Rwanda Capital Market Set to Be Automated This Year

19 January 2020

Automation of Rwanda and regional capital markets is expected to be completed in the first quarter of this year, Rwanda Stock Exchange has revealed.

Rwanda Stock Exchange was started in 2011 with the aim of creating a savings and investment culture. By the middle of last year, it has eight companies and 22 government and corporate bonds listed, 8 trading members, two licensed custodians, fund managers and other related services providers.

Meanwhile, as of December, there were 20,000 active investors on the local stock market up from 18,764 in December last year. 83.6 per cent of these are local investors, 13.8 per cent were regional, while the rest were international. Rwanda Stock Exchange (RSE) surpassed $1 billion in trading last year.

Pierre Celestin Rwabukumba, the CEO of Rwanda Stock Exchange told Sunday Times that for the capital market to grow with an increased number of investors, automation was timely.

"Automation is a project that has so far been implemented at 90 per cent. But because it involves different countries as it will link all stock exchanges in the whole region, it will be completed in the first quarter of this year," he said.

"We want to make sure that anybody who is seeking money gets it easily on the capital market and those who want to sell shares in their companies get more buyers. Automation is the main enabler," he said.

Rwabukumba explained that they have already started to test the technology.

"By April, we hope that automation will have been completed. Tanzania has finished its part. Rwanda, Burundi, Uganda are also working on theirs," he said.

He further added that the automation will enable every citizen to subscribe to the system if they want to buy bonds and shares.

"People will be able to even use their mobile phones to subscribe and buy shares and bonds thanks to the digital system," he noted.

However, he said that there is a need for efforts to educate people about the role of the capital market in terms of saving and investments through the market.

There are only around 20,000 people on the capital market, he said adding that the number must grow at least by 20 per cent every year thanks to a recently adopted Ten-Year Capital Market Master Plan to guide further development.

"We need money on the market," he said.

He added that citizens are also embracing capital markets in another way through EjoHeza scheme and National Investment Trust (RNIT).

"A citizen saving money through these schemes, it means they are buying capital market products," he said.

EjoHeza is a pension scheme intended to ensure the welfare especially of workers in the informal sector and so far, 280,272 people have subscribed to it, with Rwf979, 250,338 in savings.

The savings are also expected to be invested on the capital market, he said.

Rwanda National Investment Trust (RNIT) was established to promote the saving culture.

RNIT invests the money in a portfolio of securities such as bonds, money market instruments and shares or other authorized securities and thus contributes to the expansion and deepening of the capital market.

The capital market as a catalyst for job creation

Rwabukumba said that the capital market is a catalyst for job creation.

"If for example billions of money are raised on the capital market, it depends on the end investor to spend the money in investments that create jobs," he said.

He stressed that raised money on the capital market is dispatched into the economy.

The Statistics body says that if the economy grows 8 per cent, it creates 160,000 off-farm jobs and if it grows 10 per cent, it could create 200,000 new off-farm jobs every year according to the government target.

Government seeks to create 1.5 million jobs by 2024.

"The capital market is in charge of raising money for the economy so that employment is created. This means that if a company needs Rwf10 billion and gets it through capital markets, it will create more investments which create employment opportunities," he explained.

He enlightened that when the government raises billions of money through the bonds, the money is invested in public infrastructures such as roads, electricity and others-all which end up creating jobs.

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