will enable people to access the market from remote places without having to call or walk to a brokerage firm for trading.

What was the rationale behind the EASEA&039;s proposal to issue capital market instruments denominated in stable currencies?

This proposal, from the East African Stock Exchanges Association (EASEA), seeks to cushion investors, mostly foreign investors, from exposure to local currency risks because they have been raising concerns about the exchange rate risks.

So, the idea is to allow companies to raise capital from the capital markets by issuing bonds dominated in hard currency; the dollar in particular. This will allow cheaper capital to flow in our countries and also allow more savings from the diaspora into our economies.

Central Banks in the region have been hesitant about this idea, but they are slowly starting to come on board, The proposal cannot take off without their collective approval.

ALSO READ: Rwanda’s Rwabukumba to head continental securities body

What are your priorities as the President of the African Securities Exchanges Association (ASEA)?

My first priority is to link our African markets. ASEA's flagship project called the African Exchanges Linkage Project (AELP) aims to facilitate cross-border trading of securities in Africa.

We target to onboard 15 stock exchanges on the continent and so far, we have ten exchanges who have joined the project, with Uganda Securities Exchange as the newest entrant.

The linkage of these exchanges will enable people to trade across markets and raise money on the continent while serving the bigger purpose of having integrated African markets that are able to talk to each other.

At the same time, in the spirit of supporting the African Continental Free Trade Area, ASEA has a Memorandum of Understanding with the Pan African Payment and Settlement System (PAPSS) that will promote cross border payments of capital markets infrastructure in Africa.

We are also forging strategic alliances. For example, my first assignment as ASEA president was to sign with the Arab Federation of Capital Markets. This alliance will link African and Arab capital markets and that is why we are also creating the Sharia Compliant products.