The ROTC market yet to be active — Governor

With the infant financial market in Rwanda making modest progress particularly the primary market, it has been noted that the secondary market is not as active as it should be.

According to Francois Kanimba, the Governor of the Central Bank, the secondary market is almost non existent.
He asked the Capital Market Advisory Council (CMAC) to give advice on what should be done to activate the stock market.

"The problem on the secondary market can be attributed to investors who don’t want to sell their instruments but prefer to keep them until maturity,” he said.

Kanimba was launching the sixth government Treasury bond on the Rwanda Over-The-Counter (OTC) market on Friday.
He said that at this level of development of the capital market, there is hardly any transaction on the secondary market.

The secondary market is always critical for the development of the financial market and the Central Bank is yet to ascertain whether the problem is the interest rate or the volume of products on the market.

However, the Executive Director of CMAC Robert Mathu said that the situation is not unique to Rwanda but it is synonymous with young markets.

The bond carries a coupon rate of 9.5 percent which is slightly above the 9.4 percent of the market rating and it will mature after a period of two years.

Central Bank to increase forex trading

The National Bank of Rwanda (BNR) announced plans to increase foreign exchange trading, by using the Reuters system to enhance flexibility in Rwanda’s forex market.

The Bank’s Vice Governor, Amb. Claver Gatete told Business Times last week that the new system involves the latest electronic and IT facilities that will allow BNR to easily monitor currency trading and other financial transactions.

"It’s expected to enhance the operations and expanding the scope because the market will be more flexible with real exchange rate of the Rwandan Francs,” he said.

The new inter-bank exchange corridor plan envisages sharing daily information on foreign exchange market and improving market efficiency within banks.

Gatete said the equipment has been installed in the Bank’s premises. A consultant will be hired to train dealers in different banks across the country.

"Traditionally they (banks) have been using group e-mails, but the equipment is modern, sophisticated and suits Rwanda given the maturity of our financial market,” he said.

"The objective of the Central Bank is to ensure flexibility of the functioning of market mechanisms, financial stability and the stability of the national currency.”

The Rwandan Franc appreciated significantly against the euro and regional currencies in Q1 of this year, the Central bank said in the monetary policy statement that was released on Thursday.

Economy to Grow Between 7 and 10 Percent

The Central Bank (BNR) has projected that the country’s economy will grow beyond the earlier set 7 percent, depending on the current economic trends.

The new trend was attributed to the continuing strong performance in the agricultural sector and significant recovery in services and industry sectors.

The figure is also higher than 6 percent economic growth achieved last year Releasing its Monetary Policy and Financial Statement this week, BNR officials said that economic recovery during the first half of this year has been marked by good performance in all production sectors.

"Economic activities are strongly improving. The real Gross Domestic Product (GDP) growth for the first quarter of 2010 is estimated in the range of 4-7percent and the expectations for the rest of the year indicate good performance as well,” the Central Bank said in a statement.

The agricultural sector - the backbone of the economy - also maintained momentum recording an increase of 8.2 percent compared to 2009 due to sustained implementation of crop intensification program and favourable climatic conditions.

RwandAir Not Worried of Competition – CEO

RwandAir won’t be affected by the presence of new airline companies that have already applied to ply the Kigali route.
RwandAir’s CEO, Rene Janata said that his company expects a little bit of competition, but it will not affect the national carrier’s operations.

This year alone, Air Uganda joined the market, KLM is opening up flights to Kigali in October and South African Express is also ready to launch flights to Kigali.

"Competition is always good but we will be looking forward to partnering with them in an organised manner, than competing with them,” Janata said.

SA Express Airways is one of the fastest growing regional airlines in Africa and forms part of the strong South African Airways alliance. The airline is operationally independent of SAA, its flights are incorporated within the Alliance and the airline uses SAA reservations and check-in facilities.

Janata also added that the carrier might reschedule some of the flights accordingly so as not to have the same flying schedules with these airlines.

The issue regarding the increase to check-in points at the airport to handle the growing traffic, Janata said that 8 more checking-in counters, more terminals and the departure are expected to be extended soon. "It’s already decided by the government because more airlines are coming in.”

EASRA Meets to Resolves Stock Exchange Demutualization
A regional securities regulatory body has recommended a regional stock exchange as a way of adopting the demutualization approach Kenya has taken.

The East Africa Securities Regulatory Authority’s (EASRA) 31st consultative meeting was held in Tanzania recently and made the recommendation.

The demutualization of stock exchange will see the stock markets review their governance structure from government ownership to where companies are with multiple shareholders.

"The issue of governance especially in decision making is always a problem where there is no demutualization,” said Olivier Kamanzi Deputy Executive Director of the Capital Markets Advisory Council (CMAC).

He also stressed that demutualization would be important for guiding institutions in strategic direction for development.

The meeting which took place on 11th August 2010 in the Tanzanian town of Moshi also adopted reports of EASRA sub committees which included the legal issues sub committee, marketing development, market supervision and risk management sub committees.

Ends