We had the pleasure of visiting Rwanda in 2010. It is a beautiful country with great hilly vantage points and stunning views from almost anywhere. From our base in the capital city of Kigali we were able to see most of the rest of the country, traveling by car along well-paved roads that let us reach almost anywhere in the country within a couple hours.
It was evident that Rwanda’s government had taken a very careful approach to development with heavy use of international expertise, meaning consultants and NGO workers were fairly commonplace. What surprised us was that if you didn’t know the history, you would have no idea that there was a genocide in 1994; Kigali, the main city, is well developed with safety not an issue. The museums and sites dedicated to remembering the genocide were the only signs left of the horrific event and completely out of place when juxtaposed with the hustle and bustle of the present.
While walking along the main bank street in Kigali we found out that Rwanda had just recently opened its own exchange, the Rwanda Stock Exchange (RSE). There we met the CEO of the exchange and came away impressed. He stressed that the exchange had carefully studied more developed stock markets in the region to learn from their mistakes and successes. They would be very friendly to foreign investors with no taxes for the first few years. After the meeting we walked across the hall to CDH Capital Rwanda, the main/only broker in town, and promptly signed up for an account in anticipation of Rwanda’s first IPO later that year.
The market has come a long way since then but is still in its infancy. Here are the quick facts:
- Rwanda has two domestic listings: Bralirwa and Bank of Kigali
- Market Cap: about $900m USD
- Capital Gains Tax: 0% (for now)
- Dividend Tax: 5%
- Trading time: 09:00 – 12:00
- Settlement: T+1
- The Rwanda Stock Exchange Stock Index (RSESI) was launched at the beginning of 2013 and is the main stock market index of Rwanda
- Both shares have majority owners (Heineken for Bralirwa, and the Government of Rwanda/Social Security Fund for BoK), with only minority stakes available for trading in the secondary market
Managed and majority owned by Heineken, Bralirwa is the biggest producer and distributor of beverages in Rwanda. The company has a near monopoly in the country from selling its own beer brands (Mutzig, Primus, and Turbo King) and distributing Coca Cola brand soft drinks.
Bralirwa’s IPO was in December 2010 at 136 RWF per share. It currently trades at about 890 RWF, an over 550% return! It has also issued a dividend every year since its IPO, making it a welcome first foray for most Rwandan stock investors. With a P/E of about 24.0, it’s valuation currently seems quite lofty and is something we will look at in the future.
Bank of Kigali
The largest bank in Rwanda by both assets and market share, Bank of Kigali was also named the Best Bank in East Africa in 2012 by The Banker magazine. Although 50% of profits are paid out as dividends, BoK has still managed to focus on increasing growth by reaching out to new markets, such as the rural population through it’s mobile banking vans (ie. “Mobibank”) along with Agency banking and a greater ATM network.
Bank of Kigali’s IPO was in July 2011 at 125 RWF per share. It currently trades around 183 RWF, a 45% return without counting the dividend. With a P/E of under 5, we expect to see upside here and will look at this as well in the future.
Rwanda has been one of the hottest markets in Africa since it’s debut. While the trading infrastructure is still a long way from more developed markets, the opportunities here are attractive and it is a market we continue to actively monitor. If you have any questions please let us know!