VZCZCXYZ0012
PP RUEHWEB

DE RUEHLGB #0760/01 3021450
ZNR UUUUU ZZH
P 281450Z OCT 08
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC PRIORITY 5717
INFO RUEHDS/AMEMBASSY ADDIS ABABA 0209
RUEHBS/AMEMBASSY BRUSSELS 0327
RUEHJB/AMEMBASSY BUJUMBURA 0426
RUEHDR/AMEMBASSY DAR ES SALAAM 1238
RUEHKM/AMEMBASSY KAMPALA 2013
RUEHKI/AMEMBASSY KINSHASA 0565
RUEHLO/AMEMBASSY LONDON 0340
RUEHNR/AMEMBASSY NAIROBI 1345
RUEHFR/AMEMBASSY PARIS 0599

UNCLAS KIGALI 000760 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ENRG EPET ETRD PGOV KIDE OPIC
RW 
SUBJECT: RWANDA ECONOMIC REVIEW 
 
REF: KIGALI 623 
 
¶1.  (U) This issue of the Rwanda Economic Review Covers: 
 
 
Development Issues 
 
--  Government of Rwanda (GOR) consolidates seven agencies 
into the Rwanda Development Board (RDB) 
--  World Bank approves $24 million for ICT infrastructure 
--  GOR offers subsidies to local exporters 
--  Central Bank provides guarantee support to microfinance 
firms 
 
Commercial Issues: 
 
--  Hong Kong based New Century Development LTD plans new 5 
star hotel in Kigali 
--  Chinese owned A-link Technologies opens cell phone 
assembly plant 
--  South African Blue Financial Services opens branch in 
Kigali 
--  Coffee sees 23 percent price drop and lower than 
anticipated production 
 
Economic Indicators: 
 
--  Inflation continues to climb 
 
 
Development Issues 
------------------ 
 
 
¶2. (U)  RDB:  The GOR cabinet has approved the consolidation 
of seven government agencies under the newly formed RDB.  The 
consolidated agencies include the Investment Promotion Agency 
- RIEPA, the Office of National Parks and Tourism - ORTPN, 
the Information and Technology Authority - RITA, Human 
Resource Development Agency - HIDA, the privatization 
secretariat, the Center for Support to Small and Medium 
Enterprise - CAPMER and the Commercial Registration Agency - 
RCRSA.   U.S. businessman Joe Ritchie has been appointed CEO 
of RDB and the former agency directors of RIEPA, RITA and 
ORTPN have been named as Deputy CEOs.  RDB will report to the 
Office of the Presidency and appears to be focused on 
bolstering foreign direct investment (FDI) into Rwanda.  FDI 
in Rwanda has lagged behind other countries in the region 
despite aggressive marketing by President Kagame (reftel). 
It is so far unclear if the formerly autonomous agencies will 
be restructured, or disappear entirely. 
 
¶3. (U) World Bank:  The World Bank will provide $24 million 
for the Regional Communication Infrastructure Rwanda Project 
(RCIPRW).  The fund is part of $424 million allocated to 
Southern and Eastern Africa intended to extend access to 
broadband communications and expand the deployment of 
e-government.  The program complements the submarine fiber 
optic cable projects being implemented along the East coast 
of Africa to link the region into the global communications 
network. 
 
¶4. (U) Export Subsidies:  The Rwanda Investment and Export 
Promotion Agency (RIEPA - now part of RDB) has launched the 
Rwanda Competitiveness for Export Fund (RWACEF) with the aim 
of assisting local export companies enter new markets by 
subsidizing some export costs such as airfreight (where high 
costs have made exports less competitive).  The pilot project 
with initial funding of $300,000 will subsidize up to 65 
percent of export related costs for targeted export 
industries such as cut flowers. 
 
¶5. (U) Microfinance guarantees:  The Rwanda Central Band 
(BNR) has launched a loan guarantee program to facilitate 
commercial bank lending to micro-finance organizations.  The 
Fund - Society Mutuelle de Garantie pour le Re-financement 
(SMGF) - will initially be capitalized at $900,000. 
 
 
Commercial Issues 
----------------- 
¶6.  (U)  New Five Star Hotel Planned:  New Century 
Development Limited, a Chinese company based in Hong Kong 
plans construction of a new five star hotel in central 
Kigali.  The hotel will reportedly have 200 rooms and cost 
$40 million.  Billy Y.T. Cheung CEO of Africa Star Limited, a 
subsidiary of New Century Development, told reporters that 
construction will begin in January 2009 and take two years to 
complete.  According to Cheung, the hotel will be the Chinese 
company's first investment in Africa. 
 
 
¶7. (U) Cell phone assembly:  A-link Technologies, a 
subsidiary of Beijing-based China Link, has opened a cell 
phone assembly plant in Kigali with an initial investment of 
$.5 million and a production capacity of 600 mobile phones 
per day (current production is 200 per day).   The phones, 
which sell at $39 will compete against imported phones from 
Nokia, Motorola and Samsung, which currently sell at an 
average price of $40 per phone.  A-link is also planning to 
assemble radios in Rwanda. 
 
 
¶8. (U)  Microfinance:  South African-owned Blue Financial 
Services has opened a branch in Kigali and plans to offer 
microfinance loans and services.  Investor Relations Manager 
Morne Reiders said the investment in Rwanda was partially 
supported with assistance from the Overseas Private 
Investment Corporation (OPIC).  The Rwandan Central Bank has 
approved a license for Blue Financial Services to operate as 
a non-deposit-taking micro-finance institution. 
 
¶9. (U)  Coffee:  World coffee prices have fallen 23 percent 
in the last month negatively affecting Rwanda's coffee export 
earnings.  Coffee is currently selling at $1.17 per pound 
compared to $1.53 per pound a few months ago (Note: Rwandan 
speciality coffees are selling well above this price level - 
top selections from the Cup of Excellance competition were 
recently auctioned for as much as $18 per pound. End note) . 
Rwandan production will also be lower than expected at 23,000 
tons for the year compared to 29,000 tons that were 
previously projected.  Coffee is one of Rwanda's top three 
export products; approximately 20 percent of Rwanda's coffee 
is exported to the United States. 
 
 
Economic Indicators 
------------------- 
 
¶10. (U) Inflation:  The Rwanda National Institute of 
Statistics in September reported ongoing strengthening of 
inflationary pressures.  The annualized Consumer Price Index 
(CPI) general index increased to 21 percent for the 12 months 
ending in September - up from 13 percent in January and 18.3 
percent in July.  Prices for bread, cereals, meat and fish 
all increased by over 35 percent compared to last year. 
Transportation, housing, water and electricity costs also 
grew by over 20 percent.  Central Bank Governor Francois 
Kanimba blamed high global commodity prices for the rising 
inflation. 
 
 
 
SIM