Rwandan President Paul Kagame says his government sees broadband as a means to address its development challenges. He was addressing a session at the World Economic Forum in Davos, on the question: “why broadband should be prioritized in the post 2015 Sustainable Development Goals.”
The Rwandan government reports that President Kagame outlinedd Rwanda’s commitment to the use of ICT for transformation: “People used to think that broadband is meant for a few people and cannot be accessed by the majority. We have found that with the right investments, we can make it accessible and affordable. People are now able to use ICT for health, education and to access markets for their agricultural products. The results speak for themselves in every part of Africa.”
As co-chair of the Broadband Commission, President Kagame also thanked the broadband commissioners for their dedication to increasing broadband accessibility.
ITU Secretary General, Ahmadou Toure explained the goals of the Broadband Commission as essential to sustainable development. “Our goal is to put broadband at the centre of every national agenda. We want to use broadband to achieve millenium development goals and address global challenges including youth unemployment, climate change, and environmental sustainability. We are part of the solution and not part of the problem.”
Reminding those present that ICT must be part of a wider context that includes good governance, President Kagame emphasized the role of ICT in ensuring that citizens have access to information: “My hope is built on one thing. Giving the majority of our people ICT tools means they will be able to face their challenges.”
President Kagame added that broadband is an opportunity to share knowledge in a mutually beneficial manner:“It is important to understand that there is no part of the world that has monopoly of knowledge or best practices. That is the beauty of the globalized society we live in.”
The European Investment Bank and the I&M bank on Tuesday signed a deal that will see Rwandan small businesses benefit from EUR8 million under the new lending programme for Small and medium sized enterprises (SME’s).
This is the second new small business lending programme between the European Investment Bank and I&M Bank Rwanda in seven years. Previously the EIB floated $3 billion.
The agreement was signed by Sanjeev Anand, Managing Director of I&M Bank Rwanda and Kurt Simonsen, Head of the European Investment Bank’s regional representation for East and Central Africa.
Simonsen said that the I&M bank has proved to be a good and trusted partner over the years and the European Investment Bank (EIB) is confident that the funding will enable Rwandans to attain their economic development strategies.
“We are very proud to work with I&M, who have been using the funding appropriately to facilitate economic development in this country. We are very sure that this money will reach the rightful owners and be used well” he said.
Managing Director, Sanjeev Anand explained that the SME and corporate sector forms the most important part of I&M Bank’s strategy in Rwanda and that the long-term financing lines provided by EIB will go a long way in facilitating efforts to provide investment support to SMEs.
Over the years, the European Investment Bank has extended five small business focused credit lines for a total amount of EUR 31 million to Banque Rwandaise de Développement, Bank of Kigali, and I&M Bank Rwanda Ltd.
The funds have helped to develop more than 100 SMEs and created more than 1, 250 jobs in the private sector in Rwanda. In addition to supporting small and medium sized companies in the country.
The European Investment Bank has signed a credit line with Kenya Commercial Bank to support microfinance and intends to broaden support for private sector investment in Rwanda in the future.
A group of investors from the Czech Republic are set to invest in a range of businesses in the country.
The 30-member delegation led by Jan Kohout, the Czech Minister of Foreign Affairs, was in the country last week as they explored potential areas of investment in the country.
During their visit, the group visited Rwanda Development Board (RDB) where they were assured of an enabling business environment in Rwanda.
The group, which also had a business meeting last Tuesday with several government officials and the Rwanda business community, is interested in investing in the a variety of areas, including: agriculture, services, manufacturing, energy, import and export promotion, and aviation.
“We have chosen Rwanda, South Sudan, Uganda and Ghana as our economic missions in Africa and I am optimistic that our business community will find various investment opportunities in these countries,” said Kohout in the meeting.
He added that the objective of coming to explore potential areas of investment in the country is due to the fact that Rwanda offers potential business opportunities since the country has continued to perform well in World Bank ‘Doing Business’ reports.
Borivoj Minar, a member of the Czech Chamber of Commerce, said that although it was their first time in Rwanda, they have developed a strong feeling of establishing businesses in Rwanda after holding meetings with government officials about various business opportunities.
“We are looking forward to partner with Rwanda towards promoting trade, innovation and entrepreneurship between the two countries,” Minar said.
RDB Chief Operations Officer (COO), Claire Akamanzi, said that Czech investors are looking to African markets where growth is high, and Rwanda was chosen as one of their destinations.
“Many countries are choosing our country as a potential area of investment and this shows that Rwanda is one of the fastest growing economies on the continent. We are happy about that and ready to offer them a conducive environment that will enable them to efficiently and effectively do their respective businesses in Rwanda,” Akamanzi said.
She said that RDB will continue working together with the Czech chamber of commerce in order allow many investors from the Czech Republic to come and invest in Rwanda.
“Although we haven’t done much with Czech Republic in terms of investments, the coming of such investors shows the beginning of their business journey with Rwanda,” Akamanzi said.
The group also toured Kigali Special Economic Zone (KSEZ) which the government put aside as place for industrial zone for the national and foreign investors.
Statistics indicate that RDB registered investments worth $1.2 billion (about Frw 800 billion) between January and June this year.
The investments represent 58 domestic projects, worth $ 509.1 million, 22 foreign projects, worth $406.9m, and nine joint ventures worth $338.1 million.
While talking to the visiting delegation, the Minister of Trade and Industry, Francois Kanimba said: “Our economy has responded considerably well to business reforms, we have grown at an average rate of about 8 per cent over the last decade and we welcome you to Rwanda to explore areas of your business interests,”
According to 2013 Baseline Profitability Index by the Foreign Policy Magazine, Rwanda was ranked fifth-best destination for investment in the world out of 102 countries surveyed. The global study indicated that high returns of investment are accessible and to a great degree, retrievable to investors in Rwanda.
The 2013World Bank Doing Business Report also ranked Rwanda the third easiest place to do business in Sub-Saharan Africa, after Mauritius and South Africa.
Kenya, Uganda and Rwanda are considering building a superhighway from Mombasa to Kigali, parallel to the planned railway.
According to regional trade lobby organization Trademark East Africa, which will be facilitating the project, it is expected to have a six-lane road, with construction beginning in 2016.
Inspired by the N1 highway that runs from Cape Town in South Africa to Harare in Zimbabwe, the proposed road is intended to ease the movement of cargo, thereby reducing the cost of doing business and increasing intra-regional trade.
Expenditure on transport in the EAC countries accounts for 45% of the total cost of goods. This is 30% higher than in Southern Africa, making commodities produced in the region uncompetitive.
John Byabagambi, Uganda’s Junior Minister for Works who is chairing the Standard Gauge Railway Committee, said that Trademark was doing feasibility studies for a dual carriage highway that forms part of plans to expand the Northern Corridor, as the current single carriage system is too narrow and fraught with inefficiencies.
Allen Asiimwe of Trademark East Africa said the superhighway would have no weighbridges or roadblocks.
This means that once the goods are loaded onto a truck at the Port of Mombasa, there will be no stops until the final destination. Weighbridges and roadblocks are among major hindrances to trade in the region.
As the cost of doing business in the region drops, intra-EAC trade, which currently stands at over $3.8 million, or just 13% of the total trade volumes in the region, is expected to increase.
Asiimwe added that the road, the ability of the revenue authorities of Rwanda, Uganda and Kenya to acquire the latest software known as Automated Systems for Customs Data (Asycuda), plus a $50 million investment in the port of Mombasa, will ensure that cargo moves fast and that it is constantly monitored.
“Investment in a regional asset like the Mombasa port will reduce the time for clearing goods from 18 to five days,” she said.
The software enables Customs officials from the three countries to use the electronic tracking system to monitor the trucks.
The software will also boost the EAC Customs Union since revenue authorities will be able to assess and collect taxes at the first point of entry. This means that once a trader has paid his taxes for goods bound for Uganda, there will be no need to pay a refundable bond to Kenya. This has been the practice, due to the fear that goods could be dumped in Kenya.
As the cost of doing business in the region drops, intra-EAC trade, which currently stands at over $3.8 million, or just 13% of the total trade volumes in the region, is expected to increase.
Experts warn that intra-EAC trade is well below the standards of any functional common market.
“Intra-regional trade should account for at least 25% of the total trade volumes in any functional common market,” said Rashid Kibowa, Commissioner for Economic Affairs in Uganda’s Ministry of East African Community Affairs.
In the European Union, intra-regional trade accounts for 55% of total trade while it stands at 40% in the US.
Rwanda will soon be among the few African countries to link every corner of the country when it rolls out the first ever 4G LTE broadband network in the region.
LTE (Long Term Evolution) is a wireless broadband technology designed to support roaming Internet access via cellphones and handheld devices.
The $140 million project, to be rolled out over the next three years by the government in partnership with KT Corporation, South Korea’s biggest telecommunications provider, will see the whole country linked to a fiber optic cable.
Its launch coincides with Transform Africa, a continental ICT and innovation summit that takes place in Kigali from October 28 to 31.
Seven African presidents and more than 1,500 delegates from all over the world are expected at the summit to discuss how Africa can overcome its connectivity and ICT challenges.
The presidents who are expected to attend include Rwanda’s Paul Kagame, Uhuru Kenyatta of Kenya and Yoweri Museveni of Uganda — who will also be in Kigali for their countries’ Infrastructure Summit on October 28.
According to Rwanda’s Minister for ICT Jean Philbert Nsengimana, the country is today ranked among the “most connected” countries in Africa.
The 4G LTE network will be the final phase to deliver the “last mile” of connectivity after putting in place all the other infrastructures needed, including linking the whole country to the fiber optic backbone. The project will connect 95 per cent of Rwandans.
“Six years ago, African leaders met in Kigali for the connect Africa summit to find means of addressing the digital divide the continent was facing. At the time, only five per cent of the population had mobiles but today 65 per cent of Rwandans own mobile phones,” Mr Nsengimana said.
Connecting all citizens
“Today, when we meet in Kigali for Transform Africa, the question will not be how Africa will be connected but rather how this infrastructure can reach the final person,” he added.
Africa’s biggest challenge remains linking population to available ICT infrastructures as well as the high cost of making phone calls.
Rwanda and other EAC member states are among the countries where making a single phone call is more expensive than in any other part of the world.
The issue of affordability of telecoms and data will be one of the key issues to discussed at the Kigali summit this week.
Fitch Ratings revised Rwanda’s Outlook to ‘Positive’ from ‘Stable’ while simultaneously affirming Rwanda’s long-term foreign and local currency Issuer Default Rating (IDR) at ‘B’ and short-term foreign currency IDR at ‘B’. Fitch has also affirmed Rwanda’s Country Ceiling at ‘B’.
According to Fitch ratings, the revision of the outlook from stable to positive reflects continuing rapid and inclusive GDP growth in the future, high governance standards relative to regional peers, marked improvements in poverty reduction that attracted high levels of international support, and low public and external debt.
A sovereign rating indicates the rating agency’s opinion of a country’s credit worthiness, or in other words ability and willingness to meet its financial obligations in timely manner. Credit ratings, as opinions on vulnerability to default, do not necessarily imply a specific likelihood of a country’s defaulting on its payment.
This year’s rating is the fourth following the first in 2006, the second in 2010 and the third in 2011. At ‘B’, Rwanda’s rating is within the range of regional countries. A ‘Positive” outlook may imply to a certain extent possibility of rating upgrade provided continued positive trends in factors that triggered the upgrade in the outlook.
Rwanda’s debut US$400Million Eurobond has been over subscribed, a lead banker has revealed saying, “its well over subscribed as you can imagine”.
An investor source told media that the order book was $3 billion, or 7.5 times the issue size.
The 10-year dollar bond was issued on Thursday with a 6.875% yield, a lead banker said. That was at the tighter end of Rwanda’s final guidance of 6.875-7 %.
Investors were attracted by Rwanda’s strongly growing economy, low debt and recent political stability.
President Paul Kagame has been commended for presiding over Rwanda’s recovery after the 1994 genocide against the tutsi that claimed over a million lives.
Economic growth averaged 8.2% from 2006 to 2012 and the International Monetary Fund projects growth of 7.6% this year.
Rwanda’s debt levels are equivalent to 23.3 % of gross domestic product in 2012 and Inflation is in single digits.
The United States has praised the government of Rwanda for its tremendous strides in improving the lives of Rwandans by increasing the rate of life expectancy for its citizens and reducing the maternal mortality.
Speaking at the Africa Health Forum in Washington DC on Friday, the US Deputy Secretary of State William J. Burns said that the country is on track to meet many of the Millenium Development goals despite challenges the country faced after the 1994 Genocide against Tutsi.
In his key note address, the Deputy Secretary of state said that: “Rwanda, a country devastated by genocide less than two decades ago, is today on track to meet many of the Millennium Development Goals – life expectancy has doubled, maternal mortality and annual child deaths more than halved, and deaths from HIV, TB, and malaria have dropped by 80percent.”
The US diplomat went on to thank the current African leadership for the dramatic transformation of the continent.
“We gather here today amidst a dramatic transformation of the African continent from a region once defined largely by its problems, to a region defined increasingly by its possibilities… from a region afflicted by conflict, crisis, and impoverishment to a region known more and more for its economic growth, expanding democratic governance, and enhanced health and human development,” said William J. Burns.
He emphasized that as the continent evolves, and as governments take on greater leadership and responsibility for their own future, the nature of assistance and cooperation from the international community should evolve as well – from a donor-recipient relationship to more of a partnership.
“This partnership – based on principles of country ownership, shared responsibility, and mutual respect – allows donors and partner countries to better meet the needs of the country’s population. Where transparency, good governance, and accountability are enshrined in law and in practice – our joint investments will yield more effective, more efficient, and ultimately more sustainable outcomes.
This is why sustainability and shared responsibility are two foundational principles of President Obama’s Policy Directive on Global Development and our global health diplomacy strategy.”
The US Deputy secretary of State told delegates that United States commitment to global health is strong, citing President Obama’s budget request for a $1.65 billion contribution to the Global Fund in fiscal year 2014 as US’s historically high level of support.
The Forum was attended by Ministers and representatives of Ministries of Finance and Health over two dozen African countries.
Rwanda is globally hailed for presenting a unique case in development and in the progress towards attaining the MDGs.
Rwanda’s debut in the Eurobond market will offer investors the rare opportunity to buy into one of the fastest growing economies in Sub-Saharan Africa – but don’t expect the country to get carried away.
The sub-benchmark size of the trade, combined with the country’s strong dependence on foreign aid and volatile sectors of the economy, will see some buyers take a step back and demand a reasonable premium to get involved.
The East African sovereign, rated B/B, will wrap up investor meetings for its planned US$400m 10-year bond sale next Wednesday, after conducting a one-week roadshow in Asia, Europe and the US through BNP Paribas and Citigroup.
The last Eurobond issue from the continent, Zambia’s 5.375% US$750m 10-year note offering, generated an order book of US$12bn when it was issued in September, pricing through the curves of the country’s regional peers.
While Rwanda is unlikely to replicate that success, a shortage of African paper in the market will generate strong interest among yield-starved investors.
Despite a US$50m increase from the originally targeted US$350m, Rwanda’s transaction will fall short of the US$500m minimum required for inclusion in global emerging market indices, reducing the notes’ potential buyer base and limiting their liquidity in the secondary market.
“The sub-benchmark size is a problem because it means there is no automatic demand from index followers,” said Graham Stock, chief strategist at Insparo Asset Management. “It is a market distortion created by the importance of the index, but it can’t be ignored.”
Borrowing more for the sole purpose of joining the index league, however, would make little sense for a country with annual GDP of US$6.4bn. “It would be risky for the government of a small economy to borrow more than it needs and thereby increase debt service costs and refinancing risks just to qualify for the benchmark,” said Stock.
While Rwanda’s growth story is compelling – real GDP growth averaged 7.4% between 2003 and 2011 – the country relies on foreign aid to finance almost 40% of its budget. Subsistence agriculture accounts for one-third of annual GDP, employing 73% of the labour force.
Eyeing a 7% yield
In light of these challenges, a syndicate official away from the deal reckons investors are likely to demand a yield of around 7% to buy the new notes. “I see a definite floor of 6%, on top of which you need to add a new issue premium and [an additional concession for] non-index eligibility,” said the banker.
“I think the premium for the size will be significant. A pricing [of] circa 7% is not far-fetched,” said a London-based portfolio manager who specialises in African markets.
He suggested, however, that the rarity value of the name could push the yield even lower. “I would go tighter, between 6.5% and 6.75%, mainly because of the appetite for Eurobonds from the region and current yield levels for SSA names,” he added.
Proceeds from the sale will be used to repay outstanding loans and finance the completion of the Kigali Convention Centre and the Nyabarongo hydro power plant.