* Rwanda bourse to offer trading of derivatives
* Parliament considering proposed investment code
* Govt sees inflation at under 5 pct at end 2014
By Duncan Miriri
KIGALI, May 21 (Reuters) - Rwanda’s finance minister said the country will soon allow derivatives trading on its stock exchange and a new investment code, which could offer tax breaks for foreign investors, has been sent to parliament.
The tiny African state has ambitions to become a regional financial hub and wants to develop its capital markets and attract fund management and technology firms, although its three-year-old stock exchange has just five listings so far.
Finance Minister Claver Gatete said the country had just passed a law allowing the trading of derivatives on the Rwanda Stock Exchange to give local and foreign investors a chance to hedge risk through futures and options.
“The capital markets authority is now working with investors to see how they can start because now the rules and regulations are in place,” he told reporters on the sidelines of the African Development Bank’s annual meeting, being held in Kigali.
The cabinet had also approved an investment code offering incentives to firms investing in Rwanda and the code was now being considered by parliament, the minister said.
He did not provide details of the incentives but a Rwanda Development Board official said in March that the investment code might offer reduced tax rates for investors in energy, transport and logistics, as well as to fund managers and export-oriented projects.
Gatete also said Rwanda planned to issue another dollar bond in future after its successful $400 million Eurobond last year.
“Definitely we will be in the market but we will let you know when we are ready,” he said.
Gatete said the International Finance Corporation, the World Bank’s private sector financing arm, had successfully issued a $22 million bond in the local franc currency last week, in a move aimed at deepening the local capital market.
The central bank forecast last month that Rwanda’s economy would grow by 6 percent this year, but Gatete said the first-quarter performance suggested growth would exceed 6 percent, helped by a strong agricultural sector.
“From the indications of the first quarter I think we are getting a bit better (than) what we hoped,” he said.
The east African nation saw growth slip to 4.6 percent last year, from 7.3 percent in 2012, after donors cut aid over Rwanda’s alleged involvement in a conflict in the neighbouring Democratic Republic of the Congo.
Donors have mostly resumed bilateral assistance and President Paul Kagame’s government has won praise for its economic reforms although his opponents and rights groups accuse him of trampling political and media freedoms, something the government denies.
“Inflation is 2.4 (percent) now. It has been in that range, it has not exceeded 5 percent. We are targeting not to exceed 5 percent by the end of this year,” Gatete said.
Revenue collection had fallen below target in line with the economic slowdown last year but Gatete said the government had enough resources to fund its programmes. (Editing by James Macharia and Susan Fenton)