RSE CEO: How Rwanda plans to enhance SME corporate governance

Small and medium-sized enterprises often struggle to access long-term investment capital due to a lack of corporate governance. Rwanda is taking steps to attract SMEs to list on the stock exchange, with the introduction of a new SME Governance Guidebook offering promise. Celestin Rwabukumba, CEO of the Rwanda Stock Exchange, recently joined CNBC Africa to discuss these initiatives. Rwabukumba emphasized the importance of corporate governance for SMEs, noting that while SMEs make up 90% of businesses in Rwanda, they often do not prioritize governance. In collaboration with partners like the IMC, the Rwanda Stock Exchange has launched the SME Governance Guidebook to educate SMEs on best practices and governance structures. The guidebook has been translated into local languages to ensure accessibility for all SMEs, including those who may not be fluent in English. This initiative aims to help SMEs understand the importance of governance and enhance their overall business operations. When asked about the relevance of existing corporate governance principles for SMEs across the continent, Rwabukumba highlighted that the new guidebook takes a realistic approach tailored to the specific needs and challenges faced by SMEs. It provides guidance from the initial stages of business registration to potential listing on the stock exchange. Rwabukumba also shared progress on listing SMEs, revealing that 15 companies are currently undergoing the investment clinic process. These companies are preparing to potentially list on the stock exchange or secure other forms of financing. Additionally, there is a growing pipeline of SMEs expressing interest in the program, indicating a positive trend towards enhancing SME participation in the financial market. In terms of investor demand, Rwabukumba mentioned that institutional investors currently dominate the market, but efforts are underway to increase retail participation. The central bank is implementing measures to facilitate retail investment through mobile technology and lower investment thresholds. Despite challenges posed by the pandemic, the Rwanda Stock Exchange is optimistic about the future outlook for investment and remains committed to supporting SMEs in improving their governance practices.