VZCZCXYZ0007
RR RUEHWEB

DE RUEHLGB #0112/01 0421414
ZNR UUUUU ZZH
R 111414Z FEB 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC 5116
INFO RUEHNR/AMEMBASSY NAIROBI 1141
RUEHDR/AMEMBASSY DAR ES SALAAM 1059
RUEHJB/AMEMBASSY BUJUMBURA 0245
RUEHKM/AMEMBASSY KAMPALA 1824
RUEHFR/AMEMBASSY PARIS 0421
RUEHKI/AMEMBASSY KINSHASA 0379
RUEHDS/AMEMBASSY ADDIS ABABA 0152
RUEHLO/AMEMBASSY LONDON 0173

UNCLAS KIGALI 000112 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR AF/C 
DEPARTMENT PASS USTDA: EEBONG 
DEPARTMENT PASS USTR: WJACKSON 
DEPARTMENT PASS COMMERCE: RTELCHIN 
DEPARTMENT PASS OPIC: BCAMERON 
ADDIS FOR LISA BRODEY 
 
E.O. 12958: N/A 
TAGS: EFIN ECON PGOV EINV ENRG ETRD EPET BTIO RW
SUBJECT: RWANDA MONTHLY ECONOMIC REVIEW 
 
  (SBU) This edition of the monthly economic roundup 
includes: 
-- Regional Security: Kenyan Violence Affects Rwandan Gas 
Prices 
-- Commercial News: 
-Rwandan Stock Market Launched 
-Tourism is Large Foreign Currency Earner in 2007 
-New Immigration Forms to Capture Tourism Trends 
-Tea Revenue Expected to Rise in 2008 
-Cold Room at Airport Gives Boost to Horticulture Exports 
-- Donor Support for Energy: Belgium and EU Award Major 
Energy Grants 
-- Macro Economic Indicators: Higher Tax Revenues Projected 
for 2008 
 
 
REGIONAL SECURITY: 
------------------ 
¶2. (SBU) Kenyan Crisis & Gas Prices:  In the wake of the 
contested Kenyan elections and continuing violence, the 
Government of Rwanda (GOR) twice increased gas prices, most 
recently from USD 1.10 to  USD 1.30 per liter.  The 
Commerce Minister initially told businesses and consumers 
that the situation in Kenya would not require increased 
prices.  As shortages continued, however, the government 
imposed modest increases.  Rwanda has imported one million 
liters of fuel in the last three weeks (escorted through 
the most violent areas of Kenya) while needing 
approximately 130,000 liters of fuel per day.  Rationing in 
the immediate aftermath of the election was lifted within a 
week as supplies arrived from Kenya and Tanzania (the 
government placed an order for 45 million liters of fuel 
from Dar es Salaam).  (Note: the government subsidizes 60 
percent of the cost of fuel imports and has sole authority 
to set pump prices.  Eighty percent of Rwanda?s dry goods 
also arrive through Kenya; transport routes through 
neighboring Tanzania are longer and more expensive). 
 
COMMERCIAL NEWS 
---------------- 
¶3. (SBU) Stock Market Launch:  The Rwanda Over the Counter 
Stock Market (ROTCM) was launched by President Paul Kagame 
on January 31.  ROTCM will offer two debt securities to the 
public, a 20 billion Rwandan franc treasury bond from the 
Central Bank (BNR) issued with a maturity of two years and 
an interest rate of eight percent, and a Rwanda Commercial 
Bank (BCR) five-year corporate bond at nine percent.  The 
Capital Market Advisory Council (CMAC), a government bodyQ }1QQ&Q]Q/"Q7Q) ROTCM, but officials have expressed 
a desire for privatization of the market once it matures. 
 
¶4. (SBU) Tourism:  The tourism industry became the top 
foreign currency earner in 2007, overtaking coffee and tea. 
Almost 40,000 tourists visited Rwanda last year, spending 
over USD 42.7 million; coffee and tea earned USD 35.7 
million and USD 31.5 million respectively.  The Rwanda 
Office of Tourism and National Parks (ORTPN) credits the 
increased revenue to new hotels, an increased number of 
flights from abroad, and the acceptance of Visa and Master 
Cards by area businesses. 
 
¶5. (SBU) The Immigration Department, in collaboration with 
ORTPN, introduced new arrival and departure forms.  The new 
system will improve the collection and reporting of tourism 
statistics and assist in better documentation of tourism?s 
role in the national economy. 
 
¶6. (SBU) Tea Revenue:  According to the Director General of 
Ocir-The (the Rwanda government tea authority), tea exports 
will generate USD 38 million in 2008.  He expects to export 
Qwill generate USD 38 million in 2008.  He expects to export 
20,000 tons of tea as a result of privatization and the 
restructuring of Ocir-The.  The Rwanda tea sector has a 
total of twelve thousand hectares (close to thirty thousand 
acres) of tea plantations, of which 70 percent are owned 
and operated by growers' cooperatives.  Concerns were 
raised when the tea auction in Mombasa was suspended for a 
week in early January, as about 70 percent of all Ocir-The 
tea is sold at the weekly auction.  If the ongoing 
political turmoil in Kenya leads to a prolonged suspension 
of the auction, there could be a significant impact on 
Rwandan tea revenue. 
 
¶7. (SBU) Horticulture:  With the construction of a cold 
room at Kigali Airport with Dutch funds, horticulture 
exports are expected to significantly increase.  Prior to 
the construction of the new facility, only roses, apples, 
bananas and Dracaena Ornamental plants could be shipped. 
The new 
 cold room now allows passion fruit, snow peas, 
pineapples, Japanese plums and geranium oil (an essential 
oil for perfumes) to be added to the list of exportable 
products.  Peter Muvara, Chairman of Rwanda Horticulture 
Task Force, said the country currently exports three to ten 
metric tons of horticulture products a week; the cold room 
increases capacity to thirty metric tons of perishable 
products.  Horticulture exports earned USD 0.7m in 2005 and 
USD 2.5m in 2006.  These figures are expected to increase 
significantly for 2007 and 2008. 
 
DONOR SUPPORT FOR ENERGY 
------------------------ 
¶8. (SBU) Belgium Aid:  On December 19, 2007, the Belgium 
Ambassador signed an agreement providing a grant of USD 
34,007,352 to the GOR.  The grant will be used to develop 
horticulture and construct two micro-hydro power plants of 
thirty kilovolt (KV) and two Mega Watt (MW) in the North 
and West provinces respectively. 
¶9. (SBU) EU Aid:  The European Union (EU) announced it 
would help fund a five-year energy plan focused on bringing 
electricity to remote rural areas.  The project is expected 
to cost around USD 25.4 million.  The EU will contribute a 
grant of USD 14.6 million, with the balance covered by the 
GOR.  The project envisions the construction of micro-hydro 
electricity plants at various sites to power roughly 15,000 
households.  New solar energy systems will bring 
electricity to over 350 of the nation?s rural institutions 
such as health centers, schools and government offices 
throughout 150 of Rwanda's 416 sectors. 
MACRO ECONOMIC INDICATORS 
-------------------------- 
¶10. (SBU) Tax Revenues:  The Rwanda Revenue Authority (RRA) 
has set a target of close to USD 490 million in taxes for 
2008, 6.3 percent higher than last year?s collections.  The 
Commissioner General expects the increase to come from 
increased efficiency and reforms in the tax collection 
system, including increased tax collections from the 
informal business sector and reduction of tax evasion by 
tax payers generally.  However, this revenue projection may 
now be unattainable given  the adverse impact the situation 
in Kenya has had on transportation routes and the import 
and export of various goods. 
ARIETTI