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Viewing cable 08KIGALI634, RWANDA ECONOMIC REVIEW

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Reference ID Created Released Classification Origin
08KIGALI634 2008-09-18 14:27 2011-08-24 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Kigali
VZCZCXYZ0017
PP RUEHWEB

DE RUEHLGB #0634/01 2621427
ZNR UUUUU ZZH
P 181427Z SEP 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC PRIORITY 5622
INFO RUEHDS/AMEMBASSY ADDIS ABABA 0196
RUEHBS/AMEMBASSY BRUSSELS 0308
RUEHJB/AMEMBASSY BUJUMBURA 0405
RUEHDR/AMEMBASSY DAR ES SALAAM 1218
RUEHKM/AMEMBASSY KAMPALA 1989
RUEHKI/AMEMBASSY KINSHASA 0544
RUEHLO/AMEMBASSY LONDON 0321
RUEHNR/AMEMBASSY NAIROBI 1319
RUEHFR/AMEMBASSY PARIS 0579
UNCLAS KIGALI 000634 
 
SENSITIVE 
SIPDIS 
 
DEPT OES FOR DREIFSYNDER 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ENRG EPET ETRD PGOV KIDE OPIC
RW 
SUBJECT: RWANDA ECONOMIC REVIEW 
 
1. (U) This issue of the Rwanda Economic Review covers: 
 
Commercial Issues: 
 
-- Kobil Rwanda acquires Stippag petroleum business 
-- Total sells Rwanda operations to Engen Petroleum Ltd. 
-- Nakumatt launches business operations in Kigali 
-- Electrogaz dismantled 
 
Development Issues: 
 
-- Rwanda improves "Ease of Doing Business" rank 
-- Tourism receipts up 15 percent from last year 
-- Rwanda hosts Climate Change Conference 
-- Climate Change Observatory proposed 
 
Macroeconomic Issues: 
 
-- Economy grows by 8.5 percent but inflation soars to 18.8 
percent 
-- Rwanda currency stable against US dollar 
 
 
Commercial Issues 
----------------- 
 
2. (U) Kobil:  Kobil Petroleum Rwanda, a fully-owned 
subsidiary of Kenya's Kenol Kobil Group, has acquired the 
service stations of local petroleum distributor Stippag.  The 
acquisition follows Kobil's purchase of Shell Rwanda in 2006 
and local petroleum company KLSS in 2007, and consolidates 
Kobil's market leadership.  Kobil Rwanda was incorporated in 
2002 with the goal of servicing Rwanda, Burundi and eastern 
Congo.  The Kenyan-owned company has also invested $1.5 
million in a Butane gas (LPG) filling facility with a 
capacity of 200 metric tons per month.  Kobil is now the 
major distributor of LPG in Rwanda. 
 
3. (U) Total:  Total has agreed to sell its Rwandan 
operations to South African Engen Petroleum Limited, 
according to Total Rwanda General Manager Mamadou Ndom. 
Total currently has 19 service stations and one fuel depot in 
Rwanda representing 22 percent of the Rwandan market.  The 
French energy multinational, the last of the major oil 
companies present in Rwanda, follows Shell and Chevron in 
pulling out of the country. 
 
4. (U) Nakumatt:  Kenyan supermarket chain Nakumatt 
officially launched business operations in Rwanda on August 
24.  The new 25,000 square foot outlet is the largest 
supermarket in Rwanda and the first Nakumatt store to be 
opened outside of Kenya.  The Kenyan chain is investing $20 
million to expand operations into Uganda, Rwanda and Tanzania. 
 
5. (U) Electrogaz:  The Government of Rwanda (GOR) has broken 
up Rwanda's electricity and water utility company into two 
separate entities.  A bill passed by both chambers of 
parliament in August disbanded utility provider Electrogaz 
and replaced it with the Rwanda Electricity Company (RECO) 
and the Rwanda Water and Sanitation Corporation (RWASCO). 
Electrogaz has been struggling with frequent power outages 
and water shortages.  Critics assert the utility has been 
mismanaged and wasted resources. 
 
 
 
Development Issues 
------------------ 
 
6. (U) "Doing Business Indicators":  Rwanda improved its 
ranking in the 2009 World Bank "Ease of Doing Business" 
report by nine positions moving up to 139 out of 181 
countries surveyed compared to 148 out of 178 in 2008. 
"Registering a Property" and "Dealing with Construction 
Permits" showed the strongest gains improving 78 positions 
and 35 positions respectively and "Starting a Business" and 
"Employing Workers" also improved by 11 positions and 9 
positions respectively.  However, the country's rankings in 
other key indicators including "Protecting Investors", 
"Getting Credit", "Trading Across Borders" and "Closing a 
Business" showed little improvement and remained at the 
bottom tier of world rankings.  Rwanda continues to lag 
behind regional competitors Kenya (82) Uganda (111) and 
Tanzania (127) in the overall rankings. 
 
7. (U) Tourism:  The Rwandan tourism industry showed a 15 
percent increase in revenues for the first half of 2008 and a 
3.4 percent increase in number of visitors to the country. 
Overall revenues from tourism reached $80 million in the 
first six months of 2008 and have surpassed coffee and tea in 
foreign exchange earnings.  The improved revenues, now 3.7 
percent of GDP, are attributable to increased national hotel 
room capacity -- up from 2,391 rooms in 2007 to 3,282 in 2008 
-- and higher fees charged at the national parks. 
 
8. (U) Environment:  On September 9, Rwanda hosted the Africa 
Climate Change Forum organized by the London School of 
Economics (LSE).  In his opening remarks President Kagame 
noted that "there is hardly any region on our continent that 
is not in some way affected by grave environmental 
degradation of one kind or another."  In contrast to other 
speakers, including LSE's Howard Davis who castigated Western 
governments and the U.S. for their policies, Kagame 
emphasized that these governments were not responsible for 
the "vicious cycle of poverty, over-population, 
deforestation, and weak national environmental policies."  He 
added that Rwanda and other African governments cannot "keep 
lamenting western policies" but need to start implementing 
measures and adopt a "self-help" attitude rather than 
criticizing donor governments.  Speakers at the conference 
stated that Africa is among the most affected regions in the 
world (by climate change) despite the fact that it produces a 
small fraction of the worlds emissions.  Mary Robinson, 
former UN High Commissioner for Human Rights and former 
President of Ireland, urged the world's richest countries to 
do more to assist poorer and vulnerable nations adapt to 
changing climate. 
 
9. (U) Climate Change Observatory proposed:  In a separate 
meeting with visiting USTDA consultants, Romain Murenzi, 
Minister for Science and Technology in the President's 
Office, expressed interest in using existing communications 
infrastructure located at the top of 4,507 meters high Mount 
Karisimbi to mount meteorological equipment and connect this 
to an integrated Climate Change Observatory that would 
analyze meteorological, seismic, soil data and Geographic 
Information Systems (GIS) data.  Mount Karisimbi is located 
at the nexus of the headwaters of the Nile and Congo river 
basins and offers a "ground zero" window on climate change 
occurring in these unique and fragile ecosystems.  A climate 
change observatory would provide invaluable data and 
long-term forecast capability on precipitation, water levels, 
atmospheric conditions and volcanic and seismic activity in 
the Central African Albertine Rift.  This would be useful to 
civil aviation, agriculture, hydropower generation and water 
management throughout the region, Murenzi said. 
 
10. (U) Murenzi noted the global food crisis was a "wake-up 
call" to African governments to better understand and manage 
their natural resources.  Timely forecasting of climate and 
environmental change would help avert socio-political 
Qenvironmental change would help avert socio-political 
upheavals, he asserted.  The minister suggested that Rwanda 
would like to "partner" with either another government, an 
international organization or a university in the project as 
Rwanda lacked the technical and scientific expertise to 
implement and maintain the observatory by itself. 
 
Macroeconomic Issues 
-------------------- 
 
11. (U) Economic growth/Inflation:  The Rwandan economy is 
expected to grow by 8.5 percent in 2008 according to Minister 
of Finance and Economic Planning James Musoni.  The growth is 
powered by higher yields in the agricultural sector and 
strong performance in construction, financial services and 
tourism during the first six months of the year.  However, 
inflation grew to 13.1 percent for the first six months of 
the year and increased to an annualized 20 percent for the 
month of August compared to under nine percent for the 
comparable period in 2007.  The Governor of the Central Bank 
Francois Kanimba blamed higher global fuel and food prices 
for triggering the increase in inflation. 
 
12. (U) Foreign exchange:  The Rwandan Franc (RWF) registered 
a slight appreciation of 0.09 percent against the US dollar 
between December 2007 and June 2008.  Central Bank Governor 
Francois Kanimba attributed the stability of the RWF to 
strong foreign exchange inflows stemming from remittances, 
external aid, private transfers and higher than expected 
exports. 
SIM