Archive for the 'Privatization' Category

Rwanda starts pre-offer campaign for BRALIRWA

Rwanda’s Capital Markets Advisory Council ( has launched a 2 weeks’ pre-offer campaign across the country to sensitize people ready for the initial public offer (IPO) of BRALIRWA. The Government is selling its 30% shareholding in Rwanda’s main beer and soft drinks manufacturer and distributor. Heineken previously bought 70%. from the Government and remains the major shareholder.
According to a report in the New Times newspaper (, no date has yet been set for the IPO and discussions continue, but it is still expected this year.
The paper quotes Celeste Rwabukumba CMAC Operations Manager:”This is the first phase of the campaign and we are targeting opinion leaders, business people as the IPO take place soon.” He said that the campaign would inform the public about the benefit of buying the Government shares which are intended to benefit them.
The pre-offer campaign started in the Northern Province and will then move to other parts of the country. It will include media such as radio, television and newspapers.
After this IPO, Government is expected to sell its shares in other major companies, including MTN Rwanda and Sonarwa, an insurance company.
CMAC is the overseer and regulator of Rwanda’s stock markets. It also charged with contributing to Rwanda becoming a competitive financial centre in the region.

Rwanda makes $130 mln from privatisations

The sale of 56 enterprises has made at least Rwf 75 billion (US$131 million) for the Government of Rwanda. According to a report in the New Times newspaper ( Minister for Finance and Economic Planning, John Rwangombwa, told members of the Senate in mid-March that initially the plan was to sell 94 of its companies.
He is reported as saying: “10 of them were later scrapped off the list, seven liquidated and 56 sold off. Right now, 19 institutions are up for sale.”
He said the proceeds of the sales are being used in development projects, including as part of the national budget. The sale of Terracom, currently renamed Rwandatel ( made possible investment in fibre optics.
Minister Rwangombwa said that the Government had removed some companies from the sale list because it had realised that some were “so bankrupt” that no-one would buy them and so they were liquidated, and Government repossessed others because they posed environmental hazards.
He added that Government had set up a department in the Rwanda Development Board to monitor and evaluate the performance of privatised companies, compared to previously when it only focused on selling, without follow up. He said Government had taken back some companies which were allegedly mismanaged: “You can tell from the companies we have repossessed and resold to other investors. They are doing so well, a good example being Rwandatel.”

Results of Uganda’s NIC privatisation share offer

Uganda’s National Insurance Corporation (, was oversubscribed after Uganda Shilling (UGX) 9.5 billion (US$4.6 million came in applications when Government offered its remaining 40% stake in the company in an 161,552,000 shares totalling UGX 7.2 bln.
Shares are set to trade on the Uganda Securities Exchange ( according to a report on Reuters newsagency, quoting Jim Mugunga, communications manager for the Uganda’s Privatisation Unit.
It will be a welcome boost to the USE, which had seen foreign investors leaving in the global crisis and share prices falling. It is reportedly the first listing since 2006.
Retail investors were allotted 90% of the shares, which had been sold at “a subsidised affordable price” of UGX 45 ($0.02) each, according to the insurer’s website. per share. Another 4% of the issued shares has been reserved for the permanent employees of NIC at the IPO price.. In 2005, the Government had sold 60% of the company to Nigeria’s In June 2005 the Government had sold 60% of the shareholding in NIC to Industrial and General Insurance Company Limited (lGI) of Nigeria (,
Reuters quotes an analyst at African Alliance brokerage (, Keneth Kitariko, saying he expects NIC’s share price will rise modestly in the secondary market.
“We do expect some correlation between the level of oversubscription and performance in secondary market, so mostly we’ll see a share price rise but the numbers will be conservative,” he said.
Reuters says discovery of large crude oil deposits turned a spotlight on East Africa’s third-largest economy, where growth is expected to be 5% in fiscal 2009-2010 and then climb to 7% the next year.
According to the NIC website: “The Government of Uganda has to-date privatized 6 of Uganda’s successful public companies by way of IPOs. The companies namely are; – Uganda Clays Limited (UCL), British American Tobacco Uganda Limited (BATU), Bank of Baroda (U) Limited (BOBU), DFCU Limited, New Vision Printing and Publishing Company Limited (NVL), and Stanbic Bank Uganda Limited (SBU).”

Kenya: First steps for privatization of Consolidated Bank

The Kenyan Government’s Privatisation Commission is taking the next step towards selling a portion of Consolidated Bank of Kenya Ltd ( by appointing PricewaterhouseCoopers as transaction advisers, according to the Daily Nation newspaper ( It is on the list of 23 State-owned enterprises to be privatized, including National Bank of Kenya and Kenya Wine Agencies, 5 sugar factories and 11 hotels.
David Wachira, the bank’s Managing Director said the Government aims to raise KSh5 billion (US$65 million) by selling a portion of the shares to the public. Due diligence is to start in April and the share sale could come in the next two years.
The bank mainly finances small and medium-sized enterprises. It has 11 branches, mainly in Eastern, Central, Nairobi and Coast regions and aims to use some of the funds raised through privatization to expand to fast-growing areas such as Kisumu, Nakuru and Eldoret towns.
According to its website, the bank is 100% Government-owned with the majority shareholding (51%) held by the Treasury through the Deposit Protection Fund. The remaining shareholding is spread over 25 parastatals and other government related organizations.
The news report quotes Mr Wachira: “The bank has a risk-based pricing on its loans, which determines whether the lending rate is above or below 13%.”
Although the privatization exercise has been going slowly, Solomon Kitungu, of the Privatisation Commission, says they have submitted proposals on how to proceed to the Treasury late in 2009 and are working on final details of remaining companies before presenting details to the Treasury.
He is reported as saying: “We are on course with the plans, it is only that there is a lot of work to be done to ensure transparency and accountability. We do not want to rush it since we would not be creating any value for Kenyans.”
The budget for the 2009/2010 fiscal year does not depend on proceeds from privatisation sales, unlike the budget for the previous year, says the paper.

Big plans for Rwanda capital market, including first local public offer

The Rwandan capital markets are set for growth in 2010, including plans for a first local initial public offer (IPO) and developing the Rwandan stock exchange. In an interview with East Africa Business Week (, the Executive Director of the Rwanda Capital Market Advisory Council ( Mr. Robert Mathu outlined what to expect.
The first public offering of shares could come “very soon”, he said: “We are working on BRALIRWA and it will come very soon because it is a big company and it will meet all requirements. However, with small companies, I am looking at two years.” Brasseries et Limonaderies du Rwanda ( is the only brewer and estimated to have 95% market share, as well as the Coca Cola franchise. It is owned 70% by international Heineken Group and 30% by the Rwandan Government. According to previous reports, the Government wants to sell 25% to the public and 5% to Heineken, but was examining applications to be the transaction adviser and sponsoring broker.
Other future transactions could include Government selling shares in cellphone company MTN Rwanda ( and insurance company Sonarwa (, which is estimated by Government to have 75% of all insurance premiums.
The Rwandan Government has also said that it wants to sell off its shares in other profitable firms but Mr Mathu says these companies are not in a hurry to go public: “Many of them may not have all the requirements because they have not bothered. They have had no reason in the past to try to meet the requirements. For example, one of the basic requirements is that a company must provide audited financial statements. In Rwanda, companies used to prepare accounts only to convince the taxman that they are fine. However, this is not enough for us; we have to see what accounting system they are using, the quality of accountancy and their corporate social responsibility.
Rwanda is framing the capital market through 3 pieces of legislation: 1) The law establishing the future Capital Market Authority; 2) A law regulating capital markets; and 3) A law regulating the Collective Investment Schemes (CIS). The market is waiting for a law to split the Rwanda Stock Exchange from CMAC, which established the Rwandan Over-The-Counter market 2 years ago and will continue to be involved, but would also seek to recruit energetic people to develop and run the future RSE.
Mr Mathu says that collective investment schemes (normally pension funds, insurance funds and collective savings plans such as mutual funds and unit trusts) as critical to market development: “CIS contribute a very significant proportion in the development and deepening of the capital market because without a collective investment scheme every investor would invest directly in the market. We needed the law to make sure that investment managers handling the money has the right qualification and that they have to disclose their investment strategies and policies to the public.”
He adds that Rwanda has benefited from membership of the East Africa Securities Regulatory Association (EASRA) and East Africa Stock Exchanges Association (EASEA). It is part of plans to develop an integrated East African capital market and also part of an agreement with the International Finance Corporation to develop this. Mr Mathu said the dual listing of Kenya Commercial Bank shares is a learning opportunity: “KCB cross listing has helped us to assess our system in terms of being able to serve investors by accessing and buying shares. Therefore, it has given us a lesson, we are working on it, and very soon, you will see us conducting our equities business more effectively.” Eventually Rwanda will introduce electronic trading in securities, which is the route for integration with the regional securities market.

Privatization of Nairobi Stock Exchange

Kenya is considering speeding up plans to privatize the Nairobi Stock Exchange (, the biggest market in East Africa. The aim is initially that stockbrokers would acquire the large majority of the shares.

The NSE is already relatively advanced, with an Automated Trading System that also handles bonds. It is linked to the central depositories of the Central Depository and Settlement Corporation (CDSC) and the Central Bank of Kenya (CBK), which could lead to automated trading of treasury bills and other debt instruments.

Kenya’s Finance Permanent Secretary Joseph Kinyua was reported in local media recently as saying privatization could come earlier than expected as the Government moves to improve the country’s capital markets. First step would be to turn the stock exchange into a company via demutualization, separating its ownership from management to foster transparency.

Previously investor confidence had been hit by collapse of a number of some stockbroker firms, but regulators and others have since been taking some action.