The Rwanda Stock Exchange's (RSE) central depository was recently inter-linked with other regional stock markets' depositories; a move many sector players say will boost activity at the local stock market. In fact the switch was long overdue considering that three out of the five companies trading on the local stock market are cross-listed.
The development therefore gives them more opportunities to transact business compared to the previous situation, when they could spend months without trading a single share. It will now be easy to transfer shares across the Rwanda, Kenya, Uganda and Tanzania stock exchange markets. According to RSE officials, transactions involving regional firms will now take less than two hours compared to over three months previously. Things can only get better.
However, this development should not be seen as the magic bullet that will solve the challenge of low volumes at the local market, or why companies are reluctant to list on it. The RSE issues need new approaches and innovation so that more investors, especially Rwandans, can get involved and invest in shares of different companies listed on the stock market.
Remember, the majority of would-be investors do not understand how the stock market operates. This, therefore, calls for massive sensitisation drives to educate the public, especially business people, the benefits of investing in shares. Last year, when the Capital Markets Authority officials were appearing before Parliament they said they would start massive sensitisation campaigns, but nothing seems to be taking place.
Also, CMA had said they were working with local authorities to start issuing Municipal Bonds by end of last year; the public is still waiting. If this initiative kicks off, it would do a lot in creating awareness as more people get involved.
By The New Times
The New Times/29/01/2014