Category: Business

The Banque commerciale du Rwanda (BCR) June 3, launched a new product to its clients. The product is a mortgage loan for people with middle to low incomes.

The mortgage product will be possible for borrowers who have the affordability to repay the loan but don’t have the deposit required (20%)through a partnership between BCR and SORAS.

When one goes to BCR and asks for a mortgage loan, the bank will first seek for insurance from SORAS, it is after getting it that the key to the house is given to the client.

The new product was announced during a meeting today at BCR head office involving the South African society (HFGA) led by the M.D of BCR Sir Sanjeev Anand, the Chief Executive Officer of SORAS Sir Benjamin MBUNDI, the Head of Retail Banking Sir Benjamin MUTIMURA and the Chief executive officer of HFGA (Home Finance Guarantors Africa Reinsurance) Dr. Charlene Lea.

The meeting highlighted a new mortgage loan product, the Collateral Replacement Indemnity (CRI) for people earning middle to low gross income of 2 million and below per month taking a mortgage loan of a property below Rwf 55 million where the borrower will be paying 50% of his net income.

Unlike other mortgage loans this one favors borrowers in middle to lower income helping them acquire their own homes.

The individual in search of a loan will then deposit 1% and BCR will purchase the insurance premium cover of 4% to SORAS to cover up to 19% of the required deposit that actually enables BCR customers to borrow up to 99% of the property price where interest ranges from 14.5 to 15.7%.

Traders from Rwanda have overshadowed Tanzanians at the 36th Dar es Salaam International Trade Fair in Dar es Salaam, Tanzania.

The Rwandan dealers have specialised in setting pavilions of handicraft products made in Rwanda.

They are said to have done enough preparations for setting pavilions to exhibit their commodities.

Commodities on exhibition ranged from clothing materials, foot-ware, computer accessories, electric and electronic equipment, building materials to various forms of cellphones and automobile spare parts.

Chinese traders have also meticulously presented their pavilions and products at the famous Kikwete ground, which was occupied by the Tanzania Health and Social Welfare ministry in 2011, is now occupied by Chinese dealers who have erected over 50 pavilions.

Tanzania’s acting director general of TanTrade, Samuel Mvingira, says the Chinese had fielded more than 20 companies adding that, “This time there are many Chinese and Rwandese exhibitors.

In fact, they have overtaken others in terms of preparations.

There are some exhibitors from China that have failed to occupy pavilion spaces.”

Mvingira said, Tanzanians did not show up in big numbers, including private and public institutions.

In both the US senate and House of Representatives, a new bill has been introduced seeking to advance the extension of a special waiver aimed at allowing duty-free importation of African garments made using fabric from other countries.

The Bill was tabled last week by a group of senior lawmakers from both houses raising hope for textile exporters including some East African countries where production of cotton remains insufficient.

The rule popularly known as the Third-Country Rule of the preferential African Growth Opportunity Act (AGOA) initiative is scheduled to lapse in September threatening to lock out the bulk of textile imports from eligible African states.

“This is a win-win legislation that builds upon our nation’s goal of strengthening economic relations with Africa, while ensuring that our regional trade agreement with Central America and the Dominican Republic continues to succeed,” Senator Orrin Hatch, an Utah Republican.

The legislation seeks to renew the waiver until September 2015, when the entire AGOA will be up for renewal.

Without the Third-Country Rule, countries that manufacture garments from imported fabric would be locked out of the lucrative US market.

Though the Act originally covered the eight-year period from October 2000 to September 2008, amendments by then US President George Bush in July 2004 extended it to 2015.

“This must-do legislation has strong bipartisan and broad industry support. It will benefit US global competitiveness, aid US employment and global development, and strengthen our ties with 55 US trading partners in Africa and the Western Hemisphere,” House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, said in a statement.

Also the US Secretary of State Hillary Clinton says President Barack Obama’s administration favours extension of the trade rule that has helped to improve trade with Africa under the AGOA initiative.

The apparel firms accounted for 80.3% of the 32,251 employees at the Export Processing Zones (EPZ) by end of 2011, the Economic Survey 2012 shows.

For example, to make cotton-based garments, textile firms in Kenya have to obtain 90% of cotton from regional markets such as Tanzania, Uganda, Sudan and Egypt.

Tobbacco has for several decades been produced in Africa and contributing to rural employment and economic development on the continent.

African tobacco growers are lobbying their governments to resist the World Health Organisation’s ban on tobacco arguing that it will affect them economically.

This came up at an International Tobacco Growers’ Association-Africa meeting held recently in Zambia.

Tobacco growers opposed the ultimate eradication of tobacco growing as recommended by WHO’s Framework Convention on Tobacco Control draft policy.

The growers emphasised the need for African governments to assist tobacco farmers that are affected by the drop in demand for the crop as a result of smoking reduction strategies and changing consumer preferences.

“By restricting the available land for tobacco farming, denying farmers political and commercial rights to engage with governments through tobacco boards or commissions and ban leaf auctions, these advocate groups directly threaten jobs and livelihoods of millions of farm families worldwide,” said ITGA in a statement.

“We are concerned that, while some working group members push for a cap on tobacco production and restriction on the amount of land available to tobacco farming, the FCTC has failed to provide credible options for governments seeking to help farmers diversify to other viable crops or livelihoods in anticipation of a potential reduction in demand for tobacco.

“We note with great concern that the working group responsible for these proposals is being driven by health officers with little to no real world knowledge of agriculture, tobacco farming, or the challenges faced by farmers and farm workers living in rural areas,” said ITGA.

The ITGA challenged the FCTC to involve the tobacco farming communities at every stage of policy development and implementation.

The association urged governments to defend the interests of tobacco farmers that provide employment and income for many African farmers and families by rejecting the draft policy recommendations for Articles 17 and 18 and urging other governments to reject recommendations that destroy tobacco farmers’ livelihoods;

“We urge governments to request the Working Group for Articles 17 and 18 to revise its draft policy recommendations, to seek input from tobacco farmers’ organisations and agricultural policy specialists on specific, detailed and credible options for diversification with alternative crops,” ITGA said.

The association challenged tobacco farming communities to collectively defend their land, jobs and livelihood from efforts to deny the right to produce the legal crops that better assure their economic pros-perity.

“We reaffirm the right of farmers to choose to grow tobacco for a living and recognise that tobacco provides a secure and stable income for hundreds of thousands of African farmers,” said the association.

The ITGA represents millions of tobacco workers and farming communities in Zimbabwe, Kenya, South Africa, Tanzania and Zambia.

The association recognises that tobacco has been produced in Africa for generations and acknowledges its contribution to rural employment and economic development.

The African Development Bank (AfDB) has approved a USD 18 million private equity investment in infrastructure in sub-Saharan Africa.

The recipient of the investment is the InfraCo Sub-Saharan Infrastructure Fund (ISSIF), aiming at target capitalization of USD 200 million of equity with a first closing of USD 100 million expected third quarter 2012 to participate in greenfield and brownfield infrastructure projects.

The ISSIF will catalyze additional funds for infrastructureprojects, which will create employment and bring essential skills and technical knowledge to sub-Saharan Africa.

Infrastructure requirements in the sub-Saharan market are estimated at USD 94 billion annually over the next decade.

This considerable deficit severely impedes Africa’s economic development. The power and transport sectors are especially lacking in investment.

Population growth and increasing urbanization has left many countries with a power shortage.

The lack of regional transport infrastructure has resulted in vastly greater import/export and transport costs in Africa than in other countries.

African governments, traditionally the main investors in basic infrastructure, would greatly benefit from private sector investments to fill the gap.

Hence, the ISSIF represents a key alternative for private-led financing for the infrastructure sector in Africa.

The ISSIF is sponsored by InfraCo Limited, a donor-financed fund launched by the Private Infrastructure Development Group and EleQtra LP, a group of companies specializing in the development, financing and ownership of greenfield infrastructure projects.

The ISSIF will provide scarce equity capital for infrastructure projects, create jobs and enhance the transfer of knowledge in Africa.

These infrastructure investments are crucial to release constraints on long term sustainable growth and private sector development.

Tas Neside Anvaripour, AfDB’s manager of the infrastructure finance division said: “Buttress by a strong pipeline due to Infraco’s role as a project developer, ISSIF is expected to have immediate access to quality projects and help them to get to bankability stage”.

United States Trade Representative Ron Kirk; the Honorable Richard Sezibera, the Secretary General of the East African Community; Victoire Ndikumana, the Burundian Minister of Commerce, Industry, Posts, and Tourism; Moses Wetang’ula, the Kenyan Minister for Trade; François Kanimba, the Rwandan Minister of Trade and Industry;

Abdallah Kigoda, the Tanzanian Minister for Industry, Trade, and Marketing; and Amelia Kyambadde, the Ugandan Minister of Trade and Industry are pleased to release the following joint statement, following a meeting on June 14, 2012 on the sidelines of the AGOA Forum between the United States and the East African Community (EAC) Partner States, in Washington, D.C.:

Recognizing the importance of strengthening the economic links between the United States and East Africa, our governments jointly resolve to pursue a new trade and investment partnership between the United States and the East African Community.

This new partnership will build on the foundations of our existing trade and investment relationship, including the African Growth and Opportunity Act (AGOA), and the U.S.-EAC Trade and Investment Framework Agreement (TIFA).

Under this new partnership we will work together to provide new business opportunities to U.S. and EAC firms by reducing trade barriers, improving the business environment, encouraging open investment regimes, and enhancing our two-way trade.

The initial items we have agreed to explore under this new umbrella partnership include a regional investment treaty, a trade facilitation agreement, continued trade capacity building assistance, and a commercial dialogue.

These agreements and other activities that we will pursue will help to promote EAC regional integration, economic growth, and expand and diversify U.S.-EAC trade and investment. They could also serve as building blocks towards a more comprehensive trade agreement over the long term.

We, the Ministers, have therefore directed our respective technical teams led by the EAC to engage as soon as possible to begin consultations on each of the areas we have agreed upon.

We have full confidence that together, we can build a stronger U.S.-EAC trade and investment partnership for the benefit of the American and East African people.

Whereas China is still very competitive, rising wages are opening up opportunities for Africa and the Middle East.

Hage is the Middle East and North Africa Markets Leader at Ernst and Young in Dubai.

The report notes that Exports from the Middle East and Africa (MEA) are poised to grow up by 12% in the next ten years as the region is on the way to succeed China as a key manufacturing hub for low cost goods.

“Technological advancements and the process of industrialization in the MEA region will lead to metals, chemicals and other “intermediate” goods becoming an increasingly important part of their exports as they seek to position themselves in the global supply chain,” says the report.

Hage explains that “With a fast-growing labour force, they have the potential to become the next world assembler, possibly replacing China, as China specializes in higher-value added goods.

But for this to happen there will need to be an investment in infrastructure and the continued fostering of entrepreneurship.”

The report was a result of a study that identified 25 Rapid Growth Markets (RGM) which would have the potential to trigger a seismic shift in global trade patterns.

On specific trade flow forecasts, Hage said that “ Exports to Russia from the region will show significant growth of close to 12% per year from sub-Saharan Africa and 14% from the Middle East and North Africa region.”

Intra-trade among RGMs is poised to soar. The increase in the middle class in RGMs, particularly in Asia, will drive growth in consumer demand and trade flows between RGMs.

Ernst and Young took China as a specific example for forecasting, saying that “the number of households in China with a real disposable income of US$30,000 to US$ 50,000 will increase from US$1.6 Million in 2010 to an estimated US$ 26 Million in 2020.

Also, “Flows of goods from China to India are expected to grow by 22% per year over the next decade.”

Because of this shift, MEA countries will increasingly focus in their export policy on trade destinations in the East.

According to Hage, Ernst and Young stated he was optimistic for the MEA region in the medium-term, saying that “in addition to the rise in oil prices benefiting the region, non-oil activity is likely to remain strong especially with the steady labour force growth.

Government spending and the increase in trade between RGMs, will serve as significant catalysts to growth and, in turn, be hugely beneficial for companies that invest in these markets.

Rwanda’s sustained improvement in investment climate has been recognised during the African Business Awards at Grosvenor House in London, the United Kingdom.

Faustin Mbundu the Chairman of the Private Sector Federation (PSF) received the award on behalf of Rwanda.

The short time of six hours– it takes to register a business in Rwanda including several reforms that have emerged over time making a considerable impact on doing business.

Local print daily quoted John Gara the CEO of Rwanda Development Board (RDB) saying, “We don’t just talk but we walk the talk and RDB will continue to strive for the best investment climate in our country.”

Kenya has announced that in the next three months, it will be possible to register businesses online.

The Finance minister Njeru Githae told Kenya’s Parliament that the country is set to roll out the electronic registration of businesses within the next three months.

Rwanda is currently the only country in the East African region where online registration of businesses is fully embraced—it only takes six hours to register a business in Rwanda.

The e-registration in Kenya will ensure that investors have an easy time setting up businesses in the country.

He added that a Bill –Business Regulation Bill– to simplify the process was in the works and will make it to Parliament as soon as possible to make that dream a reality.

Julius Kones (Konoin) had noted the long processes and multiple licenses required to set up and operate business in the country, saying they had made Kenya less attractive for foreign and even local entrepreneurs.

“Why does the government require a Bill to set up an e-registry when you already have a government policy on e-governance?” posed the Konoin MP.

Dr. Kones said that the 2011-2012 Doing Business Report that was prepared by the International Finance Corporation and the World Bank had passed an indictment on Kenya as an investment destination.

Kenya was ranked number 109 in the world. Rwanda is ranked number 1 in the region and 3rd in Africa.

“What reform measures has the government taken to simplify payment of taxes and regulations for investors and what achievements have been made in improving the business environment to attract new investments in the country?” posed Dr Kones.

It is then that the Finance minister said that the government was aware that the business regulation environment was haphazard and that the processes too were inordinately long.

The World Bank’s International Finance Corporation and the African Development Bank have signed a deal to enter into African local currency swap transactions, the lenders said.

This deal will give a boost to Africa’s domestic capital markets and enable the lenders to make loans to their clients in more local currencies than they do now.

The agreement was signed at the AfDB’s annual meeting in Arusha, Tanzania, and is part of efforts by the two institutions to cut countries’ dependence on foreign currency denominated debt.

Improving Africa’s capital markets is vital if the continent is to maximise its growth potential.

Under the deal, the IFC could obtain local currency in a country where it doesn’t have a funding source or an upcoming bond issue but where the AfDB does.

“The agreement opens up the possibility for both institutions to share our local currency resources,” IFC treasurer Jingdong Hua told Reuters in a phone interview from Arusha.

“Let’s say AfDB is issuing in a currency where we haven’t started a capital market exploration but we happen to have a programme, we can borrow from the AfDB and on-lend to our clients and vice versa.”

Hua said the deal had no fixed size and the transactions would depend on project demand. It is the first such deal between two multilateral financial institutions and has no time limit.

IFC, the World Bank’s private sector arm, said it expects to invest $2.6 billion in sub-Saharan Africa this fiscal year and to mobilise an additional $1.1 billion from other investors.

The agreement follows the launch of its pan-African bond issuance programme in May. IFC is working with authorities in Botswana, Ghana, Kenya, South Africa, Uganda and Zambia to obtain consent to issue regular local currency bonds.

Funds raised from the bond sales will be invested in IFC-backed businesses that contribute to social objectives such as job creation and infrastructure development, Hua said.

Foreign investors who buy the bonds would gain exposure to African local currency debt from triple-A rated issuers.

Since 2005, the AfDB has issued bonds denominated in or linked to seven African currencies. It is also a regular issuer in South African rand, its third largest lending currency.

IFC said it wants to strengthen its presence in Ethiopia and in post-conflict or fragile states such as South Sudan, Thierry Tanoh, vice president for sub-Saharan Africa,.