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KIGALI (Reuters) – Celestin Rwabukumba is this year scrambling to add a new financial listing on the Rwanda Stock Exchange, automate the bourse, launch a market for smaller firms and encourage more companies to use the debt market to raise capital.
The initiatives are part of a broader bid to put the tiny African state on the map as a regional financial hub. But there is a long way to go for the three-year-old bourse with just five listings and where trades are still scribbled on white boards.
“We have wasted a lot of time, many years, fighting each other instead of developing,” Rwabukumba, the stock exchange’s chief executive officer, told the Reuters AfricaSummit in the Rwandan capital Kigali. “We must move forward.”
Twenty years ago, Rwanda was plunged into a bloodbath that left corpses strewn along the streets of Kigali and elsewhere across the nation. Rwanda is now ranked the easiest place to do business in continental Africa by the World Bank.
The Rwandan Stock Exchange, where trading began in 2011, is part of a plan taking shape that could include attracting fund management firms and creating a regional centre for technology.
For now, only two of the listed firms are Rwandan, with the other three cross-listed from Kenya. Their combined stock market value is about $2.1 billion, or just below $1 billion if only the two Rwandan firms are counted.
“We are always shooting for more companies,” Rwabukumba said on the first floor of one of the new towers that have shot up in the mostly low-rise capital, adding that this year “we are definitely going to have at least one, possibly two” listings.
He said he expected a Rwandan financial firm to list by June. “The prospectus is already done,” he said, without naming the firm, which will join the other two local listings: brewer Bralirwa and Bank of Kigali.
Rwabukumba said one major challenge was convincing family-owned firms to open up to new shareholders, or seek finance from alternative sources from banks, whose lending rates are punishing, now around 17 percent but more when charges and fees are added. It is a common complaint across Africa.
“Most people are afraid of (losing) control, others are afraid of disclosure requirements,” he said, adding concerns about opening up company books was largely irrelevant as the revenue authority already demanded a high level of transparency.
In an effort to expand the capital market, he said a new market segment for small and medium-sized firms was ready for launch with less onerous listing requirements once a first client signed up. “We are going to launch it any time this year, depending on how fast companies can come,” he said.
Rwabukumba said the bourse was also encouraging firms to issue corporate bonds, an alternative route to raise capital that could be a few percentage points cheaper than a bank loan.
For now, the bourse has only one corporate bond listed, but Rwabukumba said one new issuance was a “sure deal” this year, probably by June. He said it would come from a financial house and would be worth between 15 billion Rwandan francs ($22 million) and 20 billion. A second deal could follow, he added.
The governor of the central bank, John Rwangombwa, told Reuters in March he would issue regular government bonds in 2014 to help develop the capital market, even if the state did not need to raise the funds.
The government’s debut Eurobond, worth $400 million, last year was heavily oversubscribed.
In a further move to develop the stock market, the chief executive said there was a plan to end reliance on white boards on the trading floor, where transactions are marked up by a handful of traders in red jackets.
“2014 is about automation for us,” he said.
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