Tag: a_doingbusiness

By: Andrew Kareba

Rwanda enters a global competitiveness index for the first time this year at an impressive 80th position after developing closer ties with traditional and emerging partners.

Under the theme” Africa and its Emerging Partners” Negatu Makonnen the resident Representative of African Development Bank (AFDB) says, Rwanda is more integrated in the world economy and its partnerships are diversifying.

E-government, air transport and other sectors are expected to help sustain current growth, said Edward Sennoga country’s economist of AFDB.

He further explains how Rwanda’s inflation decreased markedly from 10.3% in 2009 to 2.3 % but expecting to edge upwards to 3.9% at the end of this year. He says.

“Teachers from India are working in Rwanda providing critical support to advance higher learning” This positions India as second with 14% after China as the first with 39% as Africa’s top five emerging trade partners, says Sennoga.

University graduates remain unemployed, while African countries continue to face shortage of skilled labor and spend large proportion of their national resources on education, the African Competitiveness report of 2011 states.

“When women are trained on the same level with men, they perform better than them”, says Peter Ondiege the chief research Economist of AFDB.

Ondiege shows how the rate of women’s entrepreneurship is higher in the Africa than in any other region and represent almost 40% of entrepreneurship and they concentrate in the informal, micro, low growth and low-profit areas which put them less likely to be active I higher activities, he elaborates.

Mr. Leonard Rugwabiza Director General Planning, Ministry of Finance and Economic Planning says, Rwanda’s inflation is the lowest in the region and this will enable the country to improve the domestic policies and use the increased policy space to strike out better deals, Rugwabiza says.

Infrastructure deficit, climate change and private sector promotion are some of the challenges that African Economy and competitiveness face, says Rugwabiza.

Access to finance, tax regulations and corruption are problematic factors that hinder business in Africa. Ondiege highlights.

The Finance and Economic Planning minister John Rwangombwa has announced 274% over subscription for the recently launched Bank of Kigali Initial Public Offer (IPO).

The government sold its 45% stake in Bank of Kigali, the leading bank in the country by assets, for $62.5 million in an IPO.

The shares were priced at Rwf 125 in the IPO in which the government was offloading 300.3 million shares.

He further pointed out that over subscription is a good sign that shows people have confidence in the economy. “This shows that there’s an appetite for assets in this economy,” the finance minister remarked.

In this respect, all applicants totaled to 6,636 of shares including institutional and retail investors whereby 75% represent local applicants.

Initially, BK had targeted to raise Rwf 37.5 billion but instead attracted submissions amounting to Rwf 103 billion which is rated at 274 %.

The applications came from both local and international interested buyers, and according to Rwangombwa. “A 40% pool was allocated to international investors, 15% to regional institutional buyers and another 15% to domestic institutional investors, 27.6% to retail investors while 2.4% was set aside for BK management,” he remarked.

The bank’s listing will follow that of brewer Bralirwa in which the government sold a 30% stake last year.

Before the end of October the national carrier RwandAir will have two 737-800 Boeing carriers at a cost of US$ 85 million.

The new acquisition aims at strengthening RwandAir’s performance on long distance routes, while small airplanes would be used to strengthen regional routes; South Sudan’s Juba , Zambia’s Lusaka and Zimbabwe’s Harare.

The RwandAir Chief Executive Officer John Mirenge noted that the purchase of the two bigger airplanes were timely given the 20% growth of its clients every month.

The national carrier has been able to purchase two Boeings through US$ 85 million a loan from the Eastern and South African Trade and Development Bank (PTA bank) today the latter disbursed the remaining US$60 million.

Signing the loan on behalf of the government the minister of Finance and Economic Planning John Rwangombwa noted that a lot of efforts were inserted to improve the national carrier since it promotes economic growth.

Michael Gondwe the PTA president noted that the bank has been influential in the fleet acquisition process for RwandAir since the carrier announced its plans towards an owned fleet in 2009 with the purchase of two small planes CRJ200 and also in making the pre-delivery payments towards the soon to arrive two Boeing planes.

“This is the third time in many years that I’m coming to Kigali to conclude an agreement for the purchase of air craft’s, and this is a proof that RwandAir is growing rapidly in line with the country’s noble vision of making Rwanda an aviation hub for the rest of the continent,” he remarked.

Over the last decade, a total of over US$ 150 million, inclusive of the airplanes , has been made available for the project and trade financing activities.

“We have financed projects in tourism, aviation, transport and agri-business and real estate amongst others,” he remarked.

Today July 28, Rwanda’s 14th International Trade show has set off with the increased number of foreign exhibitors reaching up to 141, coming from over 19 countries and including new features to be showcased.

The official opening will be scheduled tomorrow Friday, at the EXPO grounds in Gikondo and the Chief Guest is not yet known according to the Public Relations Officer in MINICOM.

Ephraim Karangwa, the Acting Director of Investments and Special Projects at PSF noted; “419 exhibitors have already registered, 141 of who are designated as foreign exhibitors. 721 stands are already booked.”

Karangwa added that the total number of exhibitors has declined from last year’444 to 419 while the number of foreign exhibitors has risen up from 99 registered last year to 141.

The official opening ceremony will also be marked by new features including fashion show from a renowned African Designer; Patheo Ouedraogo from Senegal.

Soon activities at MAGERWA and branches will be much quicker than before. This follows announcement by the new investor Larry lam, chairman of Portek a Singapore operator of medium sized containers and multipurpose ports.

Portek now owns 66% shares of MAGERWA and it will be in charge of the day to day activities of the once public bonded warehouse. Lam noted that much effort would be put in ensuring better customer care, better service delivery and reducing congestion at the warehouse.

The Singapore based company will also construct several dry and seaports at the two largest ports in the region situated at Mombasa and Dares salaam.

“We intend to buy several lands closer to the ports at which goods from Rwanda and region would be offloaded. Currently, the two major ports are holding more than their capacity a fact that delays activities,” he remarked.

In Rwanda more storehouses will be constructed. “With new branches cargo trucks for instance will offload quickly and service delivery would be enhanced reducing the current long queues,” he commented adding, “there will also be a reduction of miscellaneous costs.”

The minister of trade and industry Francois Kanimba hailed the new investors saying that they represent a country that has shown tremendous economic progress. “We’re happy that you bring to Rwanda professionalism and replicating some of the best practices,” said Kanimba.

The minister noted that improvement of the warehouse would be a big achievement for the landlocked country.

Difficulties of accessing bank credit especially due to lack of collateral shouldn’t worry people anymore.
The Business Development Fund (BDF) is offering banks a financial security on behalf of borrowers as a way of promoting lending to upcoming business.

BDF is an established company meant to support SME’s by offering credit guarantee facility. They generate their funds from government entities such as the National Bank of Rwanda (BNR) Rwanda Development Bank (BRD) and several ministries.

The preferred ventures are Small and Medium Enterprises (SME’s) as well as agriculture.

In his remarks the minister of trade and industry, Francois Kanimba noted that the grant was timely with the government’s campaign to strengthen SME’s through encouraging the private sector and stakeholders to join the cause.

The BDF Chief Executive Officer Desire Rumanyika was quick to support the minister adding that the grant also aimed at facilitating upcoming businesses to access finance as a way of promoting the economy, of which 90% of its growth is gained from SME’s.

He further pointed out that the fund was formed to the tune of Rwf 11 billion and that Rwf 1.5 billion of the amount has be channeled to several banks to support agriculture projects.

This supplements a BDF grant for Rural Investment Facility which was availed by the ministry of agriculture and animal resources.

The grant is worth US$ 10 million with main purpose of providing incentives for both financial institutions and for entrepreneurs making productive investments in agriculture.

About accessing the grant, an applicant should present a solid business plan meaning it should be technically feasible, financially viable, with projected cash flow that will enable repayment within a maximum of 12months.

The project should also observe standard environmental norms, yet in case of amounts below Rwf 5million a simplified business plan will suffice.

In agriculture the three categories of investments that qualify include; primary production, processing of the products and agriculture support services.
BDF will also offer advisory services related to investment, corporate and microfinance development.

Rwanda’s Junior Chamber International (JCI) organizers for Terimbere Business Plan Competition have advised the youth to continue sending their business proposals before end of August.

The business competition which was initiated by the JIC- Rwanda Chapter in collaboration with stakeholders aims at promoting private entrepreneurship, with emphasis on business proposals showing viable employment opportunities.

According to Fabrice Shema Ngoga, the JCI World Assign in charge of Africa and Middle-East, the business proposals show a reasonable sustainability for at least more than three years.

He explains that application forms are currently available from JCI’s website www.jci/cc/local/rwanda then the filled forms can be sent to [email protected].

He, however, explained to igihe.com that applications will be obtained from those that want to improve their business ventures and those willing to start new viable ones and that those interested are only allowed to send one business proposal.

“Even those who are in groups will be required to nominate a representative who will defend their single business plan,” he stressed.

JCI’s executive secretary in Rwanda, Albert Nzamukwereka was quick to clarify on how the selection process will be conducted: “Those nominated will be taught how to professionally write business proposals by mentors that will also advise on the execution process,”.

After the second phase, all nominees will defend their business proposals before a panel of judges most of whom are foreigners.

Applicants are therefore obliged to draft their proposals in international renowned languages such as French and English.

Ngoga also pointed out that those in the second phase have high chances of proceeding with their business whether they are chosen or not since at that stage their proposals will be financially viable to attract credits from banks.

The winners at the competitions will be given loans ranging from US$ 5,000 to US$1 million.

“Some amount will also be given to winners as an appreciation.” Ngoga said without specifying the amount.

JCI is an international business initiative that currently has a membership of 200,000 people from 120 countries.

Members are composed of young entrepreneurs, professionals and university students who are ambitious towards improving their lives and the community at large.

Igihe.com has learnt that the CEO of Ethiopia Commodity Exchange,Dr. Eleni Gabre-Madhin, is in Rwanda to discuss the possibility of adding some of Rwanda’s commodities into the commodity exchange.

Gabre-Madhin says, “I am very excited to see the great progress made by Rwanda and to re-acquaint myself, though briefly, with the wonderful people I always remember”.

She lived in Kigali for four years during her childhood and attended the Belgium School of Kigali (Ecole Belge de Kigali). This is her first trip back to Rwanda since she left in 1978.

During her two-day trip, Gabre-Madhin accompanied by three colleagues will meet with Dr. Agnes Kalibata the Minister of Agriculture and Animal Resources and discuss the possibility of adding some of Rwanda’s commodities into the Commodity Exchange.

The Ethiopia Commodity Exchange was established in 2008 and works to eliminate “food shortages and hunger in Ethiopia.”

In December 2005, Ethiopian government established a Commodity Exchange aimed at transforming the country’s agriculture and bringing real progress toward the country’s poverty reduction and rural growth objectives.

The exchange trades in six crops, including coffee, wheat, and maize, both on a physical trading floor in Addis Ababa and electronically.

By: Randa Rugangazi

Yesterday, Bank of Kigali officially launched its initial public offering (IPO) of 300,304,000 shares at the price of RWF 125 per share. The bank is looking to raise RWF 37.5 billion from the IPO.

Bank of Kigali (BK) first declared its intentions for an initial public offering (IPO) December of last year. The government and the bank were going to publicly offer a total of 45 percent of the bank’s shares.

It was announced on 27 June that 300,304,000 shares would be up for grabs to the Rwandan public starting Thursday, 30 June.

The IPO will then close on 29 July and BK bank will be listed on the Rwanda Stock Exchange on 29 August.

During the IPO period, brokers will be taking orders from interested invested for shares.

The shares will then be distributed out to all investors. Different types of investors have a quota of reserved shares.

East African investors have access to 82,591,440 shares. Rwandan incorporated businesses have access to 45,045,600.

The bank’s chief operating office, Lawson Naibo told Igihe.com, “The funds raised will grow the bank’s lending portfolio and expand projects around the country.”

There is optimism for the bank’s shares to be oversubscribed by investors. This follows the successful Bralirwa IPO issued end of last year. Bralirwa’s stock price shot up by more than 50 percent.

The stock’s strong performance was later supported by Bralirwa’s net income growing by 62.8 percent. Net income is the balance of business after the reduction of expense costs.

A company listed on the stock exchange has to regularly release its annual earnings to the public.

Another contributing factor to the high optimism is BK’s strong asset base forecast to grow at 35 percent within the next five years.

This growth forecast is based on a solid business plan in which the bank plans to focus on loans to small and medium sized enterprises.

According to the Ministry of Finance, privatization efforts will boost stock market activity with increased options for investors.

The efforts will also support the country’s economic growth, attract investors, and increase national savings.

“Instead of depending on the government, as a shareholder, for capital to finance upcoming projects”, explained Mr. Naibo.

The Rwanda Stock Exchange provides the bank with access to a new financing platform.

KIGALI; Nyarugenge commercial court is expected anytime from now to pronounce itself on the survival of embattled telecommunication firm Rwandatel Igihe.com has learnt.

The court had earlier appointed an interim administrator of the company for 60days that have already expired.

During the 2-month period, Richard Mugisha was mandated to investigate the company the evidence of which would be principal in the court decisions for declaring the company bankrupt or continue with its operations.

Speaking to Igihe.com today Mugisha said that the period of 60 days were a fair period and he managed to finish the report on Rwandatel as requested by the Court, “It wasn’t so difficult for me to make the assessments and I think what I presented to the judges was fair enough,” he said.

Mugisha admitted that the company is now waiting the feedback from the Judges and then see the way forward.

Mugisha was appointed by the Commercial Court to take over specific roles and responsibilities that included the total management of all the company’s assets and accounts.

The court also tasked him to supervise Rwandatel’s day-to-day business and oversee expenditures and payments of its debts, taking of loans and giving of the company’s assets as guarantees for loans on behalf of the company in the period.

A rival telecommunication company MTN Rwanda as Rwandatel’s creditor is so suspicious since the interconnection fees of fixed lines is continuously increasing the debt and they are not sure whether the company will have capacity to pay back.

“According to the report I presented yesterday to the Judges, Rwandatel owes MTN a whooping Rwf1,341,557,553 and we don’t know if the company is in the position to pay back,” Paul Mugemangango, the Senior Manager, Legal and Corporate Affairs MTN Rwanda told Igihe.com.

The debt includes Rwf60M accumulated on fixed interconnection fees during the period of 60 days after the revocation of the company’s mobile license.

According to sources who had access to the report given to the Commercial Court judges, Rwandatel accepts all the debt claimed by MTN.

Other sources also say that the Chinese company; Huawei who supplied materials is demanding over US$40M and this company is suspicious of the Rwandtel’s ability to clear such a huge debt.

Rwanda’s utilities regulatory agency withdrew Rwandatel’s GSM Mobile license in April this year and within weeks, the Office of the Registrar General had instituted insolvency proceedings against the company.

The commercial court in Kigali then appointed an administrator who is a judge of the High commercial court to take charge of the company and advise the court whether the company was solvent or insolvent and should be liquidation.

Following commencement of insolvency proceedings, Rwandatel had laid off 43.2% of its workforce as part of a company-wide restructuring process to lower its expenditure.

Operating both GSM Mobile and Fixed licenses, Rwandatel had a total workforce of 317 employees. However, only 180 have been retained to run its remaining voice, internet and data services all of which run on the fixed network.