Rwanda's private sector close to controlling economy

By ALEX NGARAMBE Rwanda Today
Posted Friday, February 28 2014 at 19:20
IN SUMMARY
According to Rwanda Development Board (RDB), since 1995 when the
government put in place a series of economic mechanisms to revive the
economy, more than 80 government parastatals have been put up for sale
with about 60 of them fully or partially sold.
The government's plan to let the private sector take ownership of
running the economy is gaining momentum with more than 80 per cent of
all government parastatals that were lined up for privatisation being
fully or partially sold to private investors.
The majority of the companies that were up for grabs have been taken
over by foreign investors with Rwandans allowed a chance to have
ownership in a few companies that are listed on the stock exchange.
According to Rwanda Development Board (RDB), since 1995 when the
government put in place a series of economic mechanisms to revive the
economy, more than 80 government parastatals have been put up for sale
with about 60 of them fully or partially sold.
More than 20 untouched
The privatisation drive was aimed at addressing the deteriorating
situation of public enterprises that lacked expertise after the
devastation caused by four years of instability in the country that
rendered sustained economic growth difficult.
READ: Boost for struggling firms as investors come calling
More than 20 companies are however untouched and the government is
courting investors to take them up.
Notable among them is RwandAir Express, the national carrier, which is
supposed to offload 99 per cent to private investors, Onatracom, which
is seeking to sell 100 per cent and Bank of Kigali, which hopes to
sell the remaining 80 per cent.
RwandAir is borrowing heavily to invest in new aircraft and other
areas with the most recent being the funds government borrowed through
the euro bond.
Onatracom, the oldest transport company in the country and the only
public one, has been struggling with heavy losses due to mismanagement
of funds.
"The privatisation campaign was put in place to promote private sector
participation, especially in business and operations, in terms of
expansion and value addition," said Naphtal Kazoora, the acting head
of assets and business management department at RDB.
For the past five years, Rwanda's economy grew at an average of eight
per cent, save for last year when it declined to 6.5 per cent,
attributed to the aid cuts of 2012. However, the government is
projecting a growth of 11.5 per cent by 2020 and the private sector is
the key driver.
Mr Kazoora added that, with high appetite for investors in most
sectors of the economy, the target is not overambitious. However, the
local private sector is still not as competitive as its regional
counterparts and the government is still the biggest employer.
Most vibrant
The tea sector is the most vibrant and successful in terms of
privatisation, with most tea estates sold and more lined up for sale
than in any other sector.
In 2012, Rwanda Tea Investment (RTI) took control of Mulindi and
Shagasha tea factories. The firm, formed by UK-based investors,
controls 60 per cent of Shagasha and the government 10 per cent and
the remaining 30 per cent is owned by farmers.
In Mulindi, Rwanda's oldest tea factory, RTI owns 55 per cent and
farmers the remainder.
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