Interest in the local bourse is rising as public’s confidence in the stock market grows, Robert Mathu, the the Capital Markets Authority (CMA) executive director, told lawmakers recently.

He said because of this, the Capital Markets Authority was devising interventions to support growing demand.

"The business at the capital market is progressing well and public’s interest in the bourse is increasing,” Mathu said.

He noted that since the bourse started over two years ago firms like Bralirwa have attracted a lot of interest. 

"Since Bralirwa came onto the market over two years ago, the value of company has risen by 525 per cent to date,” Mathu said. He added that Bank of Kigali’s value also expanded by 60 per cent.

"This has attracted a lot of interest from local and international investors. Remeber, the two companies were oversubscribed by a minimum 150 per cent when they listed on the stock market. This confidence in the local economy was clearly demonstrated when we recently went for the eurobond, which was oversubscribed by more than seven times,” he noted.

Mathu was appearing before the Chamber of Deputies’ standing committee of budget and national patrimony as finance ministry officials presented the ministry and affiliated agencies’s proposed 2013/2014 budget estimates and medium-term expenditure plan. 

However, in terms of general awareness about the bourse and capital markets, he said though there was daily trading, the supply side still falls short.

"The public is always asking us when we are bringing new products. We have to work on the speed at which we can meet this demand,” Mathu said.

He said the CMA would continue sensitising the public through the financial literacy campaign under the finance ministry and the National Bank of Rwanda.

Fund management industry lagging

Mathu told lawmakers that the fund management industry was yet to take off.

"As we develop the fund management industry, we are looking at capacity. Recently, we were happy that the Rwanda National Investment Trust was approved by the Cabinet. 

"Right now, we are in the process of implementing fund management industry…we are trying to put the institution structure in place,” he said.

The other intervention is develoing the domestic bond market, he said. 

"The Capital Markets Authority is developing it to attract the private sector to come and borrow from the public through the capital market. We believe this will lower the cost of borrowing,” Mathu said.

Secondly, he said the authority was also looking at local governments, where the local authorities could be able to issue debt or borrow from the bourse at market rates.

"We have prepared some guidelines for issuing of municipal bonds. This will enable the local governments to participate and boost the stock market. We shall soon publish the guidelines that will facilitate their participation.”

He pointed out that the bourse has also developed a strategy for the SME sector so that they can tap into the opportunities presented by the capital market. 

"This has not been easy because when we started we were looking at the big corporate companies. However, the SME sector cannot measure up to the disclosure requirements for corporates. That’s why we have develop different guidelines for them,” he said.

Mathu explained that they have already created a capital market window to accommodate SMEs.

"I am glad to mention that the RSE has developed the listing requirements which are not very strict. We have also developed rules to guide the market. So, we are looking to a very vibrant capital markets in the near future,” he pointed out.

Regional companies’ keenness

In August 2012, Mathu told The New Times that three Kenyan companies – Equity, Centum and KenoKobil, were keen on cross-listing on the local boursde.

Currently, Kenyan firms, Nation Media Group (NMG) and Kenya Commercial Bank (KCB)  are the only regional cross-listings. There are only two domestic companies, Bralirwa and Bank of Kigali listed on the RSE.

Last month, Mathu said he was optimistic more firms would soon cross-list on the local bourse. Kenya’s Uchumi Supermarket is also reportedly keen on cross listing.