East African Business Week (Kampala)
Bosco Hitimana
10 December 2007
Substantial existence of the International Finance Corporation (IFC), in Rwanda could stand more chances of nurturing a strong private sector on the ground.
The IFC is the private lending arm of the World Bank group and it has proved to be the leader in the development of a strong private sector in Rwanda.
"Rwanda's economic reforms and strong growth signal a commitment of reducing poverty, especially through a more dynamic private sector," the vice president and chief executive officer of IFC, Mr. Lars Thunell said recently when he was in Rwanda to meet President Paul Kagame.
According to Mr. Thunell, IFC is the right partner for Rwandan businesses that seek innovative solutions, global expertise, and local knowledge.
IFC is working with the World Bank and the government of Rwanda to explore financing opportunities for the huge deposits of methane gas in Lake Kivu in the western part of the country. The government has prioritized the gas as the only natural resource that would cut off power expenditure bills and heat and light up Kigali to boost business.
The government of Rwanda commissioned a study to examine the quantity and quality of the gas in Lake Kivu and how it can be extracted. The IFC investment targets in Rwanda range from a variety of sectors including financing air transport, tourism, banks and technical assistance in terms of leasing and entrepreneurship development. It is advising the government of Rwanda on the privatization of the state -owned Rwanda air.
This year, IFC loaned Intraspeed, a major flight and forwarding company in the great lakes region US$7.5million to increase its business operations targeting more profits in the region.
Rwanda's commercial bank that has been a business partner with the IFC recently signed a loan agreement with the IFC of about US$2million to facilitate the bank to do business globally. This was part of IFC's global trade finance program. The facility comes to help the bank's underlying trade transactions, covering payment risk and increase Rwanda's global trade volumes.
"Working with IFC will greatly increase our capacity to facilitate trade between Rwanda and other countries, promoting the private sector and contributing more to economic development," the managing director of BCR Mr. David Kuwana said
IFC launched this program in 2005 to support trade with emerging markets world wide and promote flows of goods and services between developing countries, according to Thunell.
Global Trade Finance Program has provided about $1.5billion worth of grantees to issuing banks in developing countries. It has supported $2.2billion in trade globally since 2005, of which $1.2billion was trade involving sub Saharan African nations. So far, 29 banks benefit on the program in 15 Sub-Saharan countries including Rwanda, Democratic Republic of the Congo (DRC), Liberia, Burundi and Sierra Leone.
IFC partnering with DEG have also shown ground breaking commitments to support sustainable tourism in Rwanda. This is symbolized by a loan of up to US$12million extended to Tourism Promotion Services Rwanda (TPSR), the owner of Kigali Serena and Lake Kivu Serena hotels in Rwanda.
The facility will see Kigali Serena hotel expanded to about 150 rooms and refurbish Lake Kivu Serena hotel. TPSR has signed a 30 year lease agreement with the government of Rwanda to run and expand Kigali Serena and Lake Kivu Serena hotels.
IFC also provided a loan of $2.5million to Milkor hotels to refurbish Hotel des Milles Collines. Hotel des Milles Collines was privatized by the government to the recently deceased Rwandan business tycoon Miko Rwayitare as the majority shareholder.
IFC was the first player to introduce leasing program in Rwanda. The program was launched this year on March 15, together with Rwanda Entrepreneurship Program. The program has been successful in terms of property leasing. However, the banks have been crying foul over the taxation system that has not been sparing the borrower and leaser. According to the Rwanda Revenue Authority, leasing is a new business program and plans are being put in place to tax it in a more specific and friendly way.
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