RWANDA MONTHLY ECONOMIC REVIEW

UNCLAS KIGALI 000405

SIPDIS

DEPARTMENT FOR AF/C
DEPARTMENT PASS USTDA: NED CABOT
DEPARTMENT PASS USTR: WJACKSON
DEPARTMENT PASS COMMERCE: RTELCHIN

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SIPDIS

E.O. 12958: N/A
TAGS: EFIN ECON PGOV EINV ENRG ETRD EPET BTIO RW
SUBJECT: RWANDA MONTHLY ECONOMIC REVIEW

Ref: A. Kigali 340

B. Kigali 193


DEVELOPMENT PROJECTS / ISSUES


1. The High Court recently issued a temporary injunction against
Dane Associates, dissolving the Board of Directors of Kibuye Power
(KP1) Limited and preventing the company from being party to methane
extraction activities at Lake Kivu. Dane has been embroiled in a
breach of contract dispute with the GOR on a pilot extraction
project (reftel B). The GOR is actively looking for other partners
with which to exploit the methane in Lake Kivu.


2. Rwanda will be the first among the selected six African
countries to expedite the New Partnership for Africa's Development
(NEPAD) agricultural development program in the region. The program
aims to develop value-added industries under the Strategic Plan for
Agricultural Transformation (PSTA) as part of the country's Economic
Development and Poverty Reduction Strategy (EDPRS). The six
countries that were selected by the Common Market for East and
Southern Africa (COMESA) are Rwanda, Ethiopia, Kenya, Malawi,
Uganda, Rwanda and Zambia.


3. Kigali will host an East African Broadband workshop from May 8-9
with the goal of accelerating deployment of high-speed broadband
networks in East Africa.


4. Google recently agreed to provide cost-free web-based
applications for e-mail, calendar, documents and spreadsheets,
messaging and Web page authoring available to government ministries
and three colleges in Rwanda (the company announced a similar
initiative in Kenya.) Each university and ministry will get its own
domain name, and all the applications will be available without
advertising. This will save the Rwandans the considerable expense of
developing their own e-mail systems, maintaining servers, training
staff and buying PC-based software.


5. Delegates from 10 countries in the East Africa region gathered
in Kigali in March to mark the first River Nile Day, with most
discussions focussing on the need to share water resources equitably
in order to avoid conflicts. It was organised by the Nile Basin
Initiative, an inter-governmental body through which countries
discuss equitable and sustainable use of the Nile's waters. Nearly
300 million people depend on the Nile, and the number is expected to
double by 2025. Policy makers therefore have made co-operation
surrounding the Nile a priority as a means of reducing poverty,
increasing trade, ensuring food security, and developing power and
electricity infrastructure. A treaty signed during the British
colonial era in 1929, and amended in 1959, guaranteed that nearly 90
per cent of the waters flow to Egypt and Sudan. Upstream countries
were required to seek authorization from Egypt to use the Nile's
waters. Amendments to the 1959 agreement are under discussion.


COMMERCIAL OPPORTUNITIES / SUCCESSES


6. SolidWorks Corporation, a US firm, established a local subsidiary
to provide sophisticated graphic software in a joint venture with
the government, the Kigali Institute of Science and Technology
(KIST) and Ecole Technique Officielle (ETO) Gitarama high school.
The project is expected to provide the hands-on 3D CAD software
training to teach Science, Technology, Engineering, and Math (STEM)
principles and enhance engineering enthusiasm in the country.

7. Opportunity International (OI),a U.S. faith-based non-profit
bank, received a commercial banking license from the Rwandan Central
Bank. As a full-service commercial bank, OI has the authority to
offer savings, lending, and insurance products. To facilitate its
entry into Rwanda, OI acquired one of the largest microfinance
institutions in the country, URWEGO, which was sponsored by World
Relief.

8. Rwanda has been seeking business with Kenya in a bid to open up
opportunities for citizens of both countries. A delegation of 42
high profile government officials from Rwanda were in the country
last week to launch the Kenya - Rwanda Business Association. Mr.
George Kanyonga, Rwandan ambassador to Kenya reported that the
formation of Kenya Rwanda Business Association is one way of making
East Africa become a common labor market. He said Rwanda is already
reviewing its immigration policy to have visas for Kenyans issued
free of charge. The association will be spending money on
feasibility studies to enable the building of a data bank that will
benefit all its members.

9. The GOR Privatization Secretariat has completed the
pre-qualification of potential strategic airline partners for the
privatization of Rwandair Express, selecting Meridiana s.p.a (Italy)
and Brussels Airlines (Belgium).


10. A Kigali Amusement Park (KAP) project is underway with a
projected value of USD 25million after completion, making it
supposedly the biggest amusement park in east and central Africa.
It is being developed by two leading Rwandan businessmen, Eugene
Nyagahene and Thaddew Musoni. Forever Design based in China
provided the master plan for KAP. Another Chinese firm, SBL company
will manufacture and install the play rides.

11. The GOR, through the Rwanda Investment and Export Promotion
Agency (RIEPA),will host the fourth annual Investment Conference
from May 28-30.


LOAN LOOKOUT


12. The Kuwait Fund for Arab Economic Development (KFAED) signed a
loan agreement for USD 10 million with the Rwandan Ministry of
Finance. This is the sixth KAFAED loan to Rwanda. The loan will
support social and economic development in the southern and western
regions of the country.


13. The European Investment Bank has made available USD 13million to
finance Rwanda's small and medium enterprise (SME) sector. The loan
will be channeled through the Rwanda Development Bank (BRD) and
Rwanda Commercial Bank (BCR). This is the first operation of the
EIB under the Cotonou Agreement facility. BRD signed its first
operation with the Bank in 1983. This partnership is one of a
number of strategic relationships that BCR has planned with the
purpose of supporting SME growth and development SME growth and
development oriented projects.

MACROECONOMIC INDICATORS

14. Exports from Rwanda to China increased more than 89 percent
between 2005 and 2006 to just over USD 20 million with exports for
December 2006 alone totalling about USD 1.6 million dollars.
According to statistics from the Chinese General Administration of
Customs, Rwanda earned USD 21,888,000 for the period
January-December 2006 representing a percentage increase of 89.8
percent of revenue in the same period of 2005. During the same
period, Rwanda imported USD 12,406,000 from China, showing a 3.3
percentage increase from 2005.
15 Rwanda and Burundi will be formally be incorporated into the
East African Securities Exchanges Association (EASEA),but initially
as observers only, since they do not yet have stockmarkets. This
will provide access to more capital, thereby attracting portfolio
investors. Uganda, Kenya and Tanzania have been working toward
establishing a joint stock exchange market, the East African Stock
Exchange (EASE),and the admission of Rwanda and Burundi will be a
major boost. When the EASE becomes operational, Rwandan and
Burundian companies operating in the two countries will be able to
list on it.
16 As described in reftel A, the IMF completed its second review of
Poverty Reduction Growth Facility program, reporting little change
from previous reviews and remaining cautiously positive about
Rwanda's future.

ARIETTI