CMAC safe from world financial crisis

As regional capital markets fall, Rwanda out of harms way The Capital Market Advisory Council (CMAC) has disclosed that Rwanda has not suffered from the global financial crisis. CMAC Executive Director, Robert Mathu, said on Friday that because Rwanda’s capital market is new it would not feel the effect of the financial crisis as other capital markets in East Africa have. “Our capital market is young. People have not come up to buy securities like in other countries. I therefore do not think the financial crisis would hit our capital markets when we have fewer securities that we have sold,” said Mathu. He explained that the Uganda and Kenya crisis in the capital market is a result of investors who had shares in strong companies panicking and rushing to sell their shares as the financial crisis ran across the world. “If you have shares in a company and you hear others sell their shares, you are also compelled to do so to save your wealth,” he continued. Because Rwanda’s capital market only deals in bonds and not shares, it is not vulnerable. “There are no big companies that have listed their shares with the capital markets in Rwanda. We are dealing with bonds and with bonds you cannot just sell it out because it is not as liquid as shares,” said Mathu. Meanwhile business people are benefiting from the drop in Ugandan and Kenyan stock markets. Buses are reportedly filling up with people heading to Uganda and Kenya to take advantage of the falling prices. It is said that business men buy dollars from here and take them to Uganda where dollars are scarce. They exchange for a lot of shillings that they use to buy more of products that they will sell here in Rwanda. Innocent Ngabonziza, a businessman who has been importing various items from Uganda, says that he has benefited a lot from this sudden rise in the value of dollar. “I have decided to start selling dollars in Uganda as it has gained too much value but I think things will come to normal again in a very short period of time.” Mathu said that this is how the market should behave and that it will normalise again in Uganda and Kenya. “If they avail dollars to Uganda which is suffering scarcity of dollars, dollars will later depreciate and get back to normal,” he explained. Ends