Kenya fund managers face tough law in Rwanda

Kenyan firms keen on being licensed as fund managers in Rwanda will be required to set up offices in the country.

The condition is spelt out under laws gazetted in December 2011 which are meant to protect investors in collective investment schemes such as equity and other funds.

The law says that operators of an approved foreign collective investment scheme must have a physical presence in Rwanda.

“The scheme operator must have a known place of business in Rwanda where any person who has a complaint to make about the operation of the scheme can submit it,” says the clause on approved foreign investment schemes.

The Capital Markets Authority (CMA) Rwanda, however, said the laws were not yet operational since one more law was required and hence no foreign firm was operating any scheme.

“There is one more piece of legislation... on trust laws that we are waiting for,” said Mr Robert Mathu, the CMA Rwanda chief executive.

He said that the regulator was waiting for the State to gazette the laws before fund and investment managers can apply for licenses to handle money on behalf of clients.

Two other laws, one establishing the Workforce Development Authority (WDA) and another regulating collective investment schemes in Rwanda were passed late last year.

WDA is a body supposed to give Rwandese and residents technical skills needed to make them competitive in the finance industry job market.

The law regulating collective investment schemes is meant to protect investors by creating guidelines for fund and invest managers as well as an efficient mechanism for pooling and investing funds.

CMA will determine the minimum capital a licensee would require. Mr Mathu said that the laws paving the way for unit trusts, money market funds, and other collective investment schemes would be applied equally to all licensees.

This implies that Kenyan investment firms operating in Rwanda would neither be disadvantaged nor given special treatment.
So far, no firm has applied.

“There will be no restrictions whatsoever,” said Mr Mathu. The Rwandan market has attracted Kenyan entrepreneurs who have invested in initial public offers, encouraged by CMA.

The Rwanda government has lined up a series of IPOs under its privatisation programme, whetting local investors’ appetite and acting as an incentive for Kenyan firms to set up shop in the country.

Kenyan firms Dyer and Blair, Faida Investment Bank, and CFC Stanbic are active in Rwanda capital markets.