Rwanda strives to move beyond the ghosts of the past

Unfortunately best known for the brutal genocide that occurred between April and June 1994, in which an estimated 800,000 Rwandans were killed in the space of 100 days, Rwanda has slowly but surely dragged itself out of that dark past.

Paul Kagame

President Paul Kagame

The man credited by many for helping the country to regain stability, Paul Kagame, recently won the presidential election with a landslide 93% of the vote, in what was generally described as a peaceful and free election, though critics accuse him suppressing the opposition.

What cannot be disputed is that the country has shown strong growth over the years since the ethnic conflict. AFP in a recent article on Rwanda says “the capital is changing from a sleepy backwater where most things closed at 09:00 pm to a future Singapore with gleaming office blocks and all-night shopping.” It cites the country’s Vision 2020 plan which seeks to transform the east African state into a middle-income country by transforming from a subsistence agriculture economy to a knowledge-based society.

Reuters reports that investment in Rwanda doubled to US$1.6bn in 2009, a year after the country was named top global business reformer by the World Bank.

Clare Akamanzi, chief operations officer at the Rwanda Development Board, said that the country’s foreign direct investment in the four years to 2009 cumulatively totalled US$118m from US$10m in 2005.

Reforms which won Rwanda the award included reducing the number of stages involved in registering a business from nine to one and halving the time needed to make land transfers.

The country has registered 7.1% average GDP growth since 2004 and is set to grow by 5.4% this year and 5.9% in 2011 according to the IMF, though its central bank believes growth will be close to 7% in 2010.

Positively for equity market investors, the country has made solid progress in terms of setting up a stock exchange, though the pace, like with Angola, has been somewhat sluggish.

“The defining moment will be the publication of the Capital Market laws,” said Robert Mathu, executive director of the Capital Market Advisory Council (CMAC).

While the market laws remain in parliament for approval and publication, the CMAC, a transitional organisation established in 2007 to assist government in putting a stock market in place, is acting as the market regulator, and the country has a fully functional over-the-counter (OTC) market, on which Kenya Commercial Bank is already cross listed.

Reports earlier in the year had suggested that companies such as MTN, Sonarwa (majority state owned insurance company) and Bralirwa (brewery 70% owned by Heineken with the balance held by the state), would have been listed OTC by the end of June 2010. While this did not occur, the latter two and many other state companies look set to be privatised via the exchange once it is up and running. Rwanda looks set to be a welcome addition to the east African investment universe.

Article produced by the Imara Africa Securities team. Imara is an investment banking and asset management group renowned for its knowledge of African markets.