The Senate has approved the bill for the ratification agreement of Rwanda's entry into the Africa Finance Corporation (AFC), with senators saying that the country will get economic development gains from it such as through infrastructure financing.
AFC was founded in 2007 as a multilateral financial institution created by sovereign African states. It provides pragmatic solutions to Africa's infrastructure requirements by financing and developing infrastructure, natural resources and industrial assets.
The senatorial plenary comprising 26 members unanimously voted the bill on Wednesday, June 24, 2020.
Uzziel Ndagijimana, Minister of Finance and Economic Planning said that AFC provides its contribution to Africa's development mainly through supporting infrastructure projects including natural resources, industries, transport as well as providing expertise for major development projects.
He added that the Corporation partakes in looking for other partners in order to get adequate funds to invest in big projects.
"AFC makes investments mainly in energy, transport, logistics, mining and processing of minerals, as well as communication," he said.
"By joining AFC, our country will get benefits such as loans intended to finance infrastructure projects, and access to AFC's expertise in planning for big projects, as well as dividends on shares as a member once the Corporation registers profits," he said pointing out Rwanda will buy shares from the Corporation.
He indicated that the loans granted by AFC are charged at an average of 6 percent, but added that it lowers the overall cost of projects through insurance and consultancy services.
He said that AFC is one of the institutions that worked on the study of the project to generate power from peat in Gisagarara District indicating that it funded it with a $100 million loan.
Senator John Bonds Bideri said that among factors that investors consider when deciding where to make investment is the cost of energy and transport, adding that this Corporation will help the country to invest in major infrastructures including transport and energy that will benefit the country.
"This agreement is timely because no country can develop if it does not have infrastructures, especially in transport and energy.
"When energy is very costly, investors prefer places where energy is cheap. When transport of raw materials and equipment to factories, or processed products from industries to market is expensive, it is also a serious problem," he said.
Bideri said that regional projects could also be funded thanks to the Corporation.
"Some of the activities we carry out are regional projects. For instance, the Rusumo hydropower project which Rwanda has undertaken together with other regional countries. We are thinking about the railway project which passes through the Northern Corridor and Central Corridor. We cannot manage that without joining efforts with other countries," he said.
"Some of the members of the members of AFC are from the [East African] region, which means that it will be easy for us to partner in order to invest in such projects that can enable the country to achieve desired development," he said.
Senator Cyprien Niyomugabo said that accessing AFC's expertise is important for Rwandans' progress and self-reliance.
"There are many institutions that support businesses for women and other people, but you realise that sometimes there is a lack of expertise. The idea that AFC will help us access expertise for project development is laudable," he said
The AFC currently has 26 states and two multilateral organisations as members, in which it has preferred credit status in these countries, and receives preferential access to foreign currency, has tax exempt status, and is immune from confiscation of its assets.
Nigeria (host country), Benin, Eritrea, Gabon, Ghana, Guinea-Bissau, The Gambia, Sierra Leone, Uganda, Rwanda, Liberia, Guinea Conakry, Côte d'Ivoire, Chad, Djibouti, Cape Verde, Kenya, Madagascar, Malawi, Mauritania, Mauritius, Namibia, Senegal, Togo, Zambia and Zimbabwe.
Current Multilateral Organisation members are the African Reinsurance Corporation, and the African Development Bank Group.
In the financial year 2019, AFC invested $19.1 billion, including $10.2 billion mobilised from other investors, according to the Corporation's 2019 financials.