Capital markets: Rwanda's new securities exchange will boost economic diversification; Rwanda's economic development has taken another step in the right direction with the launch of a securities exchange by the Central Bank of Rwanda, as the first stage on the path towards creating a full blown stock exchange. Report by Neil Ford.

Author:Ford, Neil

Kigali is seeking to build an economic structure that will overcome many of the weaknesses that helped to destabilise the country even prior to the genocide in 1994. Rwanda's over reliance on agriculture and particularly on coffee cultivation is deemed to be dangerous in what is one of the most densely populated parts of Africa, so the government is keen to put the financial infrastructure in place to support a more diverse economy.


At the opening of the new Rwanda Capital Market, President Paul Kagame described it as "an important achievement which will provide the business community with a second option to financing that is long term and which will inevitably add great value to our economy."

He also called the formation of the exchange, which will deal in both treasury and corporate bonds, a milestone in the recovery of the nation.

As in many other African states, access to credit in Rwanda is limited as well as expensive, as commercial banks have largely failed to provide the support for the small and medium sized enterprises (SMEs) that are generally regarded as the building blocks of any successful economy.

It will be interesting to see whether greater access to credit will further fuel the construction boom that accounts for much of the economic growth currently being recorded in Kigali.

Looking further ahead, it is hoped that the new financial institution will widen its range of operations to become a stock exchange handling the shares of companies registered in the country.

The governor of the Central Bank of Rwanda, Francois Kanimba, said that he hoped that property, manufacturing, mining and tourist sector companies would eventually seek a listing on the exchange. In the longer term, the Central Bank hopes to permit foreign firms to seek a listing.

The launch of the new exchange allowed Rwanda to become a fully paid up member of the East Africa Securities Exchange Association, within which it had previously acted only as an observer.

The emerging Rwanda Stock Exchange (RSE) will allow the shares of privatised companies to gain a domestic listing. The executive director of what will become the RSE, Robert Mathu, said: "We are targeting at least six government owned companies for privatisation this financial year."

Mathu also serves as the executive director of the Capital Market Advisory Council (CMAC) of Rwanda, the regulatory body set up by the government to oversee the sector.

His involvement provides some...

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