Category Archives: UK RWANDA RELATIONS

Czech Republic Investors Eye Rwanda

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.

Tour of Rwanda to Be Broadcast Live Worldwide

The fifth edition of Tour of Rwanda will be broadcast live on Supersport everyday from November 17-24.

Rwanda Cycling Federation (Ferwacy) president Aimable Bayingana said in a press statement that, “South African based sports television Supersport, TV5 and French television Canal Plus have agreed to broadcast the tour live.”

“From the time we started organizing the Tour of Rwanda, it has been our goal to broadcast it to the world. This means that the cycling competition will be viewed by people in many countries across the world,” added Bayingana.

The seven-stage race will cover a total distance of 819km and three new routes have been introduced including Kigali – Kirehe, Rwamagana – Musanze and Rubavu – Kinigi.

Meanwhile, the race is expected to have 16 teams from different countries like South Africa, Ethiopia, Egypt, Kenya, Algeria and Gabon.

UCI Continental Center, Eritrea’s AS BE CO, AVAIA Crebbe from Belgium, Novo Nordisk from USA, Algeria’s Sovac, Samsung MTN Qhubeka from South Africa and Rhone Alpes from France are the foreign teams that have confirmed participation.

Rwanda will be represented by three teams including Karisimbi, Akagera and Muhabura. These teams are currently training at the national cycling camp in Musanze.

The two Rwandan riders from UCI Continental Center, Janvier Hadi and Bonaventure Uwizeyimana have also joined camp to prepare for the annual competition.

Rwandan Olympian Adrien Niyonshuti is expected to participate with his team Samsung MTN Qhubeka.

Team Samsung MTN Qhubeka is the first African team to join the second division of world cycling, the highest level from any team on the continent after the International Cycling Union (UCI) confirmed its status as a professional continental team for 2013.

Team MTN-Qhubeka is determined to compete on the international arena in the Giro d’Italia and Tour de France.

Professional cyclists like Niyonshuti alongside Africa’s best cyclists including Daniel Teklehaymanot and this year’s African Cycling Champion Natnael Berhane will be in Rwanda to represent the team has a roster of 15 African and 6 international riders.

Rwanda, Kenya, Uganda to Build Super-Highway

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.

Fitch Lifts Outlook on Rwanda on Economic Growth

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 Eurobond Oversubscribed

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.

Rwanda readies debut Eurobond

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.

UK Foreign Minister Praises Rwanda On Regional Security

The visiting UK Foreign Secretary and First Secretary of State, William Hague, has commended Rwanda’s cooperation with regional countries in efforts to bring security in eastern Democratic Republic of Congo (DRC).

Hague addressed reporters yesterday shortly after meeting President Paul Kagame and Foreign Minister Louise Mushikiwabo at Village Urugwiro, where the leaders discussed the need for a lasting solution to the conflict in Eastern DRC, as well as other bilateral issues. The UK diplomat described the efforts of regional states in the Great Lakes region to bring back peace in the DRC as “positive” in addition to commending Rwanda’s role.

Hague met Rwandan leaders as part of a trip that he is conducting in the region along with UNHCR Special Envoy, Angelina Jolie, to highlight the terrible human cost of warzone rape, and to call on Governments worldwide to address this issue. Rape is rampant in eastern DRC, where armed groups including the FDLR, made up of elements who committed the 1994 genocide against the Tutsi in Rwanda, have been using it as a weapon of war against local communities.

In 1998, the International Criminal Tribunal for Rwanda (ICTR) became the first international court to find an accused person guilty of rape as a crime of Genocide. The judgement against Jean Paul Akayesu a former mayor, ruled that rape and sexual assault constituted acts of Genocide as they were committed with the intent to destroy in whole or in part, the Tutsi In Rwanda, between 100,000 and 250,000 women were raped during the 1994 Genocide.

Rwanda has been cooperating on regional efforts to improve security in eastern DRC through working with other regional countries under the International Conference on the Great Lakes Region (ICGLR) and it has also signed the UN-brokered Peace, Security and Cooperation Framework for the DRC and the region. The cooperation framework was signed last month in Addis-Ababa, Ethiopia, and it binds the DRC along with ten other countries of the region: Angola, Burundi, Central African Republic, Namibia, Republic of Congo, Rwanda, South Africa, South Sudan, Tanzania, Uganda and Zambia.

Strong Partnership with the UK:

Rwanda’s Foreign Affairs Minister Louise Mushikiwabo noted that the UK diplomat’s trip is likely to boost relations between the two countries in the next few months. While Hague was critical of Rwanda after a highly controversial UN Group of experts report alleging support to M23 appeared, Mushikiwabo described Rwanda and the UK as strong partners.

“Friends sometimes agree, sometimes disagree. Disagreements have been less than our agreements. So, I have no reason to believe that the partnership and the relationship between Rwanda and the UK have changed dramatically, not at all,” she said. “I think the relationship between our two countries is solid.”