While the country is celebrating 30 years of liberation and transformation, this year, our stock market has a lot to celebrate too. Rwanda Stock Exchange (RSE) has solidified its position as a cornerstone of Rwanda’s financial markets ecosystem in 2024. With achievements in trading volumes, the launch of innovative financial instruments, and the implementation of forward-looking sustainability initiatives, the RSE continues to drive economic progress and investor confidence. Some of the year’s key milestones include good market performance and cutting-edge product offerings plus strategic advancements shaping the future of Rwanda’s capital markets. From its early years as a modest over-the-counter market lacking listed companies or active stockbrokers, the RSE has undergone a remarkable evolution into a fully-fledged daily trading stock exchange. This year, its achievements are remarkable: Trading activities and investor participation Total market turnover hit a new record and surged past the Rwf100 billion mark to close the year at Rwf129 billion, a 126% increase from the previous year. The Rwanda share index (RSI) is also up by 15.86%. The RSE also surpassed its own record in issuance and listing of three products from private issuers in the last quarter of the year, raising at least Frw51 billion. The new listings include Prime Energy Plc (the first-ever green bond on the RSE market) worth Rwf9.58 billion with a 7-year maturity at a coupon rate of 13.75% per annum and listing of the first tranche of Rwf3 billion corporate bond of Mahwi Grain Millers Plc paying 15% per annum. It is worth noting that both companies graduated from the RSE’s Capital market Investment Clinic (IC). Finally, the issuance and listing of Development Bank of Rwanda (BRD) Plc 2nd tranche Sustainability-Linked Bond worth Rwf33.5 billion with a 7-year maturity at a coupon rate of 12.9% per annum. All the issuances were oversubscribed and participation from retail investors including members of the Diaspora was remarkable giving hope for future growth of investor participation which overall has increased 37.35% to 95,672 dominated by domestic investors at the rate of 95.75%. These numbers underscore the growing participation of both institutional and retail investors, driven by better accessibility and targeted education initiatives. The market capitalization has also slightly increased to Rwf3.8 trillion from Rwf3.6 trillion at the end of December 2023. Pioneering new financial products To broaden investment opportunities and support sustainable development, the RSE introduced a suite of new financial instruments which include the following; Exchange-Traded Funds (ETFs) & Real Estate Investment Trusts (REITs) which will provide investors with a low-cost, diversified, and flexible investment option, broadening access to the stock market, offering attractive returns and contributing to urban development. Green Bonds and Sustainability-Linked Bonds which have placed Rwanda on the map as a leader in sustainable finance, attracting socially responsible investments and supporting environmental goals. ESG Reporting Guidelines where Environmental, Social, and Governance (ESG) reporting guidelines were introduced to ensure listed companies adopt global best practices in transparency and sustainability. These guidelines are open to other corporations who may wish to use them. However, the RSE’s journey has not been without its share of challenges. First, much as activity on the secondary market has improved over the years, it is still low compared to other advanced markets across the globe. In addition, there is also a limited number of products and little diversification for investors. For instance, initially aiming for an average of 2 new listings per year, the exchange has realized closer to 1 per year, aligning with trends observed in other African stock exchanges. Factors such as limited financial literacy, low savings rates, and reluctance from companies to go public have contributed to this slower-than-anticipated growth. As challenging as it may be, deepening our market further is not solely our responsibility as an exchange. Policymakers, regulators, and Rwandans themselves must undergo a mindset change as there is need for a collective effort to address these obstacles. Undeterred, the RSE remains committed to cultivating the domestic market and encouraging more Rwandan companies to raise money and list on the Exchange. Just like in some countries, the government’s privatization policy through capital markets and perhaps a deliberate policy to encourage or compel public utility companies or companies of a certain size or systemic enough to go public could offer a promising avenue for expansion. On the other hand, various efforts to enhance local professional skills and financial services aim to support a growing pipeline of potential issuers. As Rwanda progresses on its development trajectory, the capital markets will and must play a pivotal role in mobilising long-term domestic finance and fostering a robust savings culture. Positioned at the forefront, the RSE is poised to deepen and diversify the country’s financial landscape in the years ahead especially now that we aspire to be an international financial hub of recon through the Kigali International Financial Center (KIFC) initiative. We should also leverage on the presidency of the African Securities Exchanges top body (ASEA) for continued growth and collaboration within Africa’s securities exchanges landscape and use Rwanda’s prominence in the regional and international financial arena. This reflects the country’s commitment to fostering collaboration and integration within Africa’s financial markets, further solidifying its role as a driver of economic development and prosperity across the continent. Driving regional and digital transformation Looking ahead, the RSE is poised for continued growth through a few strategic initiatives including some of the following; The East African Capital Market Infrastructure (CMI) project, which is part of the integration of the financial market. The overall objective under this component is to allow a seamless movement of securities and payments between the different EAC capital markets. It is compatible at the regional level to enable the creation of a regional financial market in the EAC. The project will see full automation of trading operations on the RSE and increase efficiency. The African Exchanges Linkage Project (AELP) is in line with the African Continental Free Trade Area (AfCFTA) and the RSE is collaborating with other exchanges to create a unified trading platform thereby boosting cross-border investments and positioning Rwanda as a regional financial hub. The RSE plans to launch cutting-edge digital platforms to streamline trading, enhance transparency, and improve user experience. New offerings such as the introduction of a green exchange window, multi-currency-denominated instruments, market-making and Islamic finance or Sharia compliant platforms will also enhance product offerings. And finally, sustainability commitments with renewed efforts to promote green financing and ESG practices will play a pivotal role in supporting Rwanda’s Vision 2050. The writer is the CEO, Rwanda Stock Exchange & Chairman of African Securities Exchanges Association (ASEA).
