KCB cross listing should be used to prepare Rwandans for local IPOs

It’s now 21 months since the Capital Market Advisory Council (CMAC) and the Rwanda Over-The-Counter (ROTC) where launched. Since that launch, only Kenya Commercial Bank (KCB) has its shares cross listed on the ROTC market. No local company has yet been listed on this bourse. The ROTC market commenced trading on January 31, 2008 with two government Treasury bonds and one corporate bond that was issued by Rwanda Commercial Bank which is known by its French acronym BCR. This was a milestone due to the fact that traditional regional stock markets of Nairobi stock exchange, Dar-es-Slaam stock exchange and the Uganda securities exchange had to wait for at least their first birthday before they listed any securities. However, despite various awareness campaigns carried by CMAC, the institution charged with overseeing the development of the capital markets in the country, the majority of the Rwandan population is ignorant about the stock exchange and capital market. In my interview with Pierre Celestine Rwabukumba, the Operations Manger of CMAC about the reason behind this week’s gain in KCB shares where they rose by 4.6 percent from Rwf153 to Rwf160 he said local investors were responding to market changes on the Nairobi Stock exchange. This is encouraging because it shows that Rwandans are keenly monitoring market trends of other regional stock exchanges. Yet this signals that local investors are slowly learning to trade on information. However, a total turnover of just Rwf160,000 a week is an indicator that perhaps this information is not evenly distributed amongst local investors. By trading only 1000 KCB shares in a week in just one transaction (sometimes no trading is made throughout the whole week), it shows that members of the ROTC market, especially brokerage firms are not involved much in creating awareness among potential investors. Apart from offering investment appraisal, valuation of securities, participation in buyout deals etc brokerage firms need to carryon the responsibilities of marketing products that they sell, advising and educating their clients. Literally, a broker is a professional who helps investors to sell or buy securities but it is also imperative to note that a protected investor is an educated one. Therefore the broker plays a very great role in market development through professional advice and investor education. Well, the KCB cross listing was an opportunity for local investors to diversify their investments but it is also more important for CMAC and its members to use it as an avenue of creating awareness among potential investors in Rwanda. Ends