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Rwanda braces for first IPO

By Kelvin Odoobo

Rwanda’s fledging stock market is set for a major boost as government prepares to list 25% of its 30% stake in the national brewer BRALIRWA. According to the operations manager of Capital Markets Advisory Council (CMAC), Celestin Rwabukumba, the process of issuing an initial public offer (IPO) of BRALIRWA, Rwanda’s only beer and soft drinks manufacturer, is in advanced stages. “The process has reached the selection of transactional advisors and other service providers who will ensure a smooth listing of the brewers’ shares.” Dutch multinational Heineken holds the rest of 70% shares.

The Rwanda OTC market counter currently deals in only regional bank KCB shares which were cross listed on June 18, 2009. Since its inception in January 2008, and also have three listed bonds, three issued by the National Bank of Rwanda (BNR) while one corporate bond is issued by the Rwanda Commercial Bank (BCR). The 2-year and 3-year government bonds have interest rates of 8% and 8.25% respectively.

In a move that will whet appetites of Rwandan and regional investors, the government has also lined up two other institutions in which it owns substantial stakes in; that is MTN Rwanda and the largest insurer in Rwanda, SONARWA. The move to privatize some of the government owned institutions will give a chance to Rwandans and East Africans in general to buy a stake in these institutions while providing much needed capital for business growth and expansion.

Investors also stand to benefit form the stock market by accumulating their savings in small amounts over time though investment, earning income through dividends when companies declare profits and decide to pay part of the profits to shareholders, interest income on bonds, and wealth or capital gain whenever the prices of securities listed in the market go up.

The Rwanda OTC market, currently run by CMAC is still a work in progress. However the potential of the capital market has been well demonstrated by a very active KCB shares counter in the first few months of business. “From June up t0 date, we have seen 68,300 shares traded in 42 transactions, which makes the KCB counter in Rwanda the most active among all the other bourses in east Africa where KC shares are listed,” say Mr Rwabukumba.

CMAC is also in advanced stages of separation of its functions as a stock market regulator from the market operations which it currently runs in the interim. “We have sent three draft laws to parliament for plenary debate and approval which include the Capital Market Authority Bill and the draft law for regulating the capital market. We also are working on the Collective Investment Scenes Bill that will allow investors to participate in collective investment schemes like mutual funds,” Mr. Rwabukumba says, adding that if parliament approves these bills, the stage will be set for the unveiling of the Rwanda Stock Exchange which will take over from the OTC market as an independent market entity separate from CMAC.

He maintained that as much as the capital market in Rwanda is still young, plans are in the pipeline to turn it into the wall street of Rwanda with the National Bank of Rwanda already looking into establishment of a Central Depository System and an Electronic trading platform to replace the manual system of transactions and hence improve the efficiency of the stock market.

CMAC is also running a National Public Education Program through workshops, seminars and conferences in all four provinces of Rwanda, targeting different sectors and emphasising on academic institutions all aimed at generating interest from potential capital market investors and issuers in order for them to partake in the benefits of a fully-fledged stock exchange.


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