Rwanda has been advised to focus on its capital investment climate in order to tap into over $240 billion that is readily available for investment from private investors.
Despite its notable progress in implementing the World Bank Doing Business reforms and investment in infrastructure, financial specialists say the country is missing out on the private equities floated in the sub Saharan region.
Available figures indicate that of the $240billion available for global capital investments, only 15% ($34billion) is available in the sub-Saharan region, of which 80% is invested in Kenya and the remaining 20% shared between other East African countries.
The remaining 20% is shared largely by Uganda and Tanzania and a small portion of it to Rwanda and Ethiopia according to BidNetwork, a global organization that facilitates deals between emerging market entrepreneurs and investors.
Rwanda’s small portion of the $240 billion, says BidNetwork, is largely attributed to its investment priorities especially in commercial investments.
“Rwanda now needs to attract capital investment by setting up a political and foreign exchange risk coverage, which guarantees security for the capital investors so that government or private organization can cover the risk if there are loses during the investment,” said Huseyin R. Demirhisar, Chief Operations Officer at BidNetWorks.
To join the race for the $240 billion funding, Rwanda has started working on a project to establish an independent financial arm.
Frank Namara, a Marketing Analyst at Rwanda Development Board (RDB), said “Rwanda is already starting to work on this by setting up a Rwanda Finance Ltd, a company that will implement and manage all the financial procedures needed to tap into capital investments,”
“We have more commercial projects but the Ministry of Finance is working on establishing a company that will help us to venture into risk management which will enable us to attract more impact capital investments,” Namara said.
In the meantime, in order to increase and attract capital investors to Rwanda, BiD Network through Nguriza Nshore – a USAID-funded project has expanded operations to Rwanda aimed at connecting local potential business start-ups to large capital investors as part of creating impact investment versus the current commercial investments.
This will be done through selecting Rwandan companies that can be presented at the regional multi-billion Sankalp capital investment summit which is held annually in Nairobi, Kenya.
This year’s summit will take place from 27-28, this month.
Over 2000 start-ups will participate at Sankalp summit, the largest number in history of the summit.
At the summit, Rwanda will also have a chance to host two side events for the Rwandan businesses to specifically showcase as Rwanda as an investment destination in region and the world.
‘Lend, so that I can Invest’ is the translation of ‘Nguriza Nshore’ in local vernacular.
In this five-year project of USAID, Rwandan businesses will be supported in their financial growth, with linkage to large capital investments.
The previous year, Nguriza Nshore project was able to send eight Rwandan companies at the Sankalp summit that managed to get capital funding worth $6.5million.
“This year ten more Rwandan companies will represent the country and they are targeting to collect $24 million in capital funding, in diverse sectors such as energy, Agro processing, transport and micro finance,” said Nadine Manzi, the Nguriza Nshore Deputy Chief of Party.
One of the Rwandan companies to attend is Masaka Creamery, a local diary firm which employees a team of 39 staff with half of them being deaf youths.
The comoany also deals with a 2000 farmers.
The creamry expects to get funding to increase its market beyond Rwanda through improved processing lines, packaging, and marketing.
“We have reached here with no marketing. Imagine increasing 1000 to 5000 litres per hour,” said June Igiraneza – CEO of the diary firm.
While this may look promising, BidNetWorks operations through Nguriza Nshore project will end in the next three years, and they want government to take up this model for scale up.
“This model is reflected in the resolutions of the recent government retreat meaning that we had already started on this work at a small scale, but it needs to be taken up and expanded later,” Igiraneza said.