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.


Interview with Robert Mathu (CEO Rwanda Stock Exchange)

The capital market is the market for securities, where companies and the government can raise funds for the long-term. The capital market includes the stock market and the bond market. Financial regulators oversee the capital markets in their designated countries to ensure that investors are protected against fraud. The capital markets consist of the primary market, where new issues are distributed to investors, and the secondary market, where existing securities are traded. A stock exchange is a corporation which provides facilities for stock brokers and traders to trade company stocks and other securities. Stock exchanges provide facilities for the issue and redemption of securities as well as other financial instruments and capital events including the payment of income and dividends. 

Business Rwanda spoke to Robert Mathu and Pierre Celestin Rwabukumba who are here to introduce the Stock Exchange to Rwanda. 

Business Rwanda: Exactly what role are you going to play in the growth of Rwanda’s economy?

I am here to set up the Rwanda capital market. Capital markets provide an ideal platform for transparency in transferring management from the private to the public sector by floating shares to the general public and offering the common man an opportunity to buy ownership into those companies, as opposed to going through the long and tedious tendering process. 

Business Rwanda:  How will a capital market work in Rwanda?

In any economy we have the money market and the capital market. The money market is for short term funds and is dominated by banks, commercial banks and microfinance institutions. They receive savings and offer products like fixed deposit and current accounts.  However, we constantly go back for this money so the bank cannot use it to lend to a project with a long gestation period.  

Citing an example, if an investor wanted to venture in long term projects such as coffee, tea or cement, the minimum gestation period is about three years.  Going for a bank loan would be costly for the bank and the company. This is where capital markets come in. All the company has to do is sell shares to the public. Money obtained will be invested in the long term project and the long run returns will benefit the shareholders by increasing the value of their shares and paying dividends. 

As an investor, you have the option to sell your shares and get your money back. All this happens in an organized ‘capital market’. Essentially, a capital market is a market for long term capital.

Business Rwanda:  Could you explain the structure of a capital market?

All economies fundamentally require government planning authorities for finance, banking, insurance and retirement. Of equal importance is the capital markets authority, which, however, does not have to be under the government. Such is the global trend; the New York, London and Johannesburg Stock Exchanges were all started by private entities. In Africa, the World Bank has influenced financial reforms to ignite capital markets through legislation to provide security for the investors.  

In Rwanda we are taking a double edged approach by working with the government as the main sponsor and our private agency as a guide that puts together the infrastructure of the capital market. The agency already has a secretariat and a board in place with members appointed by the Minister of Finance. I am heading the secretariat.

Business Rwanda:  What are the direct benefits of a capital market to national development?

The benefits are mainly Long term. Capital Markets will create wealth and employment by mobilizing funds within the economy and injecting them into large projects. The process will also encourage thrift savings as the value of shares go up, thereby creating wealth for shareholders. Google initially sold their shares at US$100 back in 2004 and right now that share is over $730, which means anybody who bought a significant amount of those shares at the initial price got wealthy. 

In any economy, if you don’t have savings you cannot invest, because there are only two primary sources of funding in a business; savings or loans. In aggregate economics savings are important, as the performance of most economies is judged by the level of savings.

Business Rwanda:  How would one predict the direction of the price of a share on the stock market?

Speculators understand the market and help those who don’t to predict the trends. Like any business, there is always risk, but there are ways of guarding against a volatile market. When a company is first listed on the stock market, the price of a share of its stock is determined by its performance. Once a company sells shares to the public and is quoted on the capital market, the company signs an undertaking stating that whenever anything material happens in their business or they have audited their accounts, they must send that information to the market, and this is called fundamental information. This ensures that when people are making an investment decision, they are basing it on information that is available publicly.  

For example, say a share was selling at FRW 100, and we just received information today that the turnover of that company has gone up by 20% and profitability has gone up by 50%.  Then you will be ready to pay more for that company’s shares. That is how the price goes up.  However if the news is negative, the market price will go down. The stock exchange cannot determine the direction of the price.  We are just a platform for issuers of shares and investors to come and trade.  

Business Rwanda:  It has been established that Africa offers the highest return on investment in the world. Do you expect the capital markets here in Rwanda to follow this trend?

Africa is a growth market.  For example it is good business to have shares in a company such as CIMERWA because everybody is building with cement. Due to the lack of a capital market, we are not able to participate in such companies.  But this initiative is going to give us that opportunity.  As long as African economies continue to perform the way they are performing we are going to see good returns. Of course the world economy has been growing at a high rate, so there are more funds available for investment.

Business Rwanda:  In your experience, do you find that only the elite invest in the stock market?

You would be surprised.  When it comes to investing, beyond the sophistication of the type of investment you are investing in, it’s important to keep people aware. The best awareness that you can give people is that companies that come over make money, as you’ll not need to educate a potential investor. Just the news that people are making money somewhere will be enough incentive for every Rwandan to participate. The importance of creating awareness is that it will enable them to understand what they are getting into.

Business RwandaWill any company be able to list on the stock exchange?

Only profitable companies will qualify to come to the market. You could be looking for money but it is not money you are lacking.  You could be lacking good management or markets, or business acumen. So, to be in the capital market you have to have your house in order. We will have rules stipulating what kind of management systems need to be in place before being listed and the minimum capital requirement. We are also going to have trained and licensed stock brokers.

Business Rwanda:  Investor confidence has a lot to do with perception of the country.   Will Rwanda’s international image attract investors?

The perception of Rwanda is extremely good compared to many other African countries because there is clear political good will in terms of supporting development.  Rwanda has good political systems, given where you’ve come from and where you are now.  Everybody admires Rwanda.  

The most important thing is that there is governance in this country.  There is little corruption, and corruption is what scares investors away.  I mean, Rwanda is very open, and more than that, the government of Rwanda has already gone out to the world to promote itself and invite investors to come see for themselves. The perception of Rwanda is very good and it is going to influence the emergence of our capital market. 

Q & A with Vincent Karega

The minister of Commerce Tourism and Cooperatives, The Honorable Vincent Karega found a minute to share with Business Rwanda at the recently held Bird watching ceremony in Akagera to examine the upcoming opportunities in the tourism sector. 

What were your impressions on bird watching? 

It is very important.  It is a new product in the tourism family. Thinking outside of the box and diversification of our economy is key and critical for the things we want to achieve.  

You mentioned thinking outside of the box. Apart from innovations like bird watching by ORTPN, are you aware of any new packages? 

Thinking outside of the box is doing things differently.  It is searching around, finding ways and solutions to the problems that we have because we believe that nature and the culture have a lot of opportunities that we are not tapping into, and that also means that the way things have been done traditionally by our ancestors and colonials are changed to the current and dynamic way by embracing the global and local opportunities and linking them and turning into them economic realities. 

Do you have any new projects in the pipeline? 

We are thinking of revamping the cultural tourism as well as the hospitality capacity and much more. The Akagera Game Lodge is slated for renovation.  We’ve got interest from strong investors who are well known worldwide.  In this case, it’s Dubai World. Their technical team is currently in the country and their work is ongoing. This will not be privatization but a joint management venture between ORTPN and Dubai World. It means putting together a company that will plan and manage the park in a manner that attracts high end tourists. That means people with wealth who want a special place.  

Interview with Mrs. Rosette Rugamba

Business Rwanda spoke to Mrs. Rosette Rugamba Director General of ORTPN found a minute to share with Business Rwanda at the recently held Bird watching ceremony in Akagera to examine the upcoming opportunities in the tourism sector.

Why chosen Bird watching?

Rwanda is home to over six hundred-fifty types of birds in Nyungwe and five hundred twenty-five types in Akagera. Out of those, forty-four are endemic only to our country. In August we were in London to launch Rwanda as a birding destination, and realized that we have a huge potential and the capacity to compete with the rest of the world.

While some tourists will come to Rwanda specifically to watch birds, others will extend their stay in Rwanda by engaging in the same activity. Akagera and Nyungwe are now a single bird watching circuit as we had with the primates, and the lake circuit.

Why did you take too long to a launch this activity?

Launching Bird Watching required preparation such as staff training, purchasing equipment and raising awareness. However, it comes at a timely moment in line with our strategy. We targeted seventy thousand visitors and the generation of one hundred million dollars by 2010. The only way we are going to do this is through diversification. Of course we had to start with our main product which is the primate and then we had game drives in Akagera; and now Bird watching.

Aside from bird watching, what other ideas are you looking at to promote tourism?

Well, before the birding we had the golden monkey, which actually prolonged the tourist’s stay in Rwanda. We have introduced mountain climbing, which has created the same effect. Today it is bird watching, and soon we will invite the public for the launch of cave exploration. All these are specialty markets which we have ventured into because they have dedicated tourists and a very affluent clientele.

What else is special about the Akagera Game Park that the world does not know?

We are very privileged to have a park like this one. Even Masai Mara and the Kruger national parks don’t have a landscape like this. We have lakes and hills that they don’t. They are flat. All we are doing here is taking advantage of these unique selling points and positioning ourselves as a unique destination.

We understand that Akagera has been privatized. Tell us more about this.

We have entered a joint venture with a group of tourism investors, Dubai World, with support from the Rwanda Investment and Export Promotion Authority (RIEPA). Minister Karega and the investment group have signed a Memorandum of Understanding that will see a number of Rwandan attractions developed to the tune of two hundred thirty million dollars (230,000,000 USD). This would be the biggest investment in our tourism sector to date.

This opportunity couldn’t come at a better time because that was the gap! While we could boast about our wildlife, we still lacked infrastructure and that is what Dubai World is bringing on board. Among the properties being considered for development are the Akagera Game Lodge, Nyungwe Eco-lodge, Gorilla Nest and a 5-star hotel at the Kigali Golf course. We would like to bring the standards and labels of Singita and Kampinsky to Rwanda. These are the very best the world has to offer in terms of managing hotel property. All this was discussed with the investors.

Reigning In the Investors: An Interview with the Clare Akamanzi

Reigning In the Investors: An Interview with the Clare Akamanzi

Over the last 6 years, investor interest in Rwanda has been n the steady increase, Business Rwanda talked to Deputy Director General of RIEPA (Rwanda Investment and Export Promotion Agency) Claire Akamanzi to explain this change in Rwanda’s fortunes.

Tell us about the business and investment climate in Rwanda
The business and investment climate in Rwanda has been growing over time, there has been a conscious effort by government in making it very attractive in recognition of the fact that the development of the country had to be supported by a healthy private sector.

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