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Rwanda Country Brief: December 2010 Print E-mail
Wednesday, 26 January 2011
Updates on data releases, key deals, sector news, development finance and regional developments.


DATA
  • GDP growth: According to official data, the Rwandan economy is estimated to have grown by 7.2% in 2010, up from the 6% growth achieved in 2009 as the global financial crisis and tight domestic liquidity held back growth: expansion in the industrial sector fell drastically from 15% to 1%, and growth in the services sector more than halved from 15% to 6%. The Rwandan government disagreed with the more conservative assessment by the IMF. The Fund had forecast 6% in 2010, up from 4.1% in 2009.
  • Inflation: According to the National Institute of Statistics, headline inflation rate fell to 2.8% in November. Increased agricultural productivity has increased the supply of food products to market and eased pressure on prices. Elsewhere, declining prices of imports have also contributed to slower growth in the Consumer Price index. The largest price increases were seen in alcoholic beverages and tobacco, and transportation.
  • Rising exports to narrow Rwanda's balance of payments deficit: The value of Rwanda's exports in 2010 rose by a 30.5% while export volumes rose by only 3.6%. Ocir Cafe, the coffee authority, said that between January and November, coffee prices increased between 35% and 40% on the global market. From January to November 2010, coffee export volumes rose by 25% to 20,000 metric tonnes with revenues rising to USD51m from 2009's lackluster USD37m. Rwanda plans to increase coffee exports to China and the Middle East, but will remain vulnerable to adverse weather conditions and commodity price fluctuations.


KEY DEALS
  • India to invest USD250m: The Rwanda Development Board (RDB) has signed a preliminary investment partnership agreement worth USD250m with India’s Universal Empire Infrastructures Ltd (UECL) for medical and IT facilities, training institutes and agro processing.
  • USD160m trade deal to boost private sector: Enhanced Integration Framework (EIF), an organisation set up to invest in trade-related capacity building, has launched a USD160m fund available for Rwanda over the coming three years. Investments will focus on the binding constraints to private sector growth such as high electricity costs, access to trade finance and poor availability of trade data.

SECTOR NEWS
Energy
  • Fuel prices rise again: Fuel prices in Rwanda have increased for the second month in a row due to increased international oil prices. A litre of petrol has risen 0.8% to RWF952 while a litre of diesel is now RWF946, an increase of 1.4% on last month. The rises reflect similar fuel price increase across the East African region.

Agriculture
  • Japan launches USD5m agriculture project in Bugesera, Ngoma districts: The Japan International Cooperation Agency (JICA) has set up a USD5m fund for a project, to be managed by Japanese agriculture consulting firm Sanyu Consultants, that should encourage rice and horticulture farming in these two districts of Eastern Province. The project aims to provide farmers with farm machinery and training, for which they will be flown overseas. The project follows a pilot run carried out between 2006 and 2009 in the same area, and will work closely with existing farmers' organisations, co-operatives, and NGOs.
  • 8.2% growth in agriculture yields surplus harvest: Heavy government investment in fertilisers, improved seed and training has borne fruit: In the first half of 2010, average production increased by 8.2%, with root, tuber and cereal crops leading the way. Poor rainfall in Eastern and Southern province affected yields, but should not put food security at risk. In future, the government will shift focus to short-duration crops like beans and vegetables, plan to expand irrigation, invest in food storage at the local level, and support green production methods to tackle soil erosion. There are also plans to expand the area covered by arable land to 500,000 hectares.

Real Estate
  • Canadian firm to move into Rwanda's low-cost housing market: Novatech Group Inc. are currently carrying out a feasibility study in Rwanda, and are planning the foundation of a door manufacturing plant in 2011. The firm specialises in low-cost housing, and its entry into Rwanda will mark its first step outside of its native Canada. Once the company moves into construction of prefabricated houses, the cost of a house will start from a reported minimum of USD15,000.

 Banking
  • Bank of Kigali IPO: The Rwandan government will divest 25% of its shares in Bank of Kigali (BK) in the country’s second Initial Public Offering (IPO). The government currently holds 66.3% of the shares in BK, which was due to be sold off to Barclays Bank in 2008 before price negotiations broke down. The bank expanded its network by 12 branches over the past year and registered a profit of RWF4.1bn for the first nine months of 2010. BK also announced that customers will now be able to use their international VISA cards at the bank’s ATMs.

Telecommunications
  • MTN Mobile Money reaches daily transaction volume of RWF7.5bn: MTN’s mobile money platform has now attracted over 200,000 subscribers and 286 agents across Rwanda. Approximately 5,000 transactions are carried out each day and the total value of transactions has passed RWF7.5bn. The service was launched in Rwanda in February 2010. Meantime, the company is fighting to protect its market share from competitors Tigo and Rwandatel, launching a 60-day promotion that will give out up to RWF1m to daily winners, and RWF20m to two monthly winners. Despite a subscriber base of 2.5m Rwandans, an MTN Rwanda spokesperson commented that 2010 had been a hard year and might end with the company failing to reach its annual revenue target.
  • Lower SIM prices and new promotions from Tigo: Network operator Tigo, which has signed up 600,000 customers since its launch in December 2009, has reduced the price of its SIM cards and is offering a range of new deals in an attempt to wrest market share from market leader MTN. Subscribers can now talk for 1,000 minutes over five days for RWF1,000 or 500 minutes over two days for RWF500.

DEVELOPMENT FNANCE
  • US embassy to support Rwandan cooperatives: 19 cooperatives across the country will receive US Embassy support worth a total USD136,913. The collaborative project will operate as the Ambassador's Special Self-Help Fund and PEPFAR's Community Grants Fund. The small grants are meant as direct responses to requests from Rwandans, and are designed to improve basic economic and social conditions on the village level. PEPFAR Community Grants have a programme especially geared at combating HIV/AIDS and its affects.
  • World Bank/GEF and Nordic Development Fund support Sustainable Energy Development project with USD8.5m: The Global Environmental Facility Trust Fund (GEF) has raised USD4.5m, while the Nordic Development Fund will contribute USD4m to the Ministry of Infrastructure's Sustainable Energy Development Project. The project support should complement on-going investment in Rwandan renewable energy, with an emphasis on technical assistance for long-term sustainability. The programme aims to install 38,400 square meters of solar water heaters in residential and tertiary sectors.
  • Sweden provides USD23m for poverty reduction: The Swedish International Development Agency (SIDA) will provide a total of USD23m for two projects aimed at poverty alleviation. The Vision 2020 Umurenge Project (VUP) will receive USD13.8m while the Land Tenure Regularisation Project will be granted USD9.4m.
  • China signs USD6m development aid agreement: These Chinese Development Bank funds will be put towards strengthening Rwanda's development, through projects agreed upon by both the Chinese and the Rwandan government.

REGIONAL NEWS
Mwapachu's exit as EAC Secretary General divides region:
Burundi and Rwanda seem to have been riled by Kenya’s, Tanzania’s and Uganda's insistence that the former two countries are 'too young' to offer a successor from among their national ranks to Tanzania’s Juma Mwapachu as the current East African Community (EAC) Secretary General. The EAC constitution stipulates that the new secretary general must, after the five year tenure of the outgoing, be selected in rotation from the different members states, which has lead to Rwanda and Burundi feeling that their turn has come. Rwanda's EAC Affairs Minister was quotes saying that the country was ready to take the seat, and seems to have formed a voting bloc with neighbour Burundi. That Rwanda should have taken badly to the suggestion that it cannot provide a secretary general is not surprising – the current president of the African Development Bank (AfDB), Donald Kaberuka, is a Rwandan national, and Rwanda has been very proactive in its EAC integration. 



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