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Rwanda’s CMA launches investment clinic to attract small businesses
In order to increase the number of companies utilizing the capital market; the Capital Market Authority has proposed a strategy to attract more SMEs. The Capital Market Investment Clinic is designed to help SMEs become investor ready and encourage an increase in the number of listings on the Rwanda Stock Exchange. CNBC Africa's Tesi Kaven filed this report.
Mon, 12 Oct 2020 10:13:03 GMT
Disclaimer: The following content is generated automatically by a GPT AI and may not be accurate. To verify the details, please watch the video
AI Generated Summary
- Small and medium enterprises face challenges in accessing the capital market due to issues such as disclosure, corporate governance, and awareness.
- The Capital Market Investment Clinic aims to empower SMEs by enhancing their investor readiness and providing them with guidance on navigating the stock market.
- Rwanda is revising regulatory frameworks and reducing entry barriers to attract more SMEs to the capital market and promote economic growth.
Rwanda's Capital Market Authority (CMA) is making strides towards attracting small and medium enterprises (SMEs) to utilize the capital market with the launch of the Capital Market Investment Clinic. The initiative is geared towards helping SMEs become investor-ready and facilitating their access to funding opportunities through the Rwanda Stock Exchange. CNBC Africa's Tessie Kaven delved into the details of this innovative approach to bolstering Rwanda's capital market. Since its establishment in Rwanda, the capital market has successfully mobilized almost $1 billion over the past decade. The current market capitalization stands at $4.3 billion, representing a substantial 43% of the country's GDP. However, while 10 major corporate entities are currently listed on the Rwanda Stock Exchange, including prominent companies like Rwanda Lidding Cement Manufacturer Simir Ra and South African Healthcare Investment Company Aarach Bofello Limited, SMEs remain conspicuously absent. Small and medium enterprises account for 90% of the private sector, yet many are apprehensive about engaging with the stock market due to perceived barriers. Gilbert Muronsi, the owner of a shoe factory in Rwanda, highlighted the lack of information and misconceptions surrounding the capital market. He expressed interest in exploring the capital market as a potential avenue for his business's growth and access to funding in the future. Eric Bundugu, Acting Executive Director of the Capital Market Authority, shed light on the challenges faced by SMEs in entering the stock market, including issues related to disclosure, corporate governance, awareness, and transaction costs. These hurdles, often exacerbated by the unique nature of family-owned SMEs, have hindered their participation in the formal capital market ecosystem. In response to these challenges, the CMA has introduced the investment clinic to assist SMEs in overcoming these obstacles and preparing them for investment opportunities in the capital market. The CEO of the Rwanda Stock Exchange, Celeste Robo-Kumba, emphasized the clinic's role in demystifying the capital market and making it more accessible to small businesses. By focusing on enhancing corporate governance and investor readiness among SMEs, the investment clinic aims to elevate the overall value of these companies and attract potential investors. Through a tailored program that includes mentoring and guidance from industry professionals, SMEs can navigate the complexities of the stock market and position themselves for long-term success. The CMA's strategy to appeal to SMEs involves revising regulatory frameworks and reducing entry barriers to accommodate the unique needs of small businesses. By offering tailored disclosure guidelines and streamlining capital requirements, the CMA aims to create a more inclusive and welcoming environment for SMEs seeking to access the capital market. Rwanda's efforts to bolster its capital market are crucial for attracting new businesses, fostering economic growth, and aligning with international standards. By actively engaging with SMEs and providing them with the necessary tools and support, Rwanda is positioning itself as a hub for entrepreneurial success and investment opportunities. The launch of the Capital Market Investment Clinic marks a significant step towards building a vibrant and diverse capital market that caters to the needs of all businesses, regardless of size or scale.
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