Rwanda Stock Exchange to introduce SME market segment
The Rwanda Stock Exchange is soon introducing Small and Medium Enterprises (SME) market segment commonly known as alternative investment market for SME’s
The SME market segment is a platform where SME’s will raise funds on the stock exchange. Unlike the Rwf500 million capital requirements for any company to register on the stock exchange, participants at the SME market segment will simply be required to disclose their prospectus.
This, according to the Ministry of Finance and Economic planning is in a bid to ease access to finance issues SMEs are usually faced with.
Several surveys conducted have concluded that access to finance is the major impediment faced by SME’s in their quest for growth. Yet these small and medium businesses constitute 90 percent of total businesses in the country and are the biggest employer.
With the legal framework under which the SME market segment will operate in place, the SME market segment hopes to attract small and medium businesses such as restaurants, cooperatives, distribution businesses, transport companies, hotels among others.
Through this arrangement SME’s will be able to offer corporate bonds and commercial papers. A corporate bond is a long term debt paper issued by companies as they seek to raise funds while a commercial paper is a short term debt instrument.
Currently Capital Market Authority is running a sensitization program to get SME’s to raise funds on the Rwanda stock exchange. This campaign aims to discourage individuality culture and promote disclosure.