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Tech & teamwork bolster East African bourses

Interview - August 18, 2016

Rwanda’s stock market is part of an East African integrated hub that is intrinsically linked with the rest of the region, allowing investors to take advantage of bourses in Kenya, Uganda or Rwanda with minimal outlay and no particular barrier across the region, affirms Pierre Célestin Rwabukumba, CEO of the Rwanda Stock Exchange (RSE), and who highlights some of the initiatives and incentives encouraging greater savings and investment in the country.



Africa is undergoing a transformation and becoming a growing investment destination. What do you think is attracting this attention towards the continent?

Africa has always been an opportunity; many have always envied its natural resources and human capital. Africans are more and more aware of their self worth – “Agaciro” (a word in Kinyarwanda that means self worth) – and are a lot more assertive, which reversed the tide; that is one.

Two – Africa is the last frontier; it is a virgin market. Because of its young population, Africa represents huge opportunities in terms of market to be conquered. Thanks to the internet, the world has become a global village. Knowledge is traveling all around the world, and may benefit people even in the most remote places, such as in our continent. Africa is definitely taking advantage of this technological revolution by implementing for instance financial solutions, such as mobile wire transfers, invented by Kenyan developers. This is a sign that Africans may now use technology to exploit their ideas and realize their full potential like everybody else, thus making it a negotiating powerhouse with other continents and countries as a partner on the same table.


Regional integration is also high on the African agenda, and Rwanda for example is enhancing its links with the region. What do you expect as an outcome of these efforts and how advanced are the plans to integrate the four stock exchanges (Rwanda, Tanzania, Kenya and Uganda) to form a single East African bourse?

Rwanda is landlocked, but not mind-locked. We have plenty of things to offer, even if not all of these things are tangible. We are a small country and thus, to survive, we need to trade with our neighbors and we need to trade smart.

We are part of the East African Community, a 140 million inhabitants’ region and a trading block of five countries. This is again not taking into account Ethiopia, the DRC, and South Sudan, who are also part of the Northern Corridor projects, which would add another 190 million people plus. That is more or less as big as the United States.

Rwanda’s stock market is not left behind. Kigali is an East African integrated hub that is intrinsically linked with the rest of the region. This allows people to take advantage of Kenya, Uganda or Rwanda’s stock market with no particular barrier from anywhere within the region, thus taking advantage of a wider pool of investors and issuers.

The ongoing Capital Market Infrastructure project is linking all stock exchanges through technology. The legal framework has been drastically modified in order to frame our activities in the region. The idea is to link the existing structures without having to create one physical platform. I’m convinced that the future of economic integration will require full financial services integration.


In order to facilitate regional integration, you are working hard to start automated trading. How will this boost RSE’s efficiency and competitiveness in the region?

A fully integrated market doesn’t remove competition. Our integration effort is meant to improve efficiency and take advantage of economies of scale. Automation is part of that as it makes transactions easier and faster. Our settlement system today is the only one in Eastern Africa that is directly linked to the national payment systems, and investors coming here are 100% protected on that front alone. Once fully automated and integrated, the rest will be a matter of service delivery, innovation and creativity if we are to make a difference.


Having successfully launched Bralirwa as its pioneer initial public offering (IPO), RSE's second IPO was Bank of Kigali. In January it was announced three more IPOs would be launched this year. How is the status of these offerings?

So far we have had three IPOs in the past five years. Our main focus has always been to put the right environment in place on both soft and hard infrastructure. We are now embarking on an aggressive campaign to stimulate the supply side.

The same goes for the demand side, and especially retail investors, as there are still very few. We are focusing on these in order to foster savings in the country, as small investors need to be brought on-board and this is in line with the country’s ambition to raise savings levels to 30% of GDP in order to achieve our middle-income status by 2020 This wasn’t feasible before as no fund management industry existed, whereas now because the legal framework is in place, the fund management industry is taking shape.

Rwanda National Investment Iterambere Trust, inaugurated in July, will reach the bottom of the pyramid by offering products that suit the various investment needs of the people to further develop capital markets. With as little as FRw2,000 (approx. $2.50), people will be able to invest in the portfolio of companies and therefore see their investments flourish. We are in discussions with different companies in order to enlarge opportunities, but most of these companies are still preparing their documentation and will either be coming through debts or equities. We should at least have two or three products before the end of the year.


The RSE saw $45.5 million worth of trade recorded at the stock exchange in the last quarter of 2015; records at RSE showed an increase of 19.2% of new investors during the period. You recently said the country’s bourse was optimistic regarding the future. How are you working to keep momentum and how do you envision the RSE in the coming years?

We want to be a key player in the country’s development, through capital raising for the economy here in Rwanda. The establishment of our structure was done to ensure that the economy accesses long-term and cheaper finance, to make our population join the savings culture that exists elsewhere. I hope we become the biggest contributor in terms of raising money and channeling it into the real economy in this country. Right now the market cap is at almost 50% of our GDP and at the peak last year it reached 51%, compared to 200% and more in some developed countries. We obviously want to achieve more.

As Rwanda is undergoing major infrastructure projects, what are the challenges financing these mega projects and what is the role the RSE wants to have in it?

Generally speaking, megaprojects are taken over by large international corporations once governments give them concessions. The capital markets are still not the first choice for them to get the funding, as these projects still have plenty of risks, and the money collected generally comes from their country of origin or in other financial centers around the globe.

In the near future I think we, local and regional players, should look at these infrastructure projects, and invest in them as long as people understand their use properly. The general public should add stakes in these projects.


As stock indices can be an indicator of the general trend in the economy, what is your global vision of Rwanda’s economic competitiveness?

Rwanda’s economy is one of the most competitive ones. There are no biased prerequisites for doing business here in the country. Anyone from anywhere can register a business within six hours in Rwanda and own it 100%. People here focus on skills and what you can bring on the table. For instance it is very typical to find a local indigenous financial institution or construction company run by a Ugandan or Mauritian CEO. We look at performance, efficiency and excellence. We are a country in a hurry, we need to develop, and although transferring skills is essential for us, we mainly focus on value addition and talent from anywhere in the world.


How are you working in order to promote skills development among stakeholders, especially dealers and brokers?

Since Rwanda had little or no financial culture whatsoever let alone capital market knowledge, the first players had to come from outside. Many of our members are part of larger regional international firms with local subsidiaries. These people were supported and still are by Rwandans, and skill transfer is taking place on a daily basis. We encourage foreigners to train and transfer skills to locals.

But this doesn’t stop here, we also send our people abroad, to the region and beyond, so that they can learn from different cultures and perspectives. As a matter of fact, we will host this year’s the African Securities Exchanges Association (ASEA) conference for instance, which will bring together at least 25 stock exchanges, investment bankers, capital market regulators, policymakers, institutional investors and professionals from around the world.


You recently said the diaspora community should save and invest in the stock market. How are you engaging and communicating towards the diaspora?

We have regular meetings with people from our diaspora, not as the stock exchange on our own but as a country. We communicate about investment opportunities to Rwandans living abroad when they come to the country, through dedicated conferences, but we also go to join them abroad to show them how the country is evolving and where opportunities are. We also use print and social media and thank God technology has made life easier; we use it a lot to reach out to them.


As President Kagame said, “In Africa today, we recognize that trade and investment, and not aid, are pillars of development.” What opportunities would you highlight for US investors?

Africa is here for business. Dollars are green everywhere. Returns on investments should be followed. Rwanda is a stable country on all political and economic aspects; resilience is here to stay for the foreseeable future. We are definitely ready for investments to come into the country, and investors shouldn’t be worried about coming here. The business environment is striving, people are well educated and very hospitable; we encourage everyone to come. The lowest return on government paper for instance is 11.5%, whereas the highest is 13.5%, paid every six months. Rwanda is a young economy and the companies are still young and have plenty of time to fully develop within the larger East and Central African economic block. The future is here.