Wicked High Returns
As I dip the tip of my toes in the investment banking career, I have been extremely privileged to intern with BK Capital, a subsidiary of the Bank of Kigali Group Plc. On the first day, one of the teammates gave me a rundown of BK Capital’s products. Later, he also mentioned that BK Capital owns a savings account in different banks including Bank of Kigali, “we had to; the return on savings is 8% around here!” he added. I was in awe the whole time. In the West, the amount of savings account has reduced due to meager returns (usually to 1%-2%). My supervisor added that there are much more lucrative investment opportunities in Rwanda or East Africa compared to such generous profits on savings. Folks usually prefer buying a land or property which they will later flip for a handsome return. That partly explained the reason why savings accounts are equally unattractive in East Africa as well as in the West.
The other shocking reality that I was able to notice on the first day of this 10-week internship is that there is a need for education on capital markets. Many clients who walked in had no idea of what a stock split is. They were surprised but also confused by the mere fact that the shares of a local brewery (BRALIRWA [BLR: Rwf 147-155]) purchased in 2010 have doubled in amount but halved in value. Some of the investors have no clue of where to collect their dividends cheques, later alone, understand the difference between checking and investment accounts or stock splits. One encouraging development is the increased need and thirst to be involved in the capital markets. Folks in Rwanda are showing a will to bring their funds and savings into play, helping the local economy in the process.