VZCZCXYZ4179
RR RUEHWEB

DE RUEHLGB #0161/01 0661355
ZNR UUUUU ZZH
R 061355Z MAR 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC 5162
INFO RUEHNR/AMEMBASSY NAIROBI 1148
RUEHDR/AMEMBASSY DAR ES SALAAM 1066
RUEHJB/AMEMBASSY BUJUMBURA 0252
RUEHKM/AMEMBASSY KAMPALA 1832
RUEHFR/AMEMBASSY PARIS 0428
RUEHKI/AMEMBASSY KINSHASA 0387
RUEHDS/AMEMBASSY ADDIS ABABA 0155

UNCLAS KIGALI 000161 
 
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 FOR FEBRUARY 
 
¶1. (SBU) This edition of the monthly economic roundup 
includes: 
-- Commercial News: 
   - Mobile Phone Industry Heats Up 
   - New Stock Exchange Continues to Grow 
   - Property Registration Fees Change 
-- Investment Issues: Bilateral Investment Treaty Signed 
-- Regional Issues: 
   - Kenyan Violence Continues to Impact Economy 
   - Cross-Border Trade Post Finished 
-- Macro Economic Indicators: Monetary Policy Announced 
-- Education: Education Spending Announced 
-- ICT Issues: Kigali Protocol Goes into Force 
-- Environmental Issues: 
   - Joint Conservation Program Launched 
   - Heavy Rains Destroy Crops 
-- Development Issues 
   - Development Deal Signed with South Korea 
   - IMF Review Completed 
 
 
COMMERCIAL NEWS: 
------------------------- 
¶2. Mobile Phone Industry Heats Up:  Rwandatel, a 
telephone and internet provider, signed a USD 35 million 
deal with Huawei Technologies, the largest telecom vendor 
in Chinese market, to expand infrastructure support of 
Rwandatel's Global System for Mobile Communication (GSMC) 
and 3G Universal Mobile Telecommunications System(UMTS) 
network services.  The announcement of the deal came one 
week after Rwandatel's main competitor, MTN Rwanda, 
reduced mobile phone fees on local and international 
calls by 35 percent and 60 percent respectively. 
 
¶3. New Stock Exchange Continues to Grow:  The Rwanda Over 
 
the Counter Market (OCTM), which opened last month, 
continues to grow.  Four Kenyan stockbrokers, Faida 
Investment Bank, African Alliance, Dyer and Blair and 
Tsavo Securities, have acquired licenses for membership 
 
SIPDIS 
to Rwanda Stock Exchange (RSE) in order to trade stocks 
on the OTCM.  The GOR has announced that a third treasury 
bond will be offered by the National Bank of Rwanda. 
While the first two bonds were offered for a two year 
maturity period at eight percent, the new bond will have 
a three year maturity at 8.25 percent. 
 
¶4. Property Registration Fees Change:  Rwanda replaced a 
six percent mortgage registration fee with a flat fee of 
Frw 20,000 (USD 40). This came in response to claims that 
the percentage registration fee was exorbitant, resulting 
in fewer property transfers. The move is also part of the 
GOR's ongoing effort to improve Rwanda's ranking in the 
World Bank's Doing Business report. 
 
INVESTMENT NEWS: 
------------------------- 
¶5. Bilateral Investment Treaty Signed:  President Bush 
and President Kagame of Rwanda signed the Bilateral 
Investment Treaty (BIT) on February 19, underscoring the 
two countries commitment to open investment and trade 
policies.  The treaty is expected to bring more 
investment and increase trading partnerships.  Bilateral 
trade between the two countries increased by 40 percent 
in 2007, totaling over USD 29 million. U.S. imports from 
Rwanda were valued at USD 13 million during this period, 
up 43 percent from 2006. U.S. exports to Rwanda totaled 
USD 16 million in 2007, up 37 percent from 2006. 
 
REGIONAL ISSUES: 
------------------------- 
¶6. Kenyan Crisis Continues to Impact Economy: Several 
sectors continue to feel the effects of the Kenyan 
crisis. The Rwandan company Bralirwa increased product 
prices because the brewer has been forced to switch from 
Qprices because the brewer has been forced to switch from 
cheaper furnace oil to diesel to fire its boilers.  Many 
Rwandan businesses continue to move their transportation 
route to Dar-es-Salaam from Mombasa. Transportation costs 
are up 25 percent since the start of crisis, caused by a 
fall in the number of operators, increased in fuel prices 
and the increased distance of the transportation route 
caused by switch to Dar-es-Salaam. Prices are expected to 
increase even more as the Kenyan Ports Authority will 
increase cargo tariffs starting March 1. 
 
¶7. Cross-border trade post finished:  Rwanda and Burundi 
have finished building a multi-million, one-stop border 
post at Nemba.  The post is designed make trade and 
travel easier between the two countries by cutting down 
on immigration and customs processing time.  Customs, 
security and immigration officials of the two countries 
will work together to run the post which is scheduled to 
open in March. 
 
MACRO ECONOMIC INDICATORS 
 
------------------------- 
 
¶8. Monetary Policy Announced: Finance Minister Musoni 
presented Rwanda's 2008 Monetary Policy Statement to the 
public on February 21. He noted that real growth of the 
GDP was up half a percent to six percent in 2007.  Gains 
in the industrial, construction and services sectors 
helped compensate for an agriculture sector hurt by poor 
rainfall.  While the Minster pointed out that headline 
inflation only jumped 0.2 percent in 2007, he did note 
that underlying inflation jumped to 9.7 percent from 4 
percent in 2006. 
 
EDUCATION 
------------------------- 
 
¶9. Education Spending Announced:  President Paul Kagame 
announced at the American Association for Advancement of 
Science (AAAS) Conference in Boston that his government 
will invest five percent of Rwanda's GDP by 2012 to boost 
the country?s science and technology capacity.  Kagame 
said he instructed his ministers to work with AAAS to tap 
into the American network of scientists and educators 
that can help rebuild Rwandan institutions. 
 
ICT ISSUES 
-------------------------- 
 
¶10. Kigali Protocol Goes Into Force:  Malawian President 
Dr Bingu Wa Mutharika signed a protocol on policy and 
regulatory framework for the NEPAD Broadband 
Infrastructure Network - known as the Kigali Protocol - 
on February 13. Malawi was the seventh of the twelve 
signatory countries to ratify the Protocol, providing the 
majority needed to bring the protocol into force. 
Developed to provide quality and 
affordable telecommunications connectivity to Eastern and 
Southern Africa, the NEPAD ICT Broadband Infrastructure 
Network will now start to be implemented with officials 
hoping to complete the work before the 2010 FIFA World 
Cup. 
 
ENVIRONMENTAL ISSUES 
------------------------- 
¶11. Joint Conservation Program Launched:  Rwanda, Uganda 
and the DR Congo have publically launched the tri- 
national secretariat for the Central Albertine Rift 
Strategic Plan (CARSP) on February 28 in Kampala.  CARSP 
is a massive joint conservation program in the Central 
Albertine rift, a  region where more than 50 percent of 
birds, 39 percent of mammals, 19 percent of amphibians 
and 14 percent of reptiles and plants of mainland Africa 
are found.  CARSP is supported by the Netherlands 
government and the Buffer Foundation. 
 
 
¶12. Heavy Rains Destroy Crops:   Days of heavy rains left 
killed three people and left many residents of Muhanga 
province homeless.  Twenty five percent of the crops 
within the affected districts' farmlands have been 
destroyed.  District leaders have down played the impact 
Qdestroyed.  District leaders have down played the impact 
of the rains on food security and farmers' income in the 
long run, but some residents insist the rains may lead to 
increased food prices and food insecurity in the affected 
districts. 
 
DEVELOPMENT ISSUES 
---------------------------------- 
¶13. Development Deal Signed with South Korea: Officials 
from South Korea and the GOR have signed a deal for a one 
year development integration plan worth half a million 
USD.  Under the deal, five experts from South Korea will 
work with the GOR to reform and strengthen five GOR 
policy areas: industrial policy, investment and export 
promotion, human resource development, agriculture and 
energy.  The deal will be funded by South Korea and is 
designed to help the Rwandan economy move away from its 
dependence on agriculture. 
 
¶14. IMF Review Completed: On February 29 the IMF 
Executive Board completed its review of the Rwanda?s 
performance under the three-year Poverty Reduction and 
Growth Facility (PRGF) arrangement. Upon completion of 
the review, IMF is able disburse USD 1.8 million, which 
would bring total disbursements so far under the 
arrangement to USD 7.2 million. Mr. Murilo Portugal,  IMF 
Deputy Managing Director and Acting Chair, labeled 
Rwanda's 2007 economic performance  as "satisfactory." 
Mr. Portugal stated that the GOR?s greatest challenge in 
2008 will be managing the impact of a grant-financed 
fiscal expansion without jeopardizing macroeconomic 
stability."