Alternative sourcing likely to boost the capital market

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Alternative sourcing likely to boost the capital market

Despite experts high projection for the country’s growing capital market, there is need to embrace more sourcing to increase the activity on the local bourse.

Currently, the bourse has only corporate companies listed on it such as Bank of Kigali-BK, Uchumi Supermarkets-USL, Nation Media Group-NMG, KCB and Bralirwa. Only BK and Bralirwa are the active counters on the bourse.

This implies that   looking at   increasing   both the demand and supply of   the market through taping into other sources other than the traditional listing of corporate   companies will bolster the bourse.

For example,  enticing  more people to  invest in the stocks through  a collective  investment  schemes approach  on the demand side are  one  of the  sources, experts  believe  would bolster   trading activity.

“this  is a professionally  managed  investment find   which pools  money from  different  individuals with  that of many  other investors with  similar investment  objectives,”  said Robert Mathu, Executive  Director  of Capital Markets Authority.

This means that an individual needs a small amount of   money to put together with other people in a pool of investment and get bigger returns since   a pool of money would have been collected and invested in high priced securities.

“At the same time you can also reap better returns from a portfolio of investments as opposed to the limited number of securities which one can invest individually,” he added

On the other hand, the market is also looking at   increasing the supply of the market through attracting SMEs by provision of guidelines for the public offer of securities for the sector currently struggling to access credit.

“The guidelines will make it possible for SMEs to raise capital through the capital market,” said Jackie Nankunda, capital market expert.

The private sector seen to bolster the economy has been on ‘tag to tag’  with the financial institutions with the latter arguing that the former lacks the requirements to  access loans needed  to boost their businesses.

“Actually  capital markets  would be the best  source of credit for the SMEs and  if guidelines are there  to enable  public  offers  for SMEs, then why not list  and get the  capital  they(SMEs) need,” said Davis Mukiza, a business  consultant.

Moreover, the move by the World Bank to   support the districts to offer municipal bonds is seen as a move to bolster the bond market but also raise funds to finance districts’ long term projects such as infrastructure.

Once issued, which may take two or three years, the Municipal bonds are likely to raise long term capital   for the districts to   work on infrastructure   developments for social and economic development.

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About the author

Olive Ndaka is the Junior Editor for RwandaEye. An investor and young entrepreneur, she is a quick learner and has contributed many articles for RwandaEye in Kinyarwanda.

More posts by | Visit the site of Ndaka

 

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