Interview with a Rwandan Expert: CDH Capital CEO, Shehzad Noordally


Rwanda is a market we have covered extensively in the past. As one of the youngest yet best performing frontier markets in the world, Rwanda’s stock exchange has already come a long way since its first IPO in 2010. One reason for the success of the market so far has been CDH Capital, the first stock brokerage firm in Rwanda, and the one we worked with at the opening of this market.


Running CDH has been Shehzad Noordally, the CEO, who has worked in Africa for the past 15 years in the financial and banking sector. We’ve worked with him since the beginning and he has been extremely helpful (and patient) throughout all our dealings. On the eve of the Crystal Telecom IPO, he was kind enough to do an interview with Investment Frontier.

The following interview has been edited for clarity:


[IF]: CDH was the first brokerage firm in Rwanda, and was operating before the first IPO. What was the biggest challenge in getting everything ready for a brand new market?

[Shehzad]: CDH was incorporated in 2008 under the Rwandan Companies Act. The company started operations in November 2010 with the launch of the first Rwandan IPO. The company in its first days faced several challenges.

The biggest challenge was mobilizing new investors to invest in the first IPO. For many reasons, financial education was and is still very low, although major progress has been made for the past six years. People had to be educated on the pros and cons of capital market investments. The main issue here is that people should not believe that the capital market was an Eldorado. We had to teach people about pure speculation and long term investment.

Secondly, following the 2008 financial crisis, which was still very present in people’s mind, the capital market was imaged as too risky for individuals who have saved all their life. The Capital Market Authority had to intervene to help. We also organized workshops around the country to explain. This financial literacy program is still going on today with the help of the Central Bank.

CDH was a new company operating along with other regional and pan African brokers with 20-30 years existence. It was not possible to compete with them in terms of market knowledge and servicing institutional clients – even approaching the general public was very difficult for us. We waited for them to knock at our doors instead of going to meet with them. However, we took it as a learning period to understand how brokers trade and what make institutional investors run towards them. Five years down the line, after much effort, we can say that the local market is ours.

[IF]: The Rwandan stock market has been quiet since Bank of Kigali last IPO’d in 2011. However, we’ve recently seen a flurry of announcements about new IPOs. When can you tell us about the IPOs for Crystal Telecom/MTN Rwanda and I&M Bank, and when do you think they will happen?

[Shehzad]: Crystal Ventures, through its subsidiary Crystal Telecoms, are selling 20 % of its MTN stake to the general public. The IPO starts on 21stMay 2015 and will last three weeks. The Government of Rwanda is also offloading its 20 % stake in I&M Bank to the public. Several regional advisors tendered for this IPO. We expect this IPO to start at latest in August 2015.

These two IPOs will really boost capital market transactions in Rwanda. We did not have an IPO since 2011, when BK was listed. Another major impact of these two IPOs is that both offer services to the general public: MTN services are used by millions of Rwandans. They would be willing to buy shares in a solid, blue chip company that they know. I&M Bank is also well known. Another aspect of this IPO is that financial literacy is quite high in Rwanda now. People understand the mechanics of the capital markets and stock trading. These two IPOs’ would be easier to sell. We expect that more than 100,000 new investors will participate in these two IPOs, raising significantly the number of local and regional investors on the capital market.

[IF]: The Rwanda Stock Exchange has had very favourable tax treatment and fees for investors since the beginning, and the recent reduction in bond fees supports this. Will this beneficial treatment continue for the future?

[Shehzad]: This is very hard to answer. Low fees reduces market imperfections and make capital markets more investment friendly. But there are also other factors that affect an investor’s decision. Kenya has imposed capital gains taxes recently, and is planning to introduce VAT on capital markets transactions. This cannot be duplicated in Rwanda as the market is still young. With regional integration and capital market rules harmonization, we may expect standard fees and levies. I personally don’t think fees will be revised upwards.

[IF]: After great performance in the first few years after their IPOs, Bralirwa and BoK have been stagnant of late. What do you think of the market now?

[Shehzad]: This is quite normal as stocks mature and include all investors’ expectations. The market will be stable unless a panic event occurs.

[IF]: Final question: What is one thing that makes you optimistic about Rwanda’s future? And one thing that makes you pessimistic?

[Shehzad]: The country has strong political leadership and this transcends into a clear vision. However, we need to work on our institutional leadership.

[IF]: Thank you very much for your time!

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