RWANDA HOSTS FIRST EAST AFRICAN COMMUNITY

UNCLAS KIGALI 000442

SENSITIVE
SIPDIS

DEPARTMENT PASS TO OPIC: JFLEWELLING

E.O. 12958: N/A
TAGS: ECON EFIN EINV ETRD PGOV OPIC RW
SUBJECT: RWANDA HOSTS FIRST EAST AFRICAN COMMUNITY
INVESTMENT CONFERENCE

REF: KIGALI 417


1. (U) Summary: On June 26-28, Rwanda hosted the 9th East
African Community (EAC - Kenya, Tanzania, Uganda, Rwanda and
Burundi) Heads of State Summit in conjunction with the
first-ever EAC Investment Conference. EAC leaders focused on
the need to improve transportation and energy infrastructure,
reduce trade barriers, harmonize intra-EAC customs and expand
regional agricultural production. The Heads of State called
for a dialogue between Zimbabwe's ruling ZANU/PF and
opposition MDC parties. Rwanda's President Kagame was named
incoming Chair of the EAC. End summary.


2. (U) In opening remarks to the first EAC investment
conference held June 26-28 in Kigali, the leaders of Rwanda,
Kenya, Uganda and Burundi (Tanzanian President Kikwete was
not present for the opening ceremony but attended later
events) emphasized the need to improve regional
infrastructure including roads, rail, and power generation.
Ugandan President Museveni highlighted the poor quality of
the regions road network contrasting "third world" roads that
last 15 years to European roads that last 50 years. Museveni
noted Uganda has set up a tax payer-supported energy fund of
$215 million to develop hydroelectric power and his
government has also budgeted $666 million in its 2008/9 plan
to build and repair roads. Rwanda's President Kagami decried
the antiquated regional rail system and congested and
ineffective ports noting "all those obstacles ruin rather
than foster the prosperity that we all seek". Kagami called
the 2008 World Bank report on trade indicators a sobering
reminder that "we need to fix these infrastructures" and
complained that it takes almost a month for cargo from
Mombassa and Dar es Salaam to reach inland destinations in
Uganda, Rwanda and Burundi. Kagame said East Africa has a
dynamic industrial and commercial sector that can drive
private sector-led socioeconomic transformation and
emphasized regional development lies in the hands of the East
Africans.


3. (U) Kenyan President Kibaki agreed the EAC needed to
address the challenge of poor infrastructure which remains a
major constraint to investors. Kibaki noted the size and
market potential of the EAC with its 120 million people and
combined GDP of $50 billion has improved the attractiveness
of the region for business and investment. Kibaki remarked
that since the EAC set up the regional Customs Union (Rwanda
and Burundi joined the EAC in 2007 but have not yet joined
the customs union),trade within the EAC has grown from $1.3
billion in 2003 to $2.2 billion in 2006. Kibaki also
supported ongoing negotiations among the EAC member states to
set up a protocol to facilitate the free movement of people,
goods and services in the region and called for an East
African Political Federation.


4. (U) During the plenary and breakout sessions discussion
ranged from promoting regional competitiveness and trade and
investment opportunities to financial mobilization and the
role of ICT in fueling regional trade. A number of foreign
investment groups attended the event. New York-based Merrin
Management Corp. Chief Investment Officer Michael Stern told
Emboffs that his company is actively looking for investment
QEmboffs that his company is actively looking for investment
opportunities in the region. Contour Global Project Manager
Jarmo Gummerus said his company expects to sign a methane gas
concession and power purchase agreement with the Government
of Rwanda (GOR) on or before July 10, 2008. The methane gas
to power project (reftel) will cost an estimated $260 million
and generate 100MW to the Rwandan power grid by 2012.


5. (U) The conference attracted over 1,000 participants from
the region and around the world, and the large number at
times overwhelmed the organizers. Conference organizer
Rwanda Investment and Export Promotion Agency (RIEPA)
initially planned for 600-700 participants. There were
frequent delays in processing delegates through security
check-points and scheduled events were delayed by as much as
2-3 hours. Despite these difficulties, most participants
appeared pleased with the conference and lauded the GOR
initiative to hold the event.


6. (U) In a joint communique issued at the end of the EAC

Summit, the Heads of State called for member states to
expedite the implementation of the East African Power Master
Plan in order to insure regional power supplies and to
modernize agriculture to fill the current gap in regional
food supplies. On political issues, the leaders commended
the prevailing peaceful conditions in Burundi and reaffirmed
their commitment to the on-going peace process. On Zimbabwe,
the Heads of State called for dialogue between ZANU/PF and
MDC, and asserted that conducting an election in the
prevailing (political) conditions could not offer a
long-lasting solution to the current crisis. The Summit
leaders unanimously elected President Kagame as the new Chair
of the EAC.


7. (U) Comment: Not unpredictably, the 9th EAC Summit
highlighted obvious regional developmental needs in
infrastructure and energy. However, the recent entry of
Rwanda and Burundi to the group appears to have reinvigorated
the organization, encouraged a new enthusiasm for stronger
regional integration and fostered a "can do" attitude from
the Heads of State. The size of the gathering, with over
1,000 participants including more than 250 from outside the
region, was an encouraging sign that investors are looking
for opportunities in the EAC.
ARIETTI