Rwanda’s capital market taps SMEs

Rwanda's capital market continues to be a driving force in enabling small and medium-sized enterprises (SMEs) and corporations to secure long-term funding for expansion. Initiatives like the Investment Clinic have proven successful in assisting businesses in leveraging the Rwanda Stock Exchange (RSE) to access capital. CNBC Africa's Ericks Shyaka sat down with RSE CEO, Celestin Rwabukumba, to discuss the impact of these efforts on the market. The RSE has been instrumental in supporting SMEs, allowing them to graduate to the point where they can utilize the capital market ecosystem to raise funds for expansion. Rwabukumba highlighted a case in the agro-processing sector where businesses have successfully utilized the investment clinic and the capital market to secure financing for growth. This success story serves as an example for other SMEs and corporations in Rwanda looking to expand and explore alternative financing mechanisms beyond traditional banking. The RSE's focus on attracting SMEs to its various market segments has seen significant progress. While the emphasis is not solely on listing, the RSE has introduced tailored market segments, including an SME market segment, to accommodate the specific needs of SMEs. By lowering entry requirements and providing support through the investment clinic, the RSE is preparing SMEs to raise capital at any stage of their development. The RSE has already seen success with two cohorts, with several companies raising capital and venturing into listings on the market. Notably, companies like Green Mirrors and Energy Kotel have successfully raised funds and listed bonds, demonstrating the market's potential for SMEs. Looking ahead, the RSE is preparing for a third cohort, inviting more participants to benefit from the support and guidance offered by the investment clinic. On the topic of listing public entities, Rwabukumba discussed Rwanda's exploration of listing government-owned entities. The RSE has been monitoring the market closely since its inception, focusing on key pillars like developing a fixed income market and privatization. Privatization initiatives have been essential in setting examples for private issuers, with three government-owned companies already making strides in the market. The government's commitment to divesting through the public and involving taxpayers in ownership has been evident in recent policy changes and collaborations with the RSE. As Rwanda continues to explore opportunities for listing public entities, the momentum is building, with renewed efforts to accelerate the process and involve more government-owned entities in the capital market. The push to privatize through the market aligns with the goal of increasing public participation and returning assets to the taxpayers who ultimately benefit from these investments.