FRANCIS GATARE: The Director General Of RIEPA speaks to Business Rwanda

On SME’s

Rwanda is known for attracting large investments but Small-Medium Enterprises (SME) make up the bulk of their investors, they bring vital skills and services that are lacking in the Rwandan economy. SME’s are pioneers who venture into virgin economies before larger investors enter the market, the proliferation of these small-medium businesses reflects the growth in the Rwandan economy and bodes well for the future as SME’s are growing into larger corporations. Dubai World recently invested US$230 million in a total package that will include; a golf course, luxury houses, the Akagera National Park, an eco-lodge in Nyungwe, a hotel in the Virunga mountains, among others and this will be a major boost to the tourism industry.

On the reforms Rwanda is undertaking to improve its position on the Doing Business Report Index

As Director General at RIEPA; Francis Gatare is proud of recent reforms implemented by the government; “Property tax is going to be removed, the government used to charge 6% as a way of having a stake in local businesses but that will be replaced by a single charge of Rwf 20,000 (US$36) and the mortgage fee will be waived. Institutions such as the Rwanda Revenue Authority and National Social Security Fund will work together to streamline their payment systems and focus on online payment to reduce bureaucracy.” These are examples of how the Rwandan government is striving to facilitate enterprise. He also mentioned the problems taxpayers used to face: “Before if you were paying Rwf 10 million in tax, you would have to queue and wait for the cashier to count it twice, now we have a payment center here and one can pay by cheque.”

On the recent opening of the stock market;

Gatare said it was going smoothly. “It is going well, we haven’t had any IPO’s (Initial Public Offer) yet but we have introduced bonds as a means of slowly introducing Rwandans to capital markets. We have had a lot of outside interest from Banks, investment funds, insurance companies and we want to introduce cross-registering for foreign firms to register here and Rwandan firms to register abroad.” Asked if he feared that outsiders would have a huge advantage over Rwandans, he argued, “We believe in the free movement of capital, and we operate a flexible policy.”

On Rwanda’s banking sector

Gatare commends the progress of the banking sector in Rwanda; “It is amazing; in six years, Rwanda’s banking and financial sector has grown with six major banks and financial institutions. Foreign companies have invested heavily in modernising both in structure and infrastructure using IT to transform their businesses.” The expansion of the banking sector bodes well for the growth of Rwanda as banking underpins all other sectors. Rwanda hopes to become the financial services hub of Eastern and Central Africa. “Bank de Kigali is very profitable and could go on the way it is but we need investment to improve it. Stanbic, Credit Suisse and Barclays are interested in buying it; they could bring new technology to make it world-class.”

On the attention Rwanda is getting among global leaders

The rapid development of Rwanda has led to global players taking notice; Tony Blair recently took on a role as an advisor to the Rwandan government. “That is a reflection on the stability of Rwanda and the forward-thinking leadership of President Paul Kagame. Tony Blair has tremendous faith in our President and his policies and will use his contacts in business and industry to network on behalf of Rwanda to attract investment.” Brand Rwanda is being created into a dynamic force on the global market and the East African investment conference is central to this.

The Kigali – Kampala Pipeline

One product of this approach is the newly commissioned pipeline from Kigali to Kampala. Gatare explained the situation: “As oil prices increase, we don’t know how high they will rise, so we have to stabilise supply. We will construct a pipeline and construct a base for strategic reserves where we can store up to 3 million cl. for local consumption; this will remove the speculative aspect in fuel supply. For example, in Uganda fuel prices went up 500% during the Kenya crisis, purely due to speculation.” These strategic reserves will help secure Rwanda’s energy needs and will end the absurd situation of importing fuel to export our goods and it is hoped that soon petroleum will be refined in Rwanda to further reduce costs.

THE POWER OF FIVE

Leveraging the East African market through trade and investment.

THE EAST AFRICAN INVESTMENT CONFERENCE

Kigali, Rwanda

26th – 28th June 2008

In 540 BC, Heraclitis, a Greek philosopher said, ‘nothing endures but change.’ As globalisation spreads its wings, nations are realising that they must bury social, cultural and geo-political disparities to create a universally acceptable environment that will reap tangible economic outcomes. It is becoming evident that regional integration shall shape the future of the world’s economies and the East African Community is no exception.

‘The reality of the situation is that we have merged our economies from various national ones to a single regional one’, Francis Gatare, Rwanda’s Investment and Export Agency head says. It is with this in mind that his organisation is involved in frenzied preparations for the upcoming East African Investment Conference set to take place in the Rwandan capital, Kigali, at the end of June 2008.

Rwanda, the region’s leading regional investment conference organizer, is hoping to serve as a pioneer by creating a platform for member states to reap the fruits of regional integration. The conference will serve as an opportunity to evaluate East Africa’s potential to serve as a commercial platform for servicing the continent. The forum will enable producers and industrialists to challenge government officials on regulatory issues and link them with investment bankers to stimulate further investments and expansion in the region.

Under the theme ‘Leveraging the East African market through Trade and Investment’, the conference targets participants from Rwanda, Uganda, Kenya, Tanzania and Burundi. Rwanda is working directly with the East African Business Council (EABC) and all regional investment agencies to ensure that the event is successful.

For Rwanda, there is a lot at stake. On the outset, a landlocked country with a population of under ten million does not offer much promise in terms of return on investment to a multi-million dollar investor hoping for quick returns. On further scrutiny, Rwanda’s location at the precise core of the African continent presents a strategic advantage. For Rwanda, successful regional integration with Uganda, Kenya, Burundi and Tanzania increases the investors’ target population tenfold from 9.7 million to 125 million. East Africa’s total GDP currently stands at US$ 104.2 billion, again ten times higher than Rwanda’s US$ 11.24 billion.

The stakes are high and something needs to be done; Francis Gatare suggests that integration is long overdue. ‘We have always been perceived to be one market, when an investor wants to invest in Rwanda, they are already considering the region,’ he argues.

East Africa was faced with a dilemma between December 2007 and February 2008 when Kenyan opposition and incumbent government entered a deadlock dispute over the country’s political leadership. The turmoil crossed the country’s borders when fuel prices sky- rocketed in Uganda and Rwanda and goods in transit to the two countries were blocked from crossing the Kenyan border.

It is obvious that what happens in Kenya will affect what happens in Rwanda and vice versa. A commonly sited example is the last Doing Business Index, where Rwanda was ranked poorly in the area of doing business across borders; as a result of regional issues “At this conference we are going to confront each other directly on policy issues” Mr. Gatare added.

The guest list of the conference delegates does not suggest otherwise, Amb. Juma Mwapachu, the EAC’s Secretary General and heads of state from Uganda, Rwanda, Burundi and Kenya will all be present. Seven hundred leading business executives from Rwanda, the region and the world are all invited to attend. Among them; Loyd Blankfein (Goldman Sachs), Frank Griffiths (FINA Group), Kithili Mbathi (Stanbic Bank), Patrice Motsepe (Africa Rainbow Mineral), Charles Mbogore (East African Business Council), Cyril Ramaphosa (MTN Group), John Milenge (Electrogaz), Patrick Bitature (Simba Telecom), Jan Mohammed (Serena Hotels) and James Mulwana (UMA).

THE GLOBAL RECESSION: Which one first the good news or the bad news?

The word ‘global recession’ has become the economic forecast of 2008. Certainly these words are true for the United States of America and the Euro zone as well as countries that have unwisely pegged their futures with these two largest global markets. Simply put a decline in a country’s gross domestic product [GDP} or negative real economic growth over a given period of time is a recession.

The current recession in the US and the EU, which has somehow become global, is caused by increased costs of oil, food, gold, inflation and a credit crunch caused by the implosion of a rather dubious form of mortgages called sub-prime lending.

The ‘developed’ world that happens to be our largest market is in recession but what does that mean for a country like Rwanda? The bad news first. Tourism might record a decline in visitors as their clients no longer have enough disposable income to take trips abroad. Similarly, demand for tea and coffee will drop and this may in turn drive prices for these agricultural products down. In this respect, tax revenues for 2008 will not be as high as previously hoped for.

However, if the taxman will be less than thrilled in 2008, consumers will be happier because consumer goods in the west will become cheaper to cater for reduced disposable incomes. Thus every consumable imported will be cheaper. That is, until the high petroleum costs kick in.

Another benefit of the recession is the resulting effect it has had on the US dollar which has been losing its strength due to domestic inflation. This means that the Rwandan Franc has been more or less stable for the last two years. This helps put a brake on inflation as the value remains constant. This means that the banks in Rwanda do not have to increase their interest rates in turn and produce a credit crunch of their own. It also translates into increased earnings for people with funds in treasury bills, savings accounts and fixed-deposit accounts.

The global recession is also an opportunity for the African continent to increase intra-continental trade. African countries benefiting from the high prices in oil and gold can use their increased revenues to develop their own markets and maybe even invest in the rest of the continent. It is also an impetus for Rwanda to make use of its methane gas in order to reduce energy costs and if it’s as vast as it is said to be, exportation of gas in its original form or as electricity would be a boost to the economy and reduce our demand on petroleum.

Taken as a whole, the recession of 2008 is an opportunity for Rwanda and the continent to, at least, beginning the journey to coming into their own as a viable global economic unit. It may require some adjustments, not all of them pleasant, which will ultimately pay off.

by Oscar Kabatende

Barclays eyes BK

The government of Rwanda is in the process of selling at least 70% of its shares in Banque de Kigali to Barclays Bank.

“We are now engaged with Barclays bank and we hope to conclude this exercise in June,” Rwanda’s Finance Minister, Mr. James Musoni said recently. According to the minister, negotiations are well into the due diligence stage.

The deal comes over two years after the government increased its shareholding in Banque de Kigali from 36.5% to almost 99.8% after repurchasing 50% shares owned by Belgolaise, a Belgian bank that pulled out in 2005.

Its gross income increased by 20.8% from Rwf9.9bn ($18.3million) in 2006 to Rwf12billion ($22.1million) in 2007. Banque de Kigali closed 2007 with an increase of 44% in net profit from Rwf2.9bn ($5.4million) in 2006 to Rwf4.2bn ($7.8million). Deposits increased by 47.6% from Rwf69billion ($126.8mn) in 2006 to Rwf101.8bn ($187.1mn). Total loans in the year in question increased by 28.6% from Rwf37.8bn ($69.5mn) in 2006 to Rwf48.6billion ($89.4mn).

The Barclays team was in Kigali in the beginning of the year to assess the banks position.

If the deal is successfully brokered Barclays PLC, the third largest bank in the United Kingdom PLC and among the ten largest banks in the world by market capitalization ($94.79 billion), would be the fifth foreign bank to enter the Rwandan banking sector. Other foreign banks currently active are Actis, Access, Ecobank and Fina bank.

FLYING HIGH: INYANGE’S CRUCIAL EXPANSION

One of Rwanda’s best known juice makers and mineral water bottlers, Inyange, is currently in the process of unveiling a new state of the art plant that will have the capacity to produce five times the current capacity for its juice and mineral water brands while giving Inyange the ability to add new products into its product line.

The new plant is nearing completion with the installation of machinery planned for completion in October. While the new plant is supposed to be commissioned in the final quarter of 2008, full production is expected in the first quarter of 2009. The new plant will have several production lines and will be able to mass produce new products that will be unveiled to coincide with its opening.

The mineral water and juice lines will have the ability to bottle the products at an impressive capacity of 13,000 bottles an hour. This will be the largest industrial capacity in Rwanda and will ultimately reduce the cost to the customer. The newly designed bottles will be recyclable along with being more stylish.

The Tetra Pak line (UHT- Ultra High Temperature) will produce juice in cartons that will compete with more established foreign brands such as Ceres, Splash and Kenylon. The wide product range in the juice category will include syrup, a ready to drink carton and a low-calorie product for the more health conscious. The capacity of this line is 5,000 packs an hour and about 80% of this output is geared towards the export market.

Since most of these new Tetra Pak products are intended for the export market the branding and product quality are high standard and comparable to any imported brand. There are also plans to export 200 liter drums of concentrated juice to other African and Western countries.

Mineral water from the mountains of Byumba will continue to be bottled at the plant but there are also plans to produce table-water.

The other part of the plant will be dedicated to dairy products and there is a new product range as well. A UHT line to produce long-life milk in Tetra Pak cartons will be installed.

In a country like Rwanda UHT milk is particularly popular because its ability to stay fresh without refrigeration. This UHT milk line will be able produce up to 5,000 packs an hour and will cater for the needs of the local and export market. Three types of milk will be produced to cater for varied tastes; a skimmed (no fat), semi-skimmed (low-fat) and whole milk.

Inyange will continue to produce pasteurized milk but in a new package which will be opaque to protect the milk from damaging ultraviolet rays. Yogurt will also be produced in 250ML and 120ML containers. Yogurt is also going to be available in various flavors such as strawberry, apricot, vanilla and pineapple. Ice-cream, in several flavors, will be produced in the plant as well and will no doubt be a popular addition to the products on sale. Cream and butter will also round off Inyange’s product range.

Inyange is looking forward to the challenge of running this high-tech plant and is doing all that is necessary to achieve this.

Inyange is negotiating with local suppliers to ensure the raw materials of milk and fruit can be provided and it is working with local cooperatives to ensure supply. Inyange are now seeking to expand the skills base of its employee’s because the new plant will require a high level of expertise; it fully intends to employ locals and train its staff highly.

The new plant will employ 120 people but will also employ hundreds more indirectly as suppliers, logistical support and providers of other services. The current Inyange site will remain in use as a depot and is undergoing renovation.

BILLS & BALLS: HAS THE GAME LOST ITS SOUL?

One of the largest and richest football leagues in the world, the English Premier League’s, recent proposal to play a 39th game outside the country quite predictably led to a huge uproar. The consensus among fans and the media alike was that the game was selling its soul to the lure of more and more cash and the entire enterprise would end badly for everyone except the ‘moneymen.’ The proposal was withdrawn but it revealed people’s views about the game.

This debate about the intersection of the ‘soul’ of the game and the money pouring into football has fascinated for a long time. The view seems to be that the more money is poured into the game, the more immoral and empty the whole spectacle becomes. In the long run, the game will lose its ‘soul’ and the fans will turn away from it in larger and larger numbers.

Many fans seem to wish to return to the ‘good old days’ even though many of them have not actually experienced this golden age and presumably have never seen some of the brutality that was sanctioned on the pitch in that bygone age .

I’ll play the devil’s advocate and take an unpopular position on the key arguments; is money a corrupting influence on football? And just what is this soul to begin with?

You would be hard pressed to find two people who have an identical idea of what the ‘soul’ of the game is. For many it is a hazy concept in which football is pictured as a kind of utopia. In that sense we see football’s ‘soul’ as virtually pure, just twenty-two men on the pitch running after a ball without the politics and intrigues that surround the game. Now that football has become a business, many fans see it as tainted. They feel that they cannot identify with the players anymore because they earn too much money and live a life of excess.

I find myself reluctant to make similar judgments. As I mentioned earlier, we all have different ideas of just what the soul of football is, so why do we talk about it as if it’s a completely objective phenomenon?

And even if we do agree on some hazy idea of what this is, why do we instinctively believe money is going to have such an adverse effect on this ideal?

My take on the subject is that in the context of this discussion, it doesn’t really matter that football has become virtually a business, the magic will always be there. It doesn’t matter if players are receiving such eye-watering salaries. We don’t love football because the players earn the wages we do; we love it because it is such a thrilling game and because it arouses a passion within us. Some fans get turned off because many players lead a life of such excess, but they are only human and in many ways footballers become punching bags for our discomfort with how consumerist our society has become. My point is that at a basic level the flow of cash into the game will not necessarily taint football in the way many are suggesting.

There are of course many valid concerns about the money pouring into football and one I worry about is the increasing gap between the wealthiest clubs and the rest. The wealthiest clubs win more trophies, attract the best players, create more fans all over the world and as a result of all this, make even more money. The smaller clubs cannot keep up and this could indeed pose a problem once the richer clubs become virtually bigger than the League itself and create a permanent monopoly on success. However in this case, the concern would be the inequality that money is creating in football. My opinion is that its very presence is not particularly handful and our attempts to keep football innocent and virginal are doomed.

I grant you that there are many aspects of the game that should rightly make many fans uncomfortable. However, I feel that as long as we don’t get unduly cynical or expect football to serve as a moral compass for us, then it will always be the beautiful game. Indeed when one thinks of the unifying power the football has today, from Tokyo to Alaska, it would take a very disparaging person not to be moved by this.

by Minega Isibo

KIGALI CITY- ONE HUNDRED YEARS OF GROWTH

Kigali, population one million people, capital and gateway to the Republic of Rwanda, is a city on the move. From it’s founding as a sleepy colonial outpost in 1907, with few links to the outside world, to its metamorphosis into the city that is the economic, cultural, and transport hub of a vibrant Rwanda; Kigali is a city that has famously kept its residents on their collective toes.  The residents of this wonderfully alive city are celebrating a century of its existence and Business Rwanda is proud to be a part of this celebration.  Kigali isn’t a city that’s only going through the motions. It has prevailed against the odds and has grown into a modern metropolis; the heart of the emerging Rwandan economy and the pride of every Rwandan.  Kigali City, founded by Dr. Richard Kandt, representative of the “Deutsch Ostafrika” in Rwanda, in 1907, was at first just Dr. Kandt’s residence and a few commercial houses on the lace of hills around present day Nyarugenge.  Then, in 1921, Kigali became a Belgian colonial administrative centre. The capital of pre-colonial Rwanda was the seat of the Mwami in Nyanza, while the capital of colonial Rwanda was in Butare, then known as Astrida. Butare was initially the leading contender for capital of the newly independent Rwanda, but Kigali was chosen to be the capital in 1962 because of its central location in the heart of the nation.  

As the seat of government of the newly independent Rwanda, Kigali saw incredible growth. From being a miniscule eight hectares in 1907, and with a population of three hundred and fifty seven people, Kigali has grown to be an impressive seven hundred and thirty square kilometers with a population of one million people. Kigali City has had its ups and downs as a capital, following the turbulent times of post-independence Rwanda. It reached its nadir, as did the whole nation, in 1994, as its boroughs rang with gunfire and the stench of death hung in the air like a blanket.  

But no more; for as the country recovered, so did the capital. The scars of that period are fast healing and the city is now being given a clean bill of health by its residents and visitors. It went from being a sleepy city at the heart of a regional backwater to being the exciting centre of an emerging Information Technology hub.  From being a city with small, and slightly dilapidated structures, it went to being a city of towers and skyscrapers.  From being a boring place with no nightlife to speak of, Kigali is now a night owls’ favorite haunt.    

Kigali, which has grown more than six times in square area and trebled in population since1996, resembles a quickly changing mosaic. The tallest building in town back in 1994 was a tie between ‘kwa –Rabangura’, as the tall building right next to the now defunct central taxi park was known as locally, and CND (now the Parliament buildings). Now, Centenary House and the Ecobank Headquarters tower over Kigali’s city centre. 

Anyone coming back to Kigali after more than five years away will be amazed at the changes. From 2002 to date, Kigali has seen the building of the first five-star hotel in Rwanda, the Kigali Serena, the Union Trade Center-a huge shopping mall right in the centre of town, housing projects like the Gacuriro estates and many office buildings.  Kigali resembles one big construction site. 

Kigali is a city of business. If you have doubts, then travel along the streets and watch residents as they go about their business. The hustle and bustle on the streets of Kigali is reminiscent of the forward-looking city it is and not the sleepy hollow it once was. Kigali is the headquarters and home of all the major economic players on the local scene; from MTN Rwanda, which is housed in the suitably named MTN Center in Nyarutarama, to Banque du Kigali- which has just moved into its opulent new headquarters. In the pipeline is an international conference center that will rival any in the region, a permanent Exposition Center and many more facilities that are pro-business. Rwanda is open for business and Kigali is its gateway.  

Kigali is a city of leisure. Have a meal at one of the numerous cosmopolitan restaurants- with menus as diverse as Mexican and Senegalese.  Sip refreshments in one of the many cafés and bistros in town.  Enjoy the nightlife in the many nightclubs that cater to various tastes in music. Where once there was nothing to do as soon as the sun set, Kigali is now a 24-hour city. Unlike many big cities of the world, Kigali is famous for its security. Crime rates are negligible no matter where you are, and the only unpleasantness that one might encounter on an evening stroll may be a street child asking for spare change. Muggers and other criminals of their ilk are a rare breed in Kigali.  

One of the slogans that Kigali has made its own is “Clean and Green’. The typical image of an African city, with the omnipresent Marabou Stork perched atop piles of rotting waste right in the center of town, uncontrolled traffic jams, chaotic public transport systems and the smell of general decay, is an image that Kigali city  has fought a winning battle against. Recently the International Telecommunications Union’s secretary general, Hamadoun Toure pronounced Kigali the cleanest city he has visited. Essential services work. A steady supply of piped water and electricity is something that many of Kigali residents take for granted. Roads aren’t full of potholes. 

However, it isn’t all rainbows and sunshine. True, Kigali is slowly coming into its own as the modern capital of the ambitious country that Rwanda is. Nevertheless, in the course of rousing itself to take its place in the sun, the city must rise to many challenges in its path.  

Some of the biggest challenges that city planners have to deal with are the lack of a proper citywide drainage and sewage system, the lack of sufficient landfill space, the poorly planned housing, the lack of green spaces like parks and the deficiencies in coverage of essential services in certain parts of the city. City authorities are not oblivious to these challenges. According to the Kigali City Councils’ Director in the Department of Inspection, Mr. Reuben Ahimbisibwe, in an interview with Business Rwanda, the city authorities have put in place a 50 year Master Plan to find solutions to the needs of the growing city. This Master Plan will include green zones, demarcated roads and sufficient street lighting.  

When quizzed about the urgent need of a citywide sewage and drainage system Mr. Ahimbisibwe spoke of a Sanitation Master Plan that will be completed this year.  This sanitation master plan will then guide the City Council. However, until the introduction of a city-wide sewage system, the City Council has made it compulsory for anyone constructing a large building to include an in-house sewage treatment plant. City Council has, in order to fight against the lack of affordable housing for low and middle-income earners that gave rise to small, dinghy and unplanned-for housing, started constructing what they call the ‘Batsinda Project’, 250 well-built and affordable houses for low income earners in lower Kiyovu. These houses will eventually number one thousand. All in all, Kigali City Council is, in Mr. Ahimbisibwe’s words, making sure “we don’t repeat what we inherited”.   

These various master plans are a positive step.   However, if most of these problems that Kigali faces aren’t solved, the progress that Kigali has registered in the last century will be for naught.  For a city that doesn’t provide a positive environment for both the business and pleasure of its residents and visitors is one that will stagnate and eventually die.  

If Mr. Richard Kandt somehow came back to life and took a look at the new Kigali he surely wouldn’t believe his eyes. When Business Rwanda surveys the progress made since 1994, we know that it can only get better. HAPPY 100TH BIRTHDAY KIGALI! MAY YOU CONTINUE TO RISE AND SHINE!