Rwanda is resilient against current fuzzy global economic outlook — Robert Mathu, Executive Director

Robert C. Mathu, Executive Director of the Capital Market Authority (CMA), Rwanda gives an exclusive interview to Capital Markets in Africa and elaborates on aspects of Rwanda capital markets development and investment opportunities. Robert believes that Rwanda’s economy is resilient against the bleak performance that emerging markets are expected to deliver in 2016 and beyond. 

To get us started, please tell us a bit about yourself and your experience as the Executive Director, Rwanda Capital Markets Authority so far?

Robert C. Mathu: I am the Executive Director of Rwanda Capital Market Authority (CMA). I started my career at the Nairobi Stock Exchange (NSE) in 1990 where I worked through the initial transformation of the NSE. I was also involved in setting up of the Dar-es-Salaam Stock Exchange operations as the Technical Advisor.

I assisted in the establishment of the Uganda Securities Exchange in 1996. I worked as a stockbroker in Nairobi for three years before taking up my current assignment in Rwanda.

I have an MBA in International Banking and Finance from the University of Birmingham UK, Bachelor’s degree in Commerce from the University of Nairobi.

The Rwanda Capital Market Authority’s vision is “To be a key contributor to Rwanda becoming a competitive financial centre through mobilization of long-term capital”. What measures are in place, or being planned, to help deepen and diversify the Rwanda’s capital market in term of product innovation and development?

Robert C. Mathu: Rwanda’s capital market has an active equity market and gradually emerging bond market for both corporate and Treasury Bonds. The market is gearing for additional capital market products in order to offer alternative and modern methods of mobilizing long-term capital.

Opportunities for investment in Rwanda’s capital market will continue to emerge as the privatization program is implemented, the private sector embracing the capital market as an inevitable source of long term capital for both equities and bonds. It is also expected that the capital market will continue to ride on the back of high economic growth in Rwanda and in the region.

Indeed, there are multiple initiatives to attract new users of the capital market especially the economy and SMEs.

There is a view that there is a lack of adequate information about African markets for investors to make investment decisions, how can the Capital Markets Authority help to change this view?

Robert C. Mathu: CMA is continuously running public education sessions meant to bridge the literacy gap and provide adequate investors’ education to both retail and institutional entities to develop and deepen the nation’s capital market, as well as improve the level of domestic investment. We are working closely with the media to be able to reach investors to encourage them to save and invest through the capital market.

Treasury Bonds raise money to finance the Government of Rwanda’s development projects. Please, can you tell us the latest developments regarding the issuance of the Governments T-Bonds and the latest Projects they may be funding?

Robert C. Mathu: The government issued a Rwf15 billion five-year Treasury Bond (TB) under its quarterly issuance programme in February 2016.  The issued bond will help finance various public projects including infrastructure and support the development of the local capital market. This will be the seventh bond to be issued under the quarterly issuance programme. All the previous bond issues were oversubscribed, which means that there is a lot of appetite among the public to invest in government bonds.

For the benefit of foreign investors, what are the competitive advantages of investing in Rwanda’s capital markets?

Robert C. Mathu: Investors approach the market to create wealth through investment in instruments traded in the market. Investment in the stock market provides a source of income. Shares pay dividends when companies declared profits and decide to distribute part of the profits to shareholders. Bonds pay an interest income to the bondholders. Investing in securities that are listed in the capital market encourages investors to accumulate their savings in small amounts over time.

Foreign investors seek for opportunities to diversify their portfolios into our markets that sometime provide higher returns.

In order to make Exchange’s deeper and more liquid, there are moves towards the regionalisation/integration of African Stock Exchanges. Please share with our readers any major developments with regards to achieving integration of the markets across the East African Community (EAC)?

Robert C. Mathu: The process of integrating East Africa’s capital markets is on course, and it is very encouraging. We are currently working on a project to automate and connect all the existing stock exchanges electronically into the future. The integration is at an advanced stage, but the challenge is automation.

The decision to automate an exchange is determined by the volume of business but the key requirement is to connect these markets electronically. Already, Nairobi and Kigali’s Central Depository systems have been connected electronically. This means one can buy shares in Nairobi and sell them in Rwanda but only for cross-listed securities.

On a final note, what is your outlook for Rwanda in 2016, given the current fuzzy global economic outlook as a result of slow growth in China and coupled with commodity price slump?

Robert C. Mathu: The revision of growth prospects across the globe is a reflection of the challenging economic outlook but for Rwanda, we expect some resilience against the bleak performance that emerging markets are expected to deliver. The domestic capital market is also expected to turn around based on domestic company performance.

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