Rwanda Country Brief for July 2010
Tuesday, 17 August 2010
Updates on political risk, business environment, data releases, and sector news.

Political Risk
Not a good month for Rwanda PR-wise. In the run up to the elections in early August, with increased attention by the international media, the country produced a number of worrying headlines: 

Andrew Kagwa Rwisekera, the vice president of the Green Party – which had consistently been refused registration – was found dead, with his head nearly cut off. The government’s official stance was that it was most likely a violent robbery. This was in addition to another journalist being arrested. In June, a journalist had been shot outside his house, and dissident general Nyamweya was the target of an assassination attempt in South Africa. The government had insisted that it had nothing to do with any of these incidences, but has nevertheless come under increased scrutiny.  

There was some fallout: During President Kagame’s visit to Spain for a UN meeting, the prime minister refused to meet him following the recent incidents in Rwanda, sending the minister for foreign affairs instead. Not yet a turnaround in Western relations with Rwanda, but possibly a warning shot. Pressure from NGOs to not accept Kagame’s undoubted re-election, however, will obviously not be followed. However, the string of incidences drew considerable attention to the authoritarian nature of the Kagame administration and the question how Rwanda can manage the transition to a more inclusive rule and whether Kagame will be able to contain the divisions in the military. For now, Rwanda maintains close relations with key donor countries, especially in the Anglophone sphere, and it is unlikely that there will be any significant consequences in the near future.  

  • Central bank rate: Rwanda’s central bank maintained its key interest rate at 7% even though inflation rose the previous month, from 2.74% in May 2010 to 4.21% in June.
  • Human resources: The School of Finance and Banking (SBF) has signed an agreement with Kenyan KASNEB to teach a three-year Certified Public Accountants course under which SFB will provide tutorial services and KASNEB will be in charge of examinations and certification. A shortage of qualified professionals is one of the challenges in realising Rwanda’s ambitious development plans.
  • Energy sector management: The Investment Climate Facility for Africa (ICF), a public-private partnership established as an independent trust with a seven-year lifespan focused on improving the continent's investment climate, will help to strengthen Rwanda’s capacity to encourage investments in the energy sector and diversify its energy supplies. ICF will work with the Ministry of Infrastructure (MINIFRA), the Rwanda Utility Regulatory Agency (RURA), and the Rwanda Electricity Corporation (RECO).
  • Duty-free exports to China: China’s Ministry of Commerce (MOFCOM) announced that 26 of Africa’s least developed countries, including Rwanda, can export to China duty-free from 1 July 2010 onwards. Fellow EAC members Uganda and Tanzania are also included in the list of eligible countries.
  • GDP growth: The IMF forecasts that Rwanda’s economy will grow by 5.4% this year and by 5.9% in 2011 in response to business friendly policies that help to attract investment. However, the National Bank of Rwanda disputes this forecast, arguing that GDP growth figures will be significantly higher at 7% and 8% respectively. The IMF had cited a ‘more pronounced slowdown in wholesale and retail trade, construction, real estate, and manufacturing sectors that are particularly vulnerable to the global slowdown and tightened domestic liquidity conditions’.
  • Remittances increased from USD139.89m in 2008 to USD172.4m in 2009, indicating that the global financial crisis had limited impact on remittances fro the Rwandan diaspora.

  • Rwanda Commercial Bank (BCR) reported an 11.9% increase in net profits to RWF961.3m for the first half of 2010. The bank’s managing director cited sound lending, earnings from non-interest revenues and tighter controls on expenses as the reasons behind this development.
Real Estate:
  • The Social Security Fund of Rwanda (SSFR) announced that the infrastructure for the new Vision City housing estate in Kigali, a USD500m project with 2,759 units, would be completed before the end of 2010 and that the detailed designs had been finalised. SSFR are now in the process of looking for co-investors, and have reportedly received interest from Chinese and American firms. SSFR is the largest real estate investor in Rwanda.
  • The Rwanda Development Board (RDB) estimates that the real estate sector has been growing by an average of 16% over the past five years, accelerating to 25% in 2008, driven by the country’s economic growth, infrastructure development, and the shortfall in housing and public facilities. Rwanda is host to the Kigali edition of the East Africa Real Estate Fair in August 2010.
  • Rwanda is host to the Pan African Dance Festival (FESPAD) 2010 and hopes to use this platform to attract more attention to Rwanda as a cultural destination. Growing the tourism sector helps to diversify the country’s economy and Rwanda has been keen draw more attention to e.g. its gorilla safaris – even though the sustained PR effort has briefly backfired recently .
  • Tea production: Revenues from tea exports during the 2009/2010 financial year have increased by 17% to USD56m due to better weather conditions. However, while volumes increased, tea prices have fallen from USD2.8 per kg to USD2.1.
  • Rwanda’s government has provided Rwf1.2bn in soft loans to maize processors to ensure that the full output of a bumper harvest could be processed: maize production had shot up by 51% to 327,319 tons in season A of 2010, exceeding the capacity of maize processors who were also constrained by a lack of financing. Aside from good weather, the crop increase has also been attributed to and crop intensification programmes and fertiliser application. The Permanent Secretary of Ministry of Trade and Industry emphasised the need to improve the entire value chain of maize production.
  • Milicom subsidiary Tigo Rwanda claims that it has acquired 12% market share seven months after launching in the Rwandan market.
  • Rwanda's Utility and Regulatory Agency (RURA) aims to issue a fourth operator license before the end of 2010, but this process can only be initiated once Tigo has accumulated a minimum number of subscribers.

  • IFAD: During a visit to Rwanda, the head of the International Fund for Agricultural Development (IFAD), Kanayo Nwanze, announced that IFAD would commit IFAD provide an additional $28m to the Strategic Plan for the Transformation of Agriculture (PAPSTA) and Kirehe Community-based Watershed Management Project (KWAMP). Nwanze also mentioned IFAD’s intention to start a new USD40m project in 2011.
On 1 July 2010, the East African Community’s common market came into power. Like Uganda and Tanzania, Rwandan businesses have expressed concerns about aggressive competition from Kenya. However, in contrast to the other EAC neighbours, in particular Tanzania, Rwanda has very actively pursued the regional integration and e.g. removed the need for work permits.

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