INTERVIEW: Children should be educated about investments—CMA boss

The capital market is a new phenomenon in Rwanda and its progress has attracted positive reviews from several business experts, especially concerning its future. Whereas it is easy vocabulary for people in the business world, the capital market and its operations may not be that easy to understand with the public being hesitant to buy shares on the stock market. Robert C. Mathu has been at the helm of the growth and development of capital markets in Rwanda since 2007. The Executive Director of Capital Markets Authority (CMA) has, among other things, overseen the establishment of Rwanda Stock Exchange, which lists two domestic firms, two cross listings, one corporate bond as well as a variety of Treasury bonds. The 44-year old veteran of the capital markets industry narrated that: “My real first personal investment was on the Nairobi Stock Exchange (NSE) where I bought a few shares of a small company in the early 1990’s and within one month, they generated a return of over 300 per cent. Although my intention was to hold for them for long, I sold the shares out of excitement.” He said when one buys shares of a company they become part owner of that company. “For example, all the people who bought shares in Bralirwa and recently in Bank of Kigali, are owners in those companies, represented by the shares they got.” The Kenyan national first developed interest in capital markets in 1987 as a student at the University of Nairobi, where he pursued a Bachelor’s Degree in Commerce. “I attended a talk by the then Chairman of the NSE, Ngenye Kariuki, who impressed me with his knowledge and style of the investment world,” he narrates Although he developed deep interest in stock markets then, Mathu could not pursue a specialised course in capital markets because of the industry’s low penetration rate in Africa, which caused a severe shortage of such courses. When he completed university, he applied for a job at the NSE but he was informed that there were no jobs available. Due to his relentless passion for stock markets, he persisted until he was allowed to volunteer at the body in October 1990. To him, that was the landmark of a long and successful career in capital markets. Since then, before becoming the Executive Director of CMA at its initiation in 2008, Mathu served as a Business Development manager at NSE, a consultant with Bank of Uganda, an Advisor at the Dar-es-Salaam Stock Exchange and as CEO of Drummond Investment Bank—East Africa’s oldest stock brokerage firm. “Talk to professionals, read deep and wide about the career or industry you are planning to join. Try to figure out new emerging trends and what might be the hottest career a few years from now,” Mathu advises university students. Married with three children, Mathu is never buried in work and finds time to spend with his family in Kenya, whereby most of the conversations are business related. He has bought shares in both Bank of Kigali and Bralirwa for his family as a sign of his belief in the capital market. “Sometimes we discuss investments and stock markets and get them interested. I believe all children should have an idea about investments as they grow up, “When I buy shares for them, I explain in very simple terms what it means. When a dividend (profit distribution) is paid, I inform them and this has spurred them to follow the stock market on TV.” Mathu who holds an MBA in International Banking and Finance from University of Birmingham, UK implored Rwandans to seize the opportunity and buy shares in listed companies because they have a stable foundation. “When you buy shares you become a shareholder, you will also share in the profits when they are distributed, if any,” he says. He added that: “It is also a risk because if the business does not make profits for any reason, then you will also share the loss. However, remember that even if the company is closed, you will not be required to add any more money beyond what you paid for the shares. “Buying shares should be a continuous habit and one should buy in small amounts over time and accumulate until they are significant enough to expand into other investments.” Due to price fluctuation of shares, Mathu advises that it is sometimes wise to buy more shares when the prices drop, especially when nothing has changed in the business of the company. Despite the ongoing uncertainty and market crashes in leading stock markets around the globe, he said, investments in Rwanda are doing well. “The Rwanda Stock Exchange produced a return of up to 107 per cent on Bralirwa purely driven by fundamentals of the company and hence a reflection of Rwanda’s economic potential.” And with global stock markets getting more correlated, increasing the risk of events in one market to ripple across the world in little time, the CMA boss says that this phenomenon is beginning to affect African stock markets. “However, given growth prospects of African economies, there is an obvious need for investment in African assets without the worry of contagion effects from the western stock markets, he said. To him, being the Executive Director of CMA is an opportunity and challenge to do what he likes most, particularly by setting up a stock market from scratch and running it successfully. “Business opportunities in Rwanda are many and the environment is extremely suitable for capital markets expansion—entrepreneurs can now realise their passionate business dreams,” he says. mugishaivan@yahoo.com