Mahwi Grain Millers Ltd, a food processing company, became the first small and medium sized enterprise (SME) to debut on the Rwanda Stock Exchange (RSE) on Monday, September 2, after listing its inaugural bond.

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The firm listed a corporate bond worth Rwf5 billion offered in two tranches, at a fixed interest rate of 15 per cent per annum. The first tranche worth Rwf3 billion has a five years tenor and the second tranche worth Rwf2 billion whose tenor will be determined at a later stage.

This move is part of the broader efforts by RSE to encourage more SMEs to go public, and signals the growth of the capital market and openness to catalyse access to finance for diversified sections of theeconomy.

Jean Claude Uwizeyemungu, the Managing Director of Mahwi Grain Millers, said that while the goal is to raise money, the company underwent a journey of improving its corporate governance through legal and advisory programmes, which ultimately helps to attract investors.

Mahwi Grain Millers, based in Bugesera district in the Eastern Province, has a production capacity of 250 tonnes daily. It plans to use the proceeds from the bond to scale its operations.

Uwizeyemungu said that the the funds will particularly be channeled towards strengthening their supply chain both for export markets as well as domestic markets.

"We have a market in DR Congo and have an agreement with a distributor to expand our market in Europe through Belgium and the United States as well,” he added.

Attracting more firms

According to officials at RSE, Mahwi Grain Millers was the second firm to undergo the RSEinvestment clinic and the first in the agro processing sector to go to market for capital raising.

The investment clinic seeks to help SMEs identify gaps in their state of investor-readiness, and undergo an advisory programme with technical assistance ecosystems so as to conduct a thriving, transparent, and profitable businesses enough to attract investors.

According to him, the stock market has enabled them to garner that amount of money, which would have been a relatively harder process to get from a financial institution.

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Andre Gashugi, Chief Investment Officer, RNIT Development Fund, said that the fund is currently worth Rwf40 billion from members’ contributions, thanks to the growing savings culture among Rwandans.

With this, they expect the fund to invest on behalf of its members to generate more returns.

"It made sense to invest in this corporate bond of a company that promotes our agriculture sector and contributes to the overall economic growth of the country,” he said of their investment in Mahwi Grain Millers.

While there are different challenges that hinder small and medium companies to access finance, corporate governance remains a key hindrance that causes financial institutions and investors to shy away from them.

Pierre Célestin Rwabukumba, RSE Chief Executive, emphasised on changing the narrative that the stock market serves only a certain cluster of big companies, noting that this sets the tone for creating more awareness.

"This milestone paves the way for other SMEs and young entrepreneurs to embrace the capital market fraternity. This is an alternative mechanism of raising finance, especially for such businesses that play a crucial role in Rwanda’s economy and job creation,” he noted.

While Rwanda’s stock market is young, Rwabukumba said that there has been growth over years since its establishment in 2011, including access to finance, promotion of savings culture, and creating awareness and financial literacy, among others.

"While the general uptake in the market averages around 30 percent, we would like at least everyone who owns a mobile money account to embrace stock trading, either directly or indirectly,” he said.

"We want people to understand that the stock market is not solely for rich people,” he added, "this will allow us to be people who own our economy across sectors through the many investment avenues available.”

Currently, there are 10 companies trading on the stock market, and 28 bonds have been sold.