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DE RUEHLGB #0077/01 0361307
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P 051307Z FEB 09 ZDK
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC PRIORITY 5867
INFO RUEHDS/AMEMBASSY ADDIS ABABA 0232
RUEHBS/AMEMBASSY BRUSSELS 0386
RUEHJB/AMEMBASSY BUJUMBURA 0483
RUEHDR/AMEMBASSY DAR ES SALAAM 1298
RUEHKM/AMEMBASSY KAMPALA 2073
RUEHKI/AMEMBASSY KINSHASA 0632
RUEHLO/AMEMBASSY LONDON 0401
RUEHNR/AMEMBASSY NAIROBI 1408
RUEHFR/AMEMBASSY PARIS 0662

UNCLAS KIGALI 000077 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EFIN EINV ETRD PGOV KIDE OPIC RW
SUBJECT: RWANDA ECONOMIC REVIEW 
 
¶1. (U) This edition of the Rwanda Economic Review covers: 
 
--  2008 Tourism revenues up 55 percent over 2007, but slow 
start to 2009 
--  Economy grows 10 percent in 2008 
--  Rwandatel to invest $45 million to expand market share, 
MTN launches BlackBerry 
--  Construction begins on new Hydro Power Project 
--  Rwanda Trade with India grows 59 percent 
--  Electricity roll-out plan needs $300 million in new 
investment 
 
 
¶2. (U) Tourism:  In 2008, tourism to Rwanda increased 
significantly both in numbers of tourists and in total 
tourism revenue.  The overall number of visitors (including 
leisure, transit and business) increased from just over 
800,000 in 2007 to over 1 million in 2008.  Total revenues 
also increased by 55 percent from $138 million in 2007 to 215 
million in 2008.  Leisure tourists -- high-end visitors to 
Rwanda's national parks -- increased an impressive 150 
percent from 21,000 in 2007 to 53,000 in 2008.  Leisure 
tourists accounted for only five percent of overall tourist 
numbers in 2008, but represented over 30 percent of total 
tourism revenues. 
 
¶3. (U) Anecdotal information from hotel and tour operators 
may indicate a possible drop in tourism for the first half of 
¶2009.  High-end Virunga Lodge reported only filling 100 bed 
nights for January compared to 180 last year.  Tour operators 
attributed the drop to the global financial crisis and to 
concerns about instability in nearby Democratic Republic of 
the Congo (DRC). 
 
¶4. (U) Economy Grows 10 percent:  Rwanda Minister of Finance 
James Musoni reported that the country's gross domestic 
product (GDP) grew 10 percent last year.  Agriculture, 
representing 30-40 percent of GDP, recovered from poor 
harvests in 2007 to grow by 14 percent in 2008.  The 
industrial and services sectors also registered strong growth 
at around 8 percent.  However, the government's real GDP 
growth estimates may be inflated as they are based on an 
estimated annual inflation rate of 15 percent.  Inflation 
accelerated to 29 percent by the end of 2008 indicating that 
the average annual inflation rate may have been higher than 
the 15 percent used in the government's calculations. 
Previously, the IMF reported estimated GDP growth for 2008 at 
8.5 percent. 
 
¶5. (U) Telecom:  Rwandatel, Rwanda's second largest telecom 
provider announced it will invest $45 million in 2009 to 
expand services and consolidate a shift from CDMA technology 
to GSM 3G.  Since moving to GSM technology, Rwandatel has 
attracted 40,000 new subscribers weekly, according to CEO 
Patrick Kariningufu.  Rwandatel is 80 percent owned by 
Libyan-owned LAP-Green and is seeking to increase its market 
share from 10 to 50 percent.  Meanwhile MTN, Rwanda's telecom 
market leader, announced the launch of BlackBerry solution. 
BlackBerry solution enables wireless access via BlackBerry 
smartphones to multimedia, email and other corporate data. 
MTN Chief Operations Officer Andrew Rugege told reporters 
that the company wants to double its subscriber base from one 
to two million subscribers and will increase capital 
expenditures from $60 million in 2008 to $100 million in 2009 
to achieve this target. 
 
¶6. (U)  Hydro power:  Construction has started on the 28MW 
Nyabarongo hydro power plant.  The project is scheduled to be 
completed in four years at a cost of $100 million.  India's 
Qcompleted in four years at a cost of $100 million.  India's 
Axim Bank is funding $80 million of project costs and two 
Indian companies, Bharat Heavy Electricals Ltd and Angelique 
International Ltd will execute the construction.  State 
Minister for Energy Albert Butare noted that 330 hydro sites 
have been identified in the country and construction has 
already started on 25.  Butare told reporters that 
construction of a joint Rwanda-Tanzania-Burundi 62 MW hydro 
power project in Rusumo will begin in 2010. 
 
¶7. (U) Rwanda-India Trade:  Trade between Rwanda and India 
increased substantially in 2008 over 2007.  Indian exports to 
Rwanda jumped 59 percent from $22 million in 2008 to 33.6 
million in 2007.  Rwandan exports to India grew from less 
than $500,000 in 2007 to $7 million in 2008.  On January 
19-20, President Paul Kagame led a five nation East African 
Community delegation to New Delhi to attend the India-Africa 
Business Partnership Summit.  In his keynote Summit address, 
Kagame pressed for expanded collaborative partnerships 
between Africa and India and noted that the East African 
market offered enormous investment opportunities for Indian 
companies in priority sectors such as IT, energy, 
infrastructure, construction, mining, agriculture and 
financial services.  During the Summit Kagame also openly 
supported India's bid for a permanent seat on the UN Security 
Council. 
 
¶8. (U)  Electricity Distribution Plan:  On February 4, GOR 
consultant Castalia presented a draft prospectus to the GOR 
and donors to expand electricity distribution from six 
percent of the population currently to 16 percent by 2012. 
The consultant said the plan is technically feasible but will 
need $310 million in capital investment and technical 
assistance to achieve this goal.  The national power grid 
currently only reaches 110,000 households (6 percent of the 
population), 21 percent of schools, 74 percent of health 
centers and 70 percent of administrative offices.  By 2012, 
350,000 households will be connected, 50 percent of schools 
and 100 percent of health centers and administrative offices, 
according to the plan.  The consultants estimated the cost 
per household connected at $1,300 and said current tariffs 
would cover operating costs but that 80 percent of capital 
costs would need to be funded by the Government and 
development partners.  The plan also proposes $25 million for 
solar panels and $50 million in micro-hydro generators to 
provide power to schools and clinics outside the reach of the 
proposed grid. 
 
9 (U)  Development partners at the meeting questioned whether 
sufficient funds were allocated to technical assistance and 
capacity building, noting if implementation capacity was 
lacking the project would not achieve its targets.  Donors 
also stressed the importance of a "self-financing" component 
to the proposed expansion and requested a tariff study to 
evaluate if current tariffs are "cost reflective". 
 
SYMINGTON