This week, Thursday, the Rwanda Over The Counter (ROTC) market, which has been in existence for only 18 months, listed its first equity. For starters Kenya Commercial Bank (KCB) group which has a subsidiary in Rwanda cross listed 2.2 billion shares on the Rwanda bourse, making it the only company to be quoted on all the regional stock exchanges. Cross listing is where a firm lists its shares for trading on at least two stock exchanges located in different countries. While officially inaugurating KCB activities in Rwanda, H.E President Paul Kagame said the factor of cross listing should be given its due importance. “This is a vote of confidence in the East African community and its member sates in the sense that we are a viable market individually and collectively,” Kagame said. This is because the president is very aware of the significance of the financial sector especially at this time when the global economy is facing one of its worst recessions. Rwanda is still trying to build a fully fledged stock exchange. And having three Treasury bonds, one corporate bond and an equity listing on the ROTC market in a spell of 18 months is really praiseworthy. The success enjoyed so far is due to contained efforts from government, central bank and the Capital Market Advisory Council (CMAC). However, local private companies’ effort has been so minimal with the exception of BCR which floated the only listed corporate bond on the ROTC market. It is understandable for private companies because they need assurance of investor participation. One can argue that their fear portrays limited public awareness, which limits individual and institutional investor participation, but it is largely a reflection of local firms’ lack of experience in raising capital from the stock markets. Figures suggest that that Safaricom Initial Public Offering generated around Rwf6 billion in Rwanda. This sizable amount that can partly finance Cimerwa’s new cement factory, which will increase cement production by 500,000 tonnes a year if completed, six times higher than the company’s current capacity. Cimerwa is Rwanda’s largest cement manufacturer, controlling more than 90 percent of the market share. Kageme said that we know for example that the savings culture and rates in our country remain very low. “But we are also aware that whenever Rwandans are challenged to raise financial resources they do so with remarkable commitment and result,” he said. Indeed from Safaricom experience, the president’s comments are justified. A lot of benefits, both monetary and no-monetary are derived from listed companies. The advantages are more so when the company is second listing on foreign exchanges. More investors, greater liquidity, a higher share price and a lower cost of capital can be realised. The exchanges also offer lower trading costs, stricter accounting standards, and more protection for shareholders. I would say that as KCB continues to list on multiple exchanges, though not intended to raise cash from the public, it is increasingly becoming global. This, in the public eye, makes KCB larger than its peers in the banking industry. Take an example of companies like East African Breweries ltd, Kenya Airways (KQ) and Jubilee holdings. These are firms that have taken the lead by cross listing on East Africa’s stock exchanges. They are probably the best in their areas of trade in the region. Media interest in the company making an Initial Public Offering (IPO) or cross listing its shares lead to visibility and familiarisation of the firm. The free Additionally, for cross listed companies, research has proven that investors enjoy greater protection from the increased number of regulators who will help keep the company’s management in check. Local firms need to switch from conventional ways of raising capital, understanding that banks alone can not help enterprises to raise long term investment capital. Email: gahamanyi1@gmail.com
