Letter for Investors
F. CasteleinDate: January 11, 2012
To: Potential investors in Rwanda business opportunities
Concerns: Rwanda Business oportunities for private parties.
Introduction: Rwanda, country of opportunities.
Politically stable with well functioning institutions and zero tolerance for corruption (Ombudsman office since 2004). Macroeconomic stability manifest in high GDP growth at 7 - 9% and low inflation.
Stable currency and exchange rate (related to the USD). Stabel interest rates (7%-9%)
There is an open trade policy, a favorable investment climate, cheap and abundant labor, tax incentives to businesses, specific free-zones, stable internal security, and crime rates that are comparatively low.
Rwanda has solid institutions like an Investment Board, a Chamber of Commerce, land registration a UK based legal system and a transparant tax system.
The Government of Rwanda has sought to privatize several key firms. Since 2007, the telecom and mining sectors have been largely privatized, and the government has sold off several government-owned tea estates and made great strides in completing privatization of the banking sector. RECO, the utility monopoly, remains to be privatized, as do several other parastatals.
There is access to wireless internet all over the country. Electronic banking is very well developed.
Rwanda is a member of the free trade zone EAC common market: 130 million people (with Kenia, Tanzania, Burundi, Uganda).
Investment insurance also is available through the Africa Trade Insurance Agency, the Overseas Private Investment Corporation, and the World Bank’s Multilateral Investment Guarantee Agency (MIGA). Increasingly attractive for Foreign Direct Investors (FDI)
The implementation of a value added tax of 18% and improved tax collections are having a positive impact on government revenues and thereby on government services rendered.
Banking reform and low corruption also are favorable current trends.
Today, there are about 20 institutions of higher learning in Rwanda. Between 1963-1993, Rwandan university graduates numbered roughly 2000; today, Rwandan university graduates exceed 45,000.
The biggest tax payer in Rwanda ($100 mln.) is Heineken and the biggest employer (> 2000 employees) is BPR, a bank managed by (Dutch) Rabobank. Rwanda has its own stock market.
Investment opportunities are (among others) and supported by the Dutch Government (in specific food security, the legal system, healthcare and clean water):
- Infrastructure (Kigali convention center, Bugesera Int. Airport, Isaka railway)
- Agriculture (Horticulture, fresh wholesale foodmarket, irrigation projects) and livestock programs including milk processing
- Energy (extraction of methane gaz Lake Kivu (and the drilling of three geothermal exploration wells, at a cost of $20-million, will start this year. A program of $900 million). Hydro-energy and biogas.
- Tourism
- All kinds of manufactoring
- ICT. Also a new law on intellectual property.
- Real Estate & construction, Financial services, Mining (Tin, Colombo, Wolfram)
- (newly listed companies on the capital market shall be taxed for a period of 5 years at 20% if those companies sell at least 40% of their shares to public)
- Venture capital funds will be accorded 5 years tax free if registered in Rwanda
RCF (Rwanda Chamber Foundation)
- Research in the Rwanda market
- Building contacts and facilitating parnerships
- Set up business, office, banking, administration, agency,…
- Set up other facilities like housing, transport, internetconnections, …
- Advice in legal & tax affairs
- Management & Business advice
- Management of organizations, offices, administration and performance
- Accountancy & bookkeeping services
- Dealing with cultural issues
- We deliver training
We organize a Rwanda Trade Mission in the week of June 17, 2012.
Projects
1. Energy & Horticulture
This is one project with two sub-projects.
1A. Energy
For a high tech horticulture solution we need clean water, heat and CO2. That is produced by a CHP (Combined Heat & Power Plant) with a gas turbine generator set.
The CHP delivers between 3.5 – 4.5 MW electric power what is much more than we need for the greenhouse, so we will deliver the electric power to the grid. Investment is around Euro 600.000 / MW for a new installation, however, there are very good used plant available. Based on the price of gas and the tariff of electric power, the CHP will be break-even in 12 – 15 years running 8000 hours/year. Life-time is 300.000 hours.
This CHP delivers also 3,8 kW heat and 1530 kg CO2/hour. Therefore the energy, heat and CO2 for the greenhouse is free of costs. The total production is enough for a greenhouse of 20 ha. The climate conditions in Rwanda are optimal.
The CHP delivers between 3.5 – 4.5 MW electric power what is much more than we need for the greenhouse, so we will deliver the electric power to the grid. Investment is around Euro 600.000 / MW for a new installation, however, there are very good used plant available. Based on the price of gas and the tariff of electric power, the CHP will be break-even in 12 – 15 years running 8000 hours/year. Life-time is 300.000 hours.
This CHP delivers also 3,8 kW heat and 1530 kg CO2/hour. Therefore the energy, heat and CO2 for the greenhouse is free of costs. The total production is enough for a greenhouse of 20 ha. The climate conditions in Rwanda are optimal.
1B. Horticulture
If we build a greenhouse out of glass, starting with 5ha (with an option for 20 ha). During the first year the 5 ha produces over 2,500,000 kg tomatoes (50 kg / m2), Greenhouse completed turn-key in Rwanda ready for production will cost euro 125 – 140 / m². In total about Euro 6.5 mln. Plastic greenhouse will lower the costs with about 20-25%. Scaling into 15 or 20 ha declines the costs by 10%. Calculating with a total investment of 5.5 mln Euro the EBIT will be around 700.000.- in the first year.
The turn-key project will be delivered by a Dutch party. Foreign investors are invited to join the project.
The turn-key project will be delivered by a Dutch party. Foreign investors are invited to join the project.
2. Animal feed
There is no factory for animal feed in Rwanda. At the moment the demand for good food is about 30.000 MT. The local production today is 5000 MT, the rest is imported in low quality. The total investment will be about € 350.000. We might get a grant from the Dutch Government of 50% of the total investment. We are working with local companies in this project and a solid Dutch party who delivers all additives and knowledge. In addition the Rwandan government will invest in Silo’s to store overproduced grains during the wet season for the dry season (storage, handling technologies and milling & equipment). A local entrepreneur is searching for foreign investor to build a plant for soybean processing. Total investment is Euro 500,000 to produce 2000 MT high quality high percentage protein additives.
3. Poultry Industry
Scaling and strengthening the poultry industry is based on the availability of good food. We have found local partners in hatchery (public & private) and in breeding / rearing layers and broilers. Private parties are ready to invest € 350.000 in hatchery and in houses and equipment for layers and for broilers. The government will invest into a pullet farm (100,000 pullets/year) plus training center (investment Euro 500,000). We have found solid Dutch parties who can and will deliver experts, training programs, equipment, parent-stock, settlers, hatchers, and more. We are searching external investors in parts of the projects. When the numbers of broilers grow, the government will invest in a slaughterhouse and chicken processing.
4. Flexible housing
We have a Dutch architect and a Dutch builder who have the concept and the design for flexible housing based on steel frame construction and flexible elements (system buildings), from 32 m2 to 200 m2 (between 8000 – 100,000 euro) in 1 – 3 levels. Calculating with 2 local construction companies and with full support of the Kigali City Center we can deliver houses at a very attractive price on urban and in rural locations. Based on the same concept we can build farms, offices, schools and apartments. We are focused on sustainable housing energy neutral. We need to find the finance for the first pilot houses, about € 50.000.
5. Manufacturing of constructing products and intermediate elements
Depending on project 4 we have built a business case for manufacturing locally. A plant for steel profiles. A plant for ceramic tiles. A plant for intermediate products, and one for manufacturing of bamboo into board, floors, walls. Investments between Euro 1 and 2.5 million. There is a huge market available because there is a huge constructing program and 80% of all material is imported.
For more information, please contact us.
Phone: +31 629 075 200, and +31 627 507 588, and +357 990 64 193
Mail: castelein@rwandachamber.org ; hek@rwandachamber.org
