Schellhase John
John Schellhase
Associate Director, Center for Financial Markets 
Africa and Capital Markets and Emerging and Frontier Markets and Europe and Finance and Global Economy and Public Policy and Regional Economics and Sustainable Development
John Schellhase is an associate director at the Milken Institute Center for Financial Markets. His work at the Institute is largely centered in advisory services and partnerships focused on deepening and strengthening capital markets in developing countries, and he also contributes to research on these topics.
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Capital-Market Development in Rwanda: Two Milken Institute Papers Detail the Challenges

By: John Schellhase
December 22, 2015

The Institute’s “Survey Brief: Rwandan Businesses Share Their Priorities for Capital-Market Development” is the result of a research partnership with the Capital Market Authority. The survey, commissioned by the CMA, asked members of the Rwandan Private Sector Federation  about the challenges they encounter in their efforts to raise funds. Among the findings:

  • Only 22 percent of respondents report being able to raise the funding they need for their businesses
  • Insufficient collateral is the largest obstacle, cited by 51 percent of the companies that were unsuccessful raising funds
  • A large majority—74 percent of surveyed companies—wants the government to prioritize developing the public equity markets

The survey results also raised important policy and research questions for Rwanda, which are underscored in the report. For example, the survey highlights the need to determine feasible strategies for catalyzing further venture capital and private equity investment. Also, the responses lead to the question: What is the right approach to accelerating financial market training for business leaders so they can better assess the options available to them?

The other report is titled “Capital Markets in Rwanda: Assessment and Aspirations.” This paper—which presents essential context and statistics on the Rwandan and East African business environment, banking sector, the growth of institutional investors, the status of stock and bond markets, and developments in the effort to integrate East African markets—was prepared to inform a three-day roundtable on capital market development held in October in Rubavu, Rwanda. This high-level roundtable brought together senior Rwandan policymakers, leaders of the Rwandan financial sector, international investors, scholars and development experts to discuss a range of issues in capital market development.

As the report shows, Rwanda has achieved remarkable progress over the past two decades. In purchasing-power terms, per-capita GDP has tripled in 20 years and the economy has grown at nearly 8 percent annually since 2000. The business environment has also improved dramatically. Rwanda has moved up from 150th place in 2008 on the World Bank’s Doing Business index to 46th in 2014. This past success has motivated government initiatives to strengthen and deepen the country’s financial markets to lock in recent gains and lay the foundation for future growth.

Among these initiatives is the important process of drafting a 10-year Capital Market Master Plan, which was launched at the October roundtable. As a sign of how seriously the Rwandan government takes this process, both the central bank governor and the minister of finance attended multiple sessions. As central bank Gov. John Rwangombwa said during the roundtable, “I want to once again assure the Capital Market Authority, and the other key players, that as the central bank we are a key partner, and we are committed to growing together. We are waiting to benefit from, and to contribute to, the development of capital markets.”

Amb. Claver Gatete, the minister of finance and economic planning of Rwanda, had a similar message to roundtable participants. “For us to be able to grow,” he said, “we want a proper capital market that is well integrated in the region and globally. We want this capital market to be able to support our own private sector, our own banking sector, the SMEs, the big companies, and to also help the population at large, who have had no viable alternatives in terms of savings.”

The roundtable was the start of the drafting process for the Capital Market Master Plan. The work is ongoing, led by Staci Warden, who is executive director of the Milken Institute Center for Financial Markets in Washington, D.C., and also serves as chair of the CMA board. The Institute remains closely involved as a resource for the CMA. Over the next several months, the CMA will take the concepts explored at the roundtable, return to stakeholders for further consultations, and develop a comprehensive strategy for strengthening and deepening Rwanda’s markets over the next decade. 


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