Rwanda Private Sector Federation Private sector perspectives on long term investment Development...

Rwanda Private Sector

Federation

Private sector perspectives on long term investment

Development Partners Meeting 2006

RPSF proprietary informationOTF Group 08-11-06

Investing in our future

Private sector Challenges

RPSF response

Concluding remarks

Private Sector long term investment perspectivesRPSF Presentation Overview


Good News – Fresh investments coming into play through mobilised private sector

• RIG Model– PPP approach– Mobilised 25 million US$ for local investments– Targeted investment areas:

• Energy - methane gas , • Agribusiness, • Financial services, • Cement manufacturing, • Real estate development

• Thinking outside the box – Private sector in the creative economy- ICT ( Software development and call centers) Investment in sports stadium, investments in the movie industry, sports and amusement parks, – though concept still new

• Mobilisation of the diaspora for local investment (USA, Europe, Rest of Africa) - Case of real estate investments


Replicating the RIG model by province – Projects identified

Province Project DescriptionEst. Investment in RwF

Estimates in USD

Southern Province

1. Cultural Tourism Project 600,000,000 1,071,429

2. Mini-Hydro Electric power plant on Rukarara River (PPP project) 2,550,000,000 4,553,571

Western Province 3. Real estate development a long lake Kivu 4,000,000,000 7,142,857

4. Boat making and maintenance Project on lake Kivu 715,000,000 1,276,786

Eastern Province 5. Mechanised agriculture project 550,000,000 982,143

6. Tannery and Meat packing project 700,000,000 1,250,000

Northern Province 7. Bamboo cultivation and processing project 700,000,000 1,250,000

8. Potatoe processing plant 1,000,000,000 1,785,714

9. Wind energy project 3,200,000,000 5,714,286

Ville de KIGALI 10. Construction materials plant 1,600,000,000 2,857,143

11. Paper and plastic recycling industry 800,000,000 1,428,571

12. Floriculture – cut flower project 750,000,000 1,339,286

TOTAL EST. PROJECT INVESTMENT 17,165,000,000 $30,651,786

Other projects of a sectoral nature in the pipeline include the agricultural bank


Rwanda is competing in new segments in Tourism, Tea and Coffee

• Primate tourism

• Cultural tourism

• Business tourism

$26$42

$55$31

$0

$30

$60

$90

2005 2006 2007 2008

$26$47

$61$38

$0

$30

$60

$90

2005 2006 2007 2008

$38

$72$85

$59

$0

$30

$60

$90

2005 2006 2007 2008

• Nyungwe lodge--$1.5M

• Coffee tourism farm

• Tour companies--$200K

• CTC tea

• Orthodox tea

• Packaged & flavored tea

• Specialty Arabica

• Coffee tourism--$500K

• Toll roasting in Far East

• Tea factories for sale

• Tea packaging

• Marketing / distribution

They are other opportunities in Priority Sectors

Tourism Tea Coffee


Mining Horticulture Hides & Skins

• Metals—Coltan, Wolfram,

• Precious stones

• Quarry products

$38$54 $64

$46

$0

$30

$60

$90

2005 2006 2007 2008

$1$4

$6

$2$0

$3

$6

$9

2005 2006 2007 2008

$5$7 $8

$6

$0

$3

$6

$9

2005 2006 2007 2008

• Mining concessions

• Cutting stone facility

• Cement and Tile factory

• Rose farms--$300K / ha

• Drying facility--$50K

• Packing center--$30K

• Organic fresh fruits

• Dried fruits & vegetables

• Juice

• Wet blue

• Leather

• Finished goods

• Tannery--$ 800K

• Integrated leather

unit

• Leather Handicraft

Horticulture, Mining, Hides & Skins offer attractive opportunities

They are other opportunities in Priority Sectors


Structural constraints

Supply side constraints:

Institutional constraints

The sector continues to face a number of challenges

• Geographical barrier

due to lack of access to

the sea

• Small-sized national

market

• Inadequate physical

infrastructures – Road

network, no railway link to

the region, energy

• Land issues

•Availability of long term

financing instruments

• High transport costs

• Limited skills both

technical and managerial

•Technology limitations

• existence of some

irrelevant legislations

pending reforms

•RPSF institutional

Financial & capacity

challenges• Poor participation in

Public policy decision

• Capacity issues in private

sector support institutions

However they are challenges


Not important (1, 2 ) Important (6,7)Neutral (3,4,5)

Energy Related Issues 11%

21%

15%

18%

26%

42%

28%

66%

6%

6%

27%

24%

17%

16%

34%

10%

58%

57%

42%

38%

24%

58%

73%

83%

Infrastructure

Low skills base

Weak representation in policy decisions

Taxation Issues

Access to credit

“What would you say are the biggest challenges facing your business today?

Access to markets

Corruption

Source: OTF Group Survey Private Sector Opinions N=30, November 2005

Private sector Survey findings

Infrastructure is the main constraint for large firms –

Corruption least noticed


RPSF Strategic PrioritiesRPSF Strategic PrioritiesRPSF Strategic PrioritiesRPSF Strategic Priorities RPSF main actions completedRPSF main actions completedRPSF main actions completedRPSF main actions completed

RPSF is mandated to lead the private sector response

Good progress has been made in executing the first strategic plan

Strengthen private sector companies in Rwanda

• Articulated a National BDS Development Plan • 4 BDS centres opened• Business Plan Competition established (over 900 proposals)

Build human capacity for Rwanda’s private sector

• Developed a capacity building plan for SMEs and Cooperatives • Initiated a partnership with HIDA & ACBF

Facilitate sustainable funding for the private sector

• Performed donor fundraising campaign• Improved membership revenue collection (RwF 28m – 110m)

Perform advocacy in Public Private Partnership

Provide dispute arbitration & business challenge assistance

Increase RPSF effectiveness and develop infrastructure

Develop vibrant private sector associations

• Represented private sector in PPP meetings• Negotiated successfully for the removal of 4% Magerwa fee•Negotiated successfully for the removal of 1.2% business reg

• Actively participated in the review of business laws• Leading the restructuring of the arbitration center

• Completed private sector communication strategy and website• Completed feasibility study and gained land for permanent exhibition site• Restructured 23 associations into 9 chambers (51 associations)• Signed partnerships with 7 foreign chambers of commerce


The next RPSF Strategic Priorities 2007-2010

Strategic Priorities 2007-2010

Promote entrepreneurship

and business growth

Build capacity for Rwanda’s private sector

Effective Private sector advocacy in

PPD/PPP

Enhance Ps involvement in

regional & international

trade

Build RPSF institutional

capacity

Provide direct support services to business

Advocacy to improve the business environment

Mission

Vision

To represent the interests of the entire private sector through advocacy, BDS provision thereby taking the lead in the growth of a private sector driven economy

To foster the transformation of Rwanda into a middle income nation through a strong and vibrant private sector.


RPSF response: Major projects – BDS Network to support private sector investment

District Amount in US$

BDS Setup 2007-2010

Expenditure over 4 yrs

Infrastructure & Equipment

400,000/BDS 23 9.2 M

Operating & Admin exp.

110,000/BDS 23 2.53 M

Regional exhibition centers

1,000,000/Center

4 4 M

International exhibition park - Kigali

5,000,000 5 M

Total CAPEX 20.73 M


RPSF response: Major projects – Capacity building Project: 2007-2010

• Public Private sector dialogue Interface US$ 429,091• Skills upgrading and knowledge building US$ 782,571• Information & Knowledge management US$ 350,182

• Building competitiveness of SME’s and MSSE’s:US$ 962,545

• Program for youths & women entrepreneurs: US$ 500,000

• RPSF Institutional strengthening (Others) US$ 495,943

• Total programs expenditure US$$3,520,332

Reference: Private sector capacity building plan – key programs


Concluding remarks

• Given that private sector investment has been lagging behind, there is a strong need for GoR to increase investment expenditure on infrastructure development which are crucial for private sector productivity

• This encompasses the full range of energy, transportation and communication facilities that must be in place for private producers to carry on their activities at competitive cost

• In addition the GoR should carry out crucial human capital formation both in technical and managerial skills required for rapid industrialization and entrepreneurship development

• The government under the PPP arrangement should mobilise long term financing to jumpstart investments in potential export sectors with an exit strategy

• The government should continue to play a catalytic role in providing and sustaining an attractive business environment ( expediting business law reform including property registration, removing red tape around doing business and putting in place customer charters in public sector offices, putting in place an SME charter or policy)

• We reiterate the private sector call on the development partners to support the development agenda including direct support to the private sector so as to build the engine of sustainable economic growth


Thank you for your kind attention

Rwanda Private Sector Federation Private sector perspectives on long term investment Development...

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