David Mitali opens a square-ruled exercise book and peers over his blue-ink scrawl. Such are market statistics at the Rwanda Stock Exchange. By 11.15am on a Thursday, 45 minutes before the close of business, not a single trade has gone through. The day before, Mr Mitali, board writer and operations officer, says the exchange managed four trades.
It is perhaps not bad for an exchange with only two initial public offerings to its name. The other two equities are cross-listings from Kenya. When they are not in their offices, eight traders in red jackets face a largely empty white board, trading for three hours a day by open outcry.
But, says Robert Mathu, executive director of the Capital Markets Authority, the tiny exchange is nevertheless leaps and bounds ahead of its neighbours. “This is the most open capital market in the whole region,” says Mr Mathu, a Kenyan broker whose expertise in starting stock exchanges was enlisted in Rwanda. “The country is seen as small but, in terms of leadership, it is very far ahead,” he says, noting it takes far less time to change a law in Rwanda than in Kenya or Uganda.
“It’s tiny, yes, but remember we also have another object here in our market – we would like to drive integration,” says Mr Mathu. He adds that, thanks to its late start, in 2008, Rwanda’s exchange has some of the most advanced regulations going.
Unlike Kenya, the exchange has been demutualised from inception. So while Kenya struggles to put through controversial changes necessary for regional market integration, Rwanda’s exchange is already a private company primed for such a move. Investors say it is easier to start up a brokerage in Rwanda than it is in Kenya, the regional giant with more than 60 stocks. Unlike Tanzania, too, there are no restrictions on the number or percentage of shares that may be held by foreign investors in listed companies. Already, foreign investors have bought up shares in drinks company Bralirwa, which is 75 per cent-owned by Heineken, and Bank of Kigali, which listed 45 per cent last year in a market entry oversubscribed by 276 per cent.
The exchange is also preparing to do away with the open outcry system and introduce automated trading in June next year.
For the government, the exchange offers the hope of developing long-term capital in a country dependent on the vacillations and indignities of aid, and keen to boost the role of the private sector. Already, the government has raised $44m through bonds, while the single corporate bond, from the Commercial Bank of Rwanda, raised $1.6m to underpin its mortgage lending business. Mr Mathu says the government is planning to launch more municipal bonds, including one to build a bus park in the capital.
The exchange has only 9,500 shareholders, but Mr Mathu is targeting 20,000 after the next two listings, which he expects will come next year. He says six government-owned enterprises, including a cement company, an insurance group, tea estates and banks, are set to privatise via listings.
Subsidiaries of the Rwandan Patriotic Front’s Crystal Ventures conglomerate, such as Inyange, an agribusiness company that bottles water and produces juices, may also list on the exchange. Mr Mathu says further cross-listings from regional operators keen to make the most of Rwanda’s sound legal system will also add weight to the exchange, but he holds out most hope for private sector groups keen to raise capital for expansion. “When we started it was never meant to be just symbolic; we need this market,” says Mr Mathu.