1 April 2018

Rwanda Bourse Rolls Out an SME Segment

Rwanda Stock Exchange plans to roll out new products to infuse liquidity and activity in an increasingly bearish market.

The RSE is betting on the Small and Medium Enterprises Market (SMEM) segment to drive business in 2018.

A vibrant SMEM will generate more interest among investors seeking to diversify their investment into new asset classes.

Last Thursday, Finance and Economic Planning Minister Claver Gatete launched RSE's SMEM, after regulatory requirements for initial public offerings were relaxed.

This would allow citizens to access opportunities to benefit from the success of profitable businesses when they buy shares in those companies.

The single biggest player on the RSE is the government, driving the bond market through quarterly issuances. The government has also offloaded shares in I&M Bank, Bank of Kigali and Bralirwa, Rwanda's largest beer and soft drinks manufacturer, which trade on the RSE.

To make it easier for the small businesses to raise capital on the bourse, the Capital Markets Authority (CMA) is allowing them to list for free. Corporates pay Rwf20 million ($23,000) as listing fee.

Stock brokers have been citing the windy regulatory approvals and high costs involved before a company gets approval to list as the biggest challenges locking out small and medium enterprises issuing IPOs in Rwanda.

Eric Bundugu, acting executive director of the CMA, said all that registered SMEs now need are bankable business plans and good corporate governance to get approval.

The CMA says it will subsidise the costs of hiring professional service providers -- transaction advisors, brokerage services and legal services -- to prepare SMEs for listing.

During the forum, 11 companies committed to start regulatory approvals for listing.

Rwanda also plans to roll out bond reopening, following Nairobi Securities Exchange's example. Reopening involves popular Treasury bonds that are already trading, which are opened up with new values to show the real pricing, though the coupon rate paid every six months remains constant.

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