The government has raised Rwf10 billion this year, through the issuance of treasury bonds, statistics from Capital Market Advisory Council (CMAC) show, indicating that government continues to dominate activity on the country’s budding capital market.

While there was a decrease of 30 percent in the primary bond market, compared to 2009 when government raised Rwf14.5 billion, in 2010 eight government bonds were issued with maturities ranging from 2 to 5 years with coupon rates of 8 to 11 percent.

According to Olivier Kamanzi, Deputy Executive Director of CMAC, the bonds issued are part of the government’s wider efforts to encourage the performance and growth of the stock market.

"Today they (private sector) do not have enough resources to support themselves. Lets face the reality; over 90 percent of our businesses in Rwanda are micro and small enterprises; most of  them do not meet requirements of the market to be listed,” Kamanzi told Business Times in an exclusive interview, last week.

The activity on the equity market is also still very low with only two cross listings from Kenyan firms, Kenya Commercial Bank (KCB) and Nation Media Group.

While listing requires companies to have registered profits in the last three years, which is justified by presenting audited financial statements by internationally recognised firms, Kamanzi observed that most local companies are yet to fulfill these requirements.

"The accounting system in the country is too young (established last year) - before you get listed you must have proper accounts.”

Kamanzi underscored that the recent successful launch of the country’s first Initial Public Offer (IPO) by Bralirwa, a local company is expected to encourage more domestic companies to be listed on the fully fledged Rwanda Stock Exchange (RSE), due next year. Government says the Bralirwa offer was oversubscribed by 300 percent.

The regulatory body, which oversees the sector, says trading on the Rwanda Over -The- Counter (OTC) bourse was relatively low with two transactions worth Rwf2.1 million.

Of the two companies cross listed at ROTC, KCB had a total volume of 84,200  Shares traded with turnover of Rwf14,588,760. This reflects an increase of 23 percent in equity trading compared to the same period ending November 2009 where a volume of 68,300 KCB shares was traded with a turnover of Rwf11,214,100.

NMG, which cross listed early November this year with over 157 million shares, started selling at Rwf1290 per share though last week it hit a low of Rwf1196.

Kamanzi said the process of separation of functions of CMA and the stock exchange has commenced with the establishment of the Rwanda Stock Exchange (RSE) new ownership structure. The process will be completed upon the publication of the capital market laws.

Once the capital markets laws are made effective Kamanzi said, CMAC, which is currently developing and managing the ROTC market, will become the official regulator, called the Capital Market Authority

(CMA). The OTC market will turn into a fully fledged stock exchange, the RSE.

"RSE will be a private company, CMA will be a government agency,” he explained. Kamanzi observed that the capital markets laws will serve to boost investor confidence to facilitate the development of the RSE as they have been developed in accordance with international standards.

"The publication of the capital market laws will provide an investor protection and create confidence in capital markets industry,” he said.

These  laws include the one dealing with Collective Investment Schemes (CIS) and another  on  establishment of  an  Investor Compensation Fund.

"We needed the laws since we have been operating by decree and not enacted by parliament; international investors can’t feel comfortable to come to Rwanda once they know we do not meet international standards,” Kamanzi explained.

A decree by the Prime Minister established the CMAC in March 2007 to help set up and regulate the transitional process as the Government put a stock market in place.
Kamanzi said that in 2011

CMAC will start operating an electronic trading and display platform system.

He also said the CMAC will continue with aggressive public education and awareness campaign throughout the country and Rwandan Diaspora.

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