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A bigger helping hand to the capital market

By Special correspondent

Shares of Bank of Kigali and MTN Rwanda up for grabs

The Rwandan government expects to raise Rwf25 billion through the sale of its shares in two major companies–Bank of Kigali (BK) and MTN Rwanda–to grow capital for private sector initiatives.

“We have been calling for long term financing for private sector growth and believe that through selling government stakes indicates substantial progress towards this goal,” said John Rwangombwa, Rwanda’s Finance and Economic Planning Minister.

According to the minister, the government has yet to contact any investor because it’s currently in negotiations with MTN Group, which has the right to initially purchase any sale of its shares. South Africa’s MTN Group is the majority shareholder in MTN Rwanda, while the Rwandan government owns 10 percent.


The move follows the successful 2010 IPO launch of Bralirwa, the country’s biggest drinks manufacturer, which was oversubscribed by 174 percent and generated $80million against the $29.5million that was projected for 25 percent of government shares.

Bralirwa was the first domestic company to undertake an initial IPO as part of government’s strategy to implement its privatization programme through the capital markets.

“Through an IPO or capital market, this is one way intended to be used as an avenue through which  private sector in Rwanda can access long term saving,” said Rwangombwa.

Government intends to sell 20 percent of its shares in BK through an IPO due to be launched by July this year and concluded by September. BK, moreover, will independently offer 25 percent of its shares to the public.

According to the governor of the Central Bank, Claver Gatete, government’s initiative to sell its BK shares is a boost because the bank will consequently be able to expand its branches.

“The impact is clear,” says Gatete. “Government stimulus makes credit on private sector go up and we project that credit to private sector will increase 19.7 percent.”

Robert Mathue, executive director of the Capital Market Advisory Council, says that selling government’s stake in both BK and MTN will have a significant impact in terms of trading and products. “I am extremely optimistic because I see Rwanda Stock Exchange mobilizing long term resources to finance investments in the economy.” Mathue says this will not only improve Rwanda’s competitiveness in the region, but will also increase the savings level across the country, one of the primary objectives of the RSE.

According to Mathue, more products and more trading on the market will increase Foreign Direct Investments in the country. “Investors will add Rwanda on their menu because they are willing to invest in a stable, transparent and a growing economy and investors prefer to invest where there is an exit window,” he says.

Managing Director of BK, James Gatera, could not yet reveal to what extent the sale would improve the bank’s operating capacity.“When such things are taking place we have guidelines that we are under,” says Gatera. Additional information, he says, can only be revealed after the quiet period—the time in which companies are forbidden by the Securities and Exchange Commission to reveal information that is not included in their prospectus. The prospectus, he says, is expected next month.

BK has also yet to publically clarify the price per share, a decision management will make after valuation of the company.

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