Rwanda investment march 2010

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Rwanda investment march 2010

  1. 1. Investing in Rwanda – An OverviewMarch 2010<br />
  2. 2. A clear vision for growth through private investment set out by President Kagame (Vision 2020) <br />Politically stable with well functioning institutions, rule of law and zero tolerance for corruption<br />2<br />5 reasons for investing in Rwanda<br />Source: RDB<br />7.1% average year-on-year GDP growth since 2004, stable inflation and exchange rate<br />3 year GDP growth rate highest among major African economies and neighbouring countries<br />Sustained high growth<br />Robust governance<br />Fastest global reformer of business regulations based on World Bank Doing Business Survey<br />Simple taxation, development of industrial parks and free trade zone, and creation of stock exchange<br />Increasingly attractive destination for FDI – $118M in 2009 represents 14x increase from 2004<br />Rwanda Development Board, an independent agency, created as a ‘one-stop centre’ for investors<br />Investor friendly climate<br />Market of over 10M people with a rapidly growing middle class<br />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<br />Access to markets<br />Potential opportunities for investment abound, particularly in the following sectors:<br />Infrastructure: Opportunities in rail, air transportation to further develop Rwanda as an EAC hub<br />Agriculture: Backbone of economy, potential for growth through productivity and value addition<br />Energy: Power generation, off grid generation and significant methane gas opportunities<br />Tourism: Unique assets creating booming sector; growth potential in birding and convention<br />Information and Communication Technology: Priority sector for achieving Vision 2020<br />Other attractive sectors include Real estate and construction , Financial services, and Mining<br />Untapped investment opportunities<br />
  3. 3. A country of sustained growth and opportunity<br />Sustained Real GDP growth<br />Outperforming on Real GDP growth<br />RWF (billions)<br />7.1% year on year growth<br />‘09 Share of total<br />‘04-’09 growth rate<br />6%<br />7%<br />5%<br />7%<br />10%<br />42%<br />4%<br />39%<br />10%<br />Source: Rwanda National Institute of Statistics 2010; % of GDP minus adjustments (import duties), IMF World Economic Outlook 2009 <br />*Industry – Non Manufacturing is mostly construction with a little mining and electricity and gas. Adjustments are primarily taxes such as VAT, excise tax<br />3<br />
  4. 4. A favourable and stable macro- economic environment<br />* Constant exchange rate<br />Source: 2004-2007 NISR, 2008 MINECOFIN Projection, BNR, RDB analysis<br />Single digit inflation<br />6 years of stable exchange rate (RWF to 1 USD)<br />Global food and fuel price increase caused temporary spike, now under control<br />Government revenues growing steadily <br />4<br />
  5. 5. A country which is safe, secure and an easy place to live<br />A country rebuilt and on the rise<br />More stable than most emerging markets<br /><ul><li>Rwanda has been rebuilt since the traumatic events of 1994 and is a thriving, safe country
  6. 6. Kigali representative of this turnaround
  7. 7. A clean and green city, with the lowest crime of any capital city in the region
  8. 8. Winner of UN Habitat Award (2008) the highest award for an urban area</li></ul>World Bank Governance Indicator: Political stability (Higher is better)<br />Robust governance creates long term stability<br /><ul><li>Republic with elected President, Parliament of two houses (with most members elected from local bodies)
  9. 9. The judiciary system includes Supreme, High, District as well as Commercial courts</li></ul>Source: World Bank ‘Governance Indicators’ 2007, UN, press search, RDB<br />5<br />
  10. 10. Strong leadership has created a pro-business, near zero corruption country<br />Source: World Bank Governance Indicators, Rwanda ‘Vision 2020’, RDB<br />A bastion of near zero corruption<br />A President who understands business<br /><ul><li>President Kagame, recognized as a ‘CEO President’, understands the need for private sector investment
  11. 11. Advised by a team of international business leaders</li></ul>World Bank Governance Indicator: Control of Corruption (Higher is better)<br />A country with a clear vision<br /><ul><li>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.”</li></ul>Respected by the business community<br /><ul><li>“A mecca for venture capitalists” - CNN Money: Business 2.0
  12. 12. “Rwanda is the most undervalued stock on the continent and maybe in the world” - Fortune Magazine</li></ul>6<br />
  13. 13. A government committed to making it easier to do business<br />Fastest reforming country in World Bank’s Doing Business 2010 rankings<br />Business regulations now easier in Rwanda than the average economy in Eastern Europe, Asia,<br /> Middle East, Latin America and Africa<br /><ul><li>Rose record 76 places in World Bank’s global survey
  14. 14. 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
  15. 15. Rwanda #11 in world for ease of starting business
  16. 16. 2 steps in less than 3 days to register a company</li></ul>Source: World Bank ‘Doing Business’ Rankings 2010<br />7<br />
  17. 17. A taxation system and infrastructure projects supporting growth in FDI<br />Simple business taxation for investors<br />Specialized infrastructure for industry and trade<br />Kigali Industrial Park and Free Trade Zone under construction (completion end ‘09):<br />Sites to have reliable infrastructure and commercial services<br />Easy access to the planned new Bugesera International Airport<br />As an EAC custom union member, Rwanda has:<br />Duty free importation for products produced within EAC<br />Common external tariff: 0% on Raw materials and Capital Equipment; 15% on intermediate goods; 25% on finished goods<br />Constitutionally protected free repatriation of capital and profits<br />100% write off of R&D costs<br />Additional fiscal incentives in strategic sectors<br />Continuing work to simplify the taxation system<br />As a result of all these factors, FDI investment growing fast <br />Building robust capital markets<br />Stock exchange established in January 2008 with OTC transactions in bonds and equities<br />Global and Pan-African investors include Actis, Aga Khan hotels, MTN S. Africa, Starbucks, TiGO, Dubai World, Contour Global, Ecobank<br />Source: RDB, BNR and MINECOFIN<br />8<br />
  18. 18. 9<br />The Rwanda Development Board is proof that Rwanda is open for business<br />Source: RDB<br />RDB is the government agency charged with fast-tracking economic development in Rwanda. Independent, influential and built with global expertise, we are a government agency with a private sector mindset. Bringing the entire investor experience under one roof, RDB is here to show that Rwanda is open for business<br />Information hub for investors <br /><ul><li>The Investment Promotion team in RDB or its representative offices worldwide are your guide to investing in Rwanda. They are your single point of contact for guidance on laws, policies, incentives, investment climate and trends, investment opportunities including privatization, costs of setting up a business, process for finding land and sector specific information
  19. 19. The team can address your questions on via email, phone, in person and also arrange investment meetings in Rwanda</li></ul>Your link to the right people<br /><ul><li>Advocates on your behalf for special considerations to Cabinet depending on project size and strategic importance
  20. 20. If you are seeking them, RDB helps you find local joint venture partners and connects you to local service providers
  21. 21. Coordinates public private partnerships between thegovernment and the investors</li></ul> <br />One Stop Centre for starting a business<br /><ul><li>You can register your business in 2 easy steps and receive your certificate in 24 hours at the RDB’s One Stop Centre (OSC)
  22. 22. OSC pprovides trading license, sector specific certifications and licenses, environment clearance and investment certificates
  23. 23. Delegated officers from government agencies provide quick services at the OSC - work permits and visas, tax exemption and tax payment, land and construction permit, utilities (water, electricity), notary services
  24. 24.  </li></ul>Facilitator for business implementation<br /><ul><li>The Aftercare team in RDB becomes your single point of contact after you register your business and begin to operationalize—helping identify solutions for issues you may be facing, coordinating and introducing you to Government stakeholders and finding local partners
  25. 25. RDB also provides business development services for export based companies and small-medium businesses</li></li></ul><li>A hub for investors to access the rapidly integrating East African market<br />Source: Data from IMF World Economic Outlook<br />A large market<br />EAC: Taking real strides towards integration<br /><ul><li>Established a Customs Union (2005)
  26. 26. Working towards a Common Market in 2010, a Monetary Union by 2012 and, ultimately, a Political Federation
  27. 27. Functioning political and legal organs
  28. 28. Regional infrastructure projects are being financed and implemented and regional trade has increased
  29. 29. 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.
  30. 30. Existing bilateral trade agreements with the US and initiatives with the European Union (EU) and others in advanced stages </li></ul>Rwanda: A gateway to Africa and the world<br /><ul><li>EAC comprised of 125 million people with a combined GDP of over USD 70 billion</li></ul>10<br />
  31. 31. 11<br />Opportunities for investment<br />Source: RDB<br />Priority investment sectors:<br />Infrastructure<br />Agriculture<br />Energy<br />Tourism<br />Information and Communications Technology<br />Real estate and construction<br />Financial services<br />Mining<br />
  32. 32. Sector profile: InfrastructureRail, air, logistics investment opportunities abound to develop Rwanda as an EAC hub<br />Roads<br /><ul><li>Roadsrepresent 90% of transportation in the country
  33. 33. Over 14,000 km (8,700 miles) of roads, ~20% of which is paved
  34. 34. Regional hub for road transport as it connects important regional players, from the east coast of Africa to the west coast</li></ul>12<br />Source: RDB <br />Rail<br />Air<br /><ul><li>There are no railroad systems available, but a new railway line is in the pipeline:
  35. 35. 2 branches of the railway line are:
  36. 36. Isaka-Kigali railway project to link to the port of Dar Es Salaam
  37. 37. Rwanda-Burundi via Congo to link the southern Africa Cape Gauge railway network
  38. 38. Cost of $4B and is currently fundraising
  39. 39. The Kigali International Airport has an annual capacity of 4.4M passengers
  40. 40. Rwandair is the national air carrier with flights to number of regional destinations (Arusha, Entebbe, Nairobi and Johannesburg)
  41. 41. Other international airlines include Kenya Airways, Ethiopian Airlines, Brussels Airlines, China Postal Airlines, and African Star Airways
  42. 42. A new airport planned 40 km outside of Kigali, for estimated construction cost of $300M for Phase 1</li></li></ul><li>Sector Profile: AgricultureWorld class exports but many opportunities for regional export expansion<br />Source: MINECOFIN, OCIR Cafe, RDB<br />Agriculture is the bedrock of the economy<br />National strategy driving productivity, quality<br /><ul><li>Government and development partners have focused on improving quality through fertiliser distribution and farmer training programmes
  43. 43. This resulted in 15% growth in the sector in 2008 and higher price realization for coffee
  44. 44. Around 78% of the population is engaged in agricultural activities</li></ul>Exports led by tea, coffee but many options<br /><ul><li>Coffee– world class and winner of a number of international awards; main agricultural export with buyers including Starbucks and Sainsbury’s
  45. 45. 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
  46. 46. Many other opportunities – Dairy, fruits (many exotic varieties for juice), fresh cut flowers, silk and food crops for export to region </li></ul>Value addition is a major opportunity<br /><ul><li>Privatization of tea plantations and factories has begun in 2009 and is ongoing
  47. 47. Further opportunities in coffee washing and roasting as the premium harvest grows
  48. 48. Also in distribution, markets and cold chain infrastructure for export products</li></ul>13<br />
  49. 49. Sector profile: EnergyNew generation and methane gas can open access beyond Rwanda to neighbouring markets<br />Overview<br />Source: RDB, Ministry of Finance <br />Generation<br /><ul><li>80% of energy from wood combustion and electricity coverage levels low at 6%
  50. 50. 60-69MW of electricity generation (50% hydro-electric, 50% diesel) today
  51. 51. 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
  52. 52. For instance, in micro-hydro, 333 potential sites identified (50KW-1MW) by 2008, 2 constructed, 21 under construction and 10 scheduled</li></ul>Power grid<br /><ul><li>Power grid coverage is planned to expand to 67% of the region by 2012 through a $311M capital budget roll-out plan
  53. 53. Transmission and distribution networks to expand from 3,300km to 5,000km by 2012</li></ul>Methane Gas<br /><ul><li>50-55 billion m3 of methane gas in Lake Kivu:
  54. 54. 1st Gas Concession and Power Purchase Agreement signed with Contour Global – 100MW KivuWatt power plant under construction expected to produce 4MW/hour for ~$324M
  55. 55. Further opportunities such as a 2nd concession at Lake Kivu and conversion of gas to liquid and gas to fertilizer</li></ul>Renewable energy<br /><ul><li>Targeting 90% electricity from renewable source
  56. 56. 246,000 ha of forests for carbon credit potential
  57. 57. 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</li></ul>14<br />
  58. 58. Visitor numbers have been booming<br />Sector profile: TourismTourism sector booming, but significant opportunities remain<br />Source: ORTPN, KPS, RDB<br />What is unique about tourism in Rwanda<br />Visitors by purpose<br /><ul><li>Tourism receipts are expected to grow at a compound annual growth rate of 9% until 2012</li></ul>Transit/Other 16%<br />Business <br />49%<br />Leisure 35%<br />Tourist expenditure by purpose of visit<br /><ul><li>Unique assets: It offers tourists a one of a kind journey – home to one third of the world’s remaining Mountain Gorillas, one third of Africa’s bird species, several species of primates, volcanoes, game reserve, resorts and islands on the expansive Lake Kivu, graceful dancers, artistic crafts and friendly people
  59. 59. Safe and easy to get around with short distances to diverse destinations: Rwanda is a thriving, safe country with one of the lowest crime rates in Africa. All major attractions are located along a circuit within 1-5 hour drive from the capital, Kigali. In a short vacation, a tourist can reach volcanoes, rainforests, savannah, islands, lakes and the beautiful city of Kigali
  60. 60. A base to visit East African destinations: Located in the heart of Central and East Africa with easy access to bordering countries of Uganda, Tanzania, Burundi and Democratic Republic of Congo as well as to Kenya , Rwanda is an ideal location for travel within the region for conference and leisure tourists</li></ul>Visiting friends/family<br />Business<br />Leisure<br />Transit/Others<br /><ul><li>The average spend by a visitor is $200 a day and average length of stay is one week
  61. 61. Investments into tourism sector comprised 30% of registered projects in 2009
  62. 62. There are ~200 hotels and ~4500 hotel rooms in Rwanda. For the upper range, average occupancy rate is 70%, with foreigners accounting for 97% of bed nights sold. </li></ul>15<br />
  63. 63. Sector profile: ICTICT – Information and Communication Technology – top priority for 2020<br />Overview of ICT <br />Major players in telecom<br /><ul><li>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
  64. 64. Between the two companies, there are approximately 2M mobile subscribers, representing 20% penetration
  65. 65. A sizeable private sector is growing around the networking and software development sectors, with Rwandan companies exporting services to Burundi and Eastern DRC
  66. 66. Rwanda is participating in a $24M World Bank project to connect its national backbone to submarine cable:
  67. 67. There are three optic Service Providers Seacom, Teams and Eassy, at the East Coast to link various African countries to the global network.
  68. 68. Attracted ~$500M in investment over the last three years by both private and public sector
  69. 69. The government has invested in building the ICT infrastructure through:
  70. 70. a 2,500km optic fiber that covers Kigali city and the entire country, with a total of 7 regional links to the neighboring countries
  71. 71. Kigali City Wireless Broadband due to be commissioned early next year
  72. 72. ICT park set up for investors in pilot phase
  73. 73. ICT in Rwanda currently encompasses, in varying degrees:
  74. 74. Wireline telephones
  75. 75. VoIP
  76. 76. Dial-up internet, ISDN based internet, broadband internet
  77. 77. Computer software use and development,
  78. 78. Computer hardware, assembly, and repair</li></ul>16<br />Source: RDB<br />
  79. 79. Sector profile: Real estate & constructionGrowth creating boom in demand for commercial and residential real estate development<br />Source: RDB<br />Real estate is booming<br />Residential real estate <br /><ul><li>In 2007, Rwanda’s development and public works sectors experienced a 10% growth creating a shortage of fully functional office space and residential housing
  80. 80. 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:
  81. 81. Population growth of 2.8% combined with urban growth currently at 4% per annum
  82. 82. Growth of the middle class
  83. 83. Diaspora returning to Rwanda
  84. 84. As a result, there is also a shortage in construction material.
  85. 85. Rwanda imported $64.6M of construction materials in 2007 and $140M in 2008
  86. 86. This includes 100% of steel and a majority of other construction materials
  87. 87. 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.
  88. 88. 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</li></ul>Commercial real estate <br /><ul><li>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%</li></ul>17<br />
  89. 89. Sector profile: Financial servicesThe banking sector remains relatively underpenetrated<br />Overview<br />18<br />Source: RDB, Ministry of Finance <br />Key players<br /><ul><li>~ $200M of equity capital supporting ~$1B in total assets
  90. 90. Estimated 12% of the population had a bank account in 2007
  91. 91. 20% sector growth rate in 5 years driven by:
  92. 92. GoR enforcement of banks meeting international banking standards
  93. 93. The “Financial Sector Development Program” which increased the minimum capital requirement from $2M to $8M and requires banks to prove they are qualified before receiving a charter
  94. 94. Policy, strategy and incentives in place to develop capital markets
  95. 95. The banking sector is comprised of eight commercial banks, one primary microfinance bank, one discount house, one development bank and one mortgage bank
  96. 96. Commercial banks represent 76% of the economy’s total financing while micro finance institutions serve 88% of depositors and 90% of borrowers
  97. 97. The microfinance sub sector consists of more than 50 relatively small institutions where ~ 11% of Rwandan assets and ~ 3.5% of the population hold accounts
  98. 98. The 3 largest local banks are:
  99. 99. Banque de Kigali (100% govt. owned)
  100. 100. BPR (98% private, including Actis)
  101. 101. BCR (80% private)
  102. 102. Ecobank, Access Bank and KCB are among the international banks with a presence in Rwanda</li></ul>Interest rates in line with the region<br />
  103. 103. Sector profile: MiningUnexploited opportunities in ores, processing and diversification abound<br />Source: MINIRENA, RDB<br />Mineral exports have room for growth<br />Work is being done to develop the sector<br /><ul><li>A national mining survey is being conducted to identify mineral deposits
  104. 104. A strong, investor friendly legal and policy framework being put in place
  105. 105. Rwanda’s main mineral exports are ores processed to extract tin, coltan and tungsten
  106. 106. Only 25% of ~$ 200M potential output currently exploited
  107. 107. Significant opportunity to increase productivity through industrial mining</li></ul>Opportunities in diversification and processing<br /><ul><li>Significant opportunities in processing ores
  108. 108. Diversification opportunities in quarries (for construction materials) and precious stones (gold, diamond, beryl, topaz, rubies, sapphires, gamets and other unexploited deposits have been identified
  109. 109. 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</li></ul>Share of production volume by source, 2007 <br />19<br />
  110. 110. For further information please contact Investment Promotion in the Rwanda Development Board <br />info@rwandainvest.com<br />Tel: + 250 252 580804<br />For further information<br />20<br />

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