Rwanda winning investor confidence

The entry of big banks and financial institutions into Rwanda, one of the smallest economies in the region with few natural resources is an indication of the huge investor confidence that the country has managed to cultivate over the years. The entry of Kenya’s premier commercial bank, Kenya Commercial Bank (KCB) into Rwanda this month, is at the tail end of major foreign acquisitions of local institutions that is likely to spice up the banking industry. Fina Bank from Kenya, Ecobank and Access Bank from West Africa are some of the other major multinational entries into the banking sector in Rwanda. This silent but confident drive gives Rwanda’s economy a clean bill of health and is sure to become the magnetic drive that attracts major economic players in the region to look at Rwanda closely. Peter Munyiri, KCB Deputy Chief Executive told Business Daily, a regional paper recently, “Our objective is to be strategically located to support the country’s economic activities and create synergies with our operations in other regional markets.” This economic trend is also sure to benefit another infant player in financial sector, the proposed Rwanda Stock Exchange that the current Over The Counter market is expected to grow into, a stage which market players are already eyeing closely. The Executive Director of Capital Market Advisory Council, Robert Mathu, under whom the mandate to create a thriving stock exchange in Rwanda falls, this week told The New Times that KCB’s plans to cross list on the Rwanda stock market. Even though currently the OTC market only opportunity is limited to treasury bonds issued by government and one corporate bond issued by Rwanda Commercial Bank (BCR), in the near future when the stock market goes full blast, Rwandans of all classes will have an opportunity to buy a shares of private companies which will chose to seek capital through the bourse. As opposed to bonds which are basically debt instruments in which government or private sector player can use to borrow funds from the public, for a stated period of time with a fixed return, shares or equity are pieces of the overall ownership of a company. Trade in stock exchanges prior to the current global financial crisis had become a popular activity in Africa with specific stock exchanges of Botswana and Ghana topping other exchanges worldwide. In recent years, the listing of Stanbic Bank on the Ugandan stock exchange, Kengen and Safaricom in Kenya, have excited the stock market watchers with unprecedented attention given to the Safaricom listing which was billed as one of the largest Initial Public Offer in Africa. The fact that major stock brokers in east African bourses have already set up shop in Rwanda points to the likely confidence in the. Mathu told Rwanda Television that the current eleven members of the OTC market are all stock brokers who operate on Nairobi, Kampala or Dar stock exchanges. He also confirmed that African Alliance South African fund manager that pioneered investment in unit trusts in Kenya is one of the eleven members present in Rwanda. Unit trusts are instruments trough which many individuals pool funds and entrust them to a fund manager such us African Alliance who then invests it strategically with the aim of spreading risk and ensuring increased returns for investors. Meanwhile, a clear push by other banks operating in Rwanda into variously uncharted waters is also worthwhile to notice. The movement of the Bank Populaire from the microfinance sector to a deposit taking institution, the entry of many banks into unbanked areas previously ignored like Nyamirambo are but examples of these aggressive movements that financial institutions have taken on. In Kenya, the entry of Equity Building Society into the deposit taking sector has rewritten the banking form book in Kenya. Formerly prestigious banks like Barclays and Standard Chartered that could not lend without collateral and prided themselves is serving the high end market sector are now literary throwing loans at market sellers and vendors. This is because Equity Bank’s efforts to discard rigid conditions for clients and embrace the urban and rural unbanked has unleashed a banking revolution that has attracted the world’s top notch schools of economics to Kenya to study this new banking phenomenon. Established Rwanda banks should therefore not have to wait for an equity bank to happen under their noses. They should put off their gloves and go digging in the likes of Nyabugogo and Remera market for the small savers and business people who lack the much required capital to expand their businesses other than the big fish that more often than not do not really need the money. The gloom and doom resulting from the expected global recession in the short time is likely to dampen the financial sector, but in the long term, the major financial players in the region have clearly decided that Rwanda is the place to be. Contact: kelviod@yahoo.com