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A clear vision for growth through private investment set out by President Kagame (Vision 2020)
Politically stable with rule of law and zero tolerance for corruption
Fastest global reformer of business regulations based on World Bank Doing Business Survey
Simple taxation, development of industrial parks and free trade zone, and creation of stock exchange
Increasingly attractive destination for FDI – $103M in 2008 represents 10x increase from 2005
Rwanda Development Board, an independent agency, created as a ‘one-stop centre’ for investors
2
Reasons for investing in Rwanda
Source: RDB
Investor friendly
government and climate
8.8% average year-on-year GDP growth since 2004 sustained by a liberal macroeconomic policy
GDP growth rate in 2008 of 11.2%, highest among East African countries
Sustained high growth
Potential opportunities for investment abound, particularly in the following sectors: Infrastructure: Opportunities in rail, air transportation to further develop Rwanda as an EAC
hub Agriculture: Backbone of economy, potential for growth through productivity and value addition Energy: Power generation, off grid generation and significant methane gas opportunities Tourism: Unique assets creating booming sector; growth potential in birding and convention Information and Communication Technology: Priority sector for achieving Vision 2020
Other attractive sectors include Real estate and construction , Financial services, and Mining
Untapped investment
opportunities
Most densely populated country in Africa with ~10M people, majority below the age of 20
A hub for rapidly integrating East Africa: located centrally bordering 3 countries in East Africa which has an existing Customs Union and forming a Common Market in 2010 for 125M people
3Source: Rwanda MINECOFIN, 2009; % of GDP minus adjustments (import duties), IMF World Economic Outlook 2009 *Industry – Non Manufacturing is mostly construction with a little mining and electricity and gas
Sustained Real GDP growth Outperforming the region on Real GDP growth
Strong leadership has created a pro-business, near zero corruption country
Source: World Bank Governance Indicators, Rwanda ‘Vision 2020’, RDB
President Kagame, recognized as a ‘CEO President’ understands the need for private sector investment
Advised by a team of international business leaders including Prof. Michael Porter of Harvard Business School
A bastion of near zero corruption
World Bank Governance Indicator: Control of Corruption (Higher is better)
A country with a clear vision
Vision 2020: “The major aspiration of Vision 2020 is to transform Rwanda’s economy into a middle income country...this will not be achieved unless we transform from a subsistence agriculture economy to a knowledge-based society, with high levels of savings and private investment.”
A President who understands business
“A mecca for venture capitalists”- CNN Money: Business 2.0
“Rwanda is the most undervalued stock on the continent and maybe in the world”
A government committed to making it easier to do business
Source: World Bank ‘Doing Business’ Rankings 2010
Fastest reforming country in World Bank’s Doing Business 2010 rankingsBusiness regulations now easier in Rwanda than the average economy in Eastern Europe, Asia,
Middle East, Latin America and Africa
Rose record 76 places in World Bank’s global survey
4 major commercial laws passed in 2009 in addition to administrative changes that make it easier to start a business, employ workers, register property, get credit and be protected as an investor
The Rwanda Development Board is proof that Rwanda is open for business
Source: RDB
Investor focused
Independent and influential
Built with global expertise
One stop centre for all investors
Created by consolidating all key agencies in government responsible for business registration, investment promotion, environmental clearances, privatization and specialist agencies which support the priority sectors of ICT and tourism as well as SMEs and human capacity development
Reports directly to the President
Guided by a Board composed of all the key Ministers (e.g., finance, commerce, infrastructure, agriculture)
Modelled on international best practices such as Singapore EDB
Advisory and hands-on support from global entrepreneurs and experts from Singapore Development Board, World Bank, IFC and the Office of Tony Blair
A hub for investors to access the rapidly integrating East African market
Source: Data from IMF World Economic Outlook 10
A large market
EAC comprised of 125 million people with a combined GDP of over USD 70 billion
EAC: Taking real strides towards integration
Established a Customs Union (2005)
Working towards a Common Market in 2010, a Monetary Union by 2012 and, ultimately, a Political Federation
Functioning political and legal organs
Regional infrastructure projects are being financed and implemented and regional trade has increased
Efforts to combine the East African Community, the Common Market for Eastern and Southern Africa, and the Southern Africa Development Community underway, putting 600M people into a single market.
Existing bilateral trade agreements with the US and initiatives with the European Union (EU) and others in advanced stages
Priority investment sectors: Infrastructure Agriculture Energy Tourism Information and Communications Technology Real estate and construction Financial services Mining
Sector Profile: AgricultureWorld class exports but many opportunities for regional export expansion
Source: MINECOFIN, OCIR Cafe, RDB
Coffee – world class and winner of a number of international awards; main agricultural export with buyers including Starbucks and Sainsbury’s
Tea – relatively underdeveloped but high potential with 6% increase in volume creating 29% additional value to sector in 2008; buyers include Mark’s & Spencer’s in the UK
Many other opportunities – Dairy, fruits (many exotic varieties for juice), fresh cut flowers, silk and food crops for export to region
48%36%
16%
GDP Contribution, 2008
Services
Agriculture
Industry
Agriculture is the bedrock of the economy
Around 87% of the population is engaged in agricultural activities
Exports led by tea, coffee but many options
National strategy driving productivity, quality
Government and development partners have focused on improving quality through fertiliser distribution and farmer training programmes
This resulted in 15% growth in the agricultural sector in 2008 and rising prices for coffee
Privatization of tea plantations and factories has begun in 2009 and is ongoing
Further opportunities in coffee washing and roasting as the premium harvest grows
Also in distribution, markets and cold chain infrastructure for export products
Sector profile: EnergyNew generation and methane gas can open access beyond Rwanda to neighbouring markets
Overview
Source: RDB, Ministry of Finance
80% of energy from wood combustion and electricity coverage levels low at 6%
Generation 60-69MW of electricity generation (50% hydro-
electric, 50% diesel) today
Recognising the strategic importance of the sector, the GoR has ambitious plans to more than double generation capacity to 130MW through methane gas, hydro (macro and micro) and 1 heavy fuel oil plant
For instance, in micro-hydro, 333 potential sites identified (50KW-1MW) by 2008, 2 constructed, 21 under construction and 10 scheduled
Methane Gas 50-55 billion m3 of methane gas in Lake Kivu:
1st Gas Concession and Power Purchase Agreement signed with Contour Global – 100MW KivuWatt power plant under construction expected to produce 4MW/hour for ~$324M
Further opportunities such as a 2nd concession at Lake Kivu and conversion of gas to liquid and gas to fertilizer
Power grid Power grid coverage is planned to expand to
67% of the region by 2012 through a $311M capital budget roll-out plan
Transmission and distribution networks to expand from 3,300km to 5,000km by 2012
Targeting 90% electricity from renewable source
5200 ha of forests for carbon credit potential
Example: recent agreement with US/ UK based company funded by leading UK PE firm to produce biodiesel by planting 10,000 ha of Jatropha plants ($35M investment in 2 years) to address 15-20% of domestic diesel demand
Sector profile: TourismTourism sector booming, but significant opportunities remain
Source: ORTPN, KPS, RDB
Virunga National Park: natural habitat for 600 of the 800 rare mountain gorillas made famous by the work of Diane Fossey. Park includes a mountain lodge in the ‘Condé Nast Hot List’
The rainforests of Nyungwe National Park: home to rare chimpanzees, birds and elephants
Lake Kivu: surrounded by stunning beaches and dormant volcanoes covered by lush vegetation. A 4 star Serena resort is one of several hotels
Akagera National Park: offers the potential to be one of East Africa’s great safari destinations
Birding tourism: Rwanda has over 1/3 of Africa’s bird species, the highest concentration in Africa with 260 species in Nyungwe forest alone
In 2008, leisure visitors increased 50%
26% increase in business/conference visitors – a priority area of significant potential
There are 187 hotels and 4102 hotel rooms in Rwanda of which only 7 are upper range
The average room occupancy rate for upper range hotels was 70% in 2008 with foreign tourists accounting for 97% of bed nights sold
Rwanda has unique natural assets
Leisure42%
Rela-tives16%
Business27%
Transit15%
Total Tourist Expenditure
In 2007, leisure tourists spent $209M, making the tourism industry the country’s largest foreign exchange earner
Sector profile: ICTICT – Information and Communication Technology – top priority for 2020
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Overview of ICT
Attracted ~$500M in investment over the last three years by both private and public sector
The government has invested in building the ICT infrastructure through:
a 2,500km optic fiber that covers Kigali city and the entire country, with a total of 7 regional links to the neighboring countries
Kigali City Wireless Broadband due to be commissioned early next year
ICT park set up for investors in pilot phase
ICT in Rwanda currently encompasses, in varying degrees:
Wireline telephones
VoIP
Dial-up internet, ISDN based internet, broadband internet
Computer software use and development,
Computer hardware, assembly, and repair
Major players in telecom
Source: RDB
MTN Rwanda and Rwandatel are the dominant players ,offering fixed telephones, mobile telephones, and internet services. TiGO, the 3rd operator, is set to begin operation by end of ‘09
Between the two companies, there are approximately 2M mobile subscribers, representing 20% penetration
A sizeable private sector is growing around the networking and software development sectors, with Rwandan companies exporting services to Burundi and Eastern DRC
Rwanda is participating in a $24M World Bank project to connect its national backbone to submarine cable:
There are three optic Service Providers Seacom, Teams and Eassy, at the East Coast to link various African countries to the global network.
Sector profile: Real estate & constructionGrowth creating boom in demand for commercial and residential real estate development
Source: RDB
Real estate is booming Residential real estate
In 2007, Rwanda’s development and public works sectors experienced a 10% growth creating a shortage of fully functional office space and residential housing
From 2003-2008,investment in the construction sector grew from $100M to $350M. In 2008, revenues from the general construction sector increased by 51% driven by:
Population growth of 2.8% combined with urban growth currently at 4% per annum
Growth of the middle class
Diaspora returning to Rwanda
As a result, there is also a shortage in construction material.
Rwanda imported $64.6M of construction materials in 2007 and $140M in 2008
This includes 100% of steel and a majority of other construction materials
GoR projects that by 2020 approximately 30% of the population will live in urban areas. To date, only about 5% of residents in Kigali own modern-style houses.
In Kigali alone, demand for housing is 8,000- 10,000 units per annum. The combined demand for housing countrywide is estimated to be ~25,000 units per annum
Commercial real estate
The recent increase in foreign investments has created a shortage of upper end office space with fully equipped telecommunications, utilities, and power. From 2003 to 2006 rent on these buildings increased between 50-200%
Type Rent price Construction cost
Residential $2500 - $4000 per unit
$200 – 215 per sq foot
Commercial $46 - $53 per sq foot $335 – 365 per sq foot
~ $200M of equity capital supporting ~$1B in total assets
Estimated 12% of the population had a bank account in 2007
20% sector growth rate in 5 years driven by:
GoR enforcement of banks meeting international banking standards
The “Financial Sector Development Program” which increased the minimum capital requirement from $2M to $8M and requires banks to prove they are qualified before receiving a charter
Policy, strategy and incentives in place to develop capital markets
The banking sector is comprised of eight commercial banks, one primary microfinance bank, one discount house, one development bank and one mortgage bank
Commercial banks represent 76% of the economy’s total financing while micro finance institutions serve 88% of depositors and 90% of borrowers
The microfinance sub sector consists of more than 50 relatively small institutions where ~ 11% of Rwandan assets and ~ 3.5% of the population hold accounts
The 3 largest local banks are:
Banque de Kigali (100% govt. owned)
BPR (98% private, including Actis)
BCR (80% private)
Ecobank, Access Bank and KCB are among the international banks with a presence in Rwanda
Sector profile: MiningUnexploited opportunities in ores, processing and diversification abound
Source: MINIRENA, RDB
Mineral exports have room for growth
Rwanda’s main mineral exports are ores processed to extract tin, coltan and tungsten
Only 25% of ~$ 200M potential output currently exploited
Significant opportunity to increase productivity through industrial mining
Work is being done to develop the sector
A national mining survey is being conducted to identify mineral deposits
A strong, investor friendly legal and policy framework being put in place
Opportunities in diversification and processing
Significant opportunities in processing ores
Diversification opportunities in quarries (for construction materials) and precious stones (gold, diamond, beryl, topaz, rubies, sapphires, gamets and other unexploited deposits have been identified
There are major peat deposits in the southwest of Rwanda which are only just being exploited and could be used for electricity generation or processed as an alternative to fire wood