RWANDA: THE LEAST CORRUPT NATION IN THE WORLD, OR THE MOST TACTFUL CITIZENS FOR SURVIVAL?

By David Himbara, July 12, 2013

When Seremani Mukundabantu asked me to comment on how and why Rwanda is painted to be corruption-free in the latest Transparency International’s (TI)2013 Global Corruption Barometer (GCB), I initially thought it would be a waste of time. But on second thoughts, I am glad Seremani asked. On deeper analysis of GCB, I find it may indicate survival instincts among Rwandans as opposed to absence of corruption – something I wish to share here.

The main reason why I was not initially keen on analysing GCB is that I find these kinds of reports to be simplistic in their definition of corruption. They concentrate on such things as bribing to access public service for example in the judiciary, police, registry/licencing, education and health sectors. I call this type of corruption “routine.”

But by concentrating on “routine” corruption, the most devastating forms of corruption are left out, including what I may term high-level and systemic institutional corruption that give advantage to ruling elites. Some of the practices used in the systemic institutional corruption do not readily appear to be “illegal” but they have immoral and disastrous impact on societies especially in poor countries. An example in Rwanda is the widespread practices where the RPF government awards tenders and contracts to RPF companies; where the RPF government rents luxurious executive jets from an RPF firm to transport the president; where Rwandan social security funds finance RPF company-formations. Such widespread or high-level systemic malpractices that are embedded in national institutions rather than individual corruption do not feature in Transparency International and its Global Corruption Barometer (GCB).

WHAT 2013 GLOBAL CORRUPTION BAROMETER CLAIMS ABOUT CORRUPTION IN RWANDA COMPARED TO OTHER COUNTRIES

The 2013 Global Corruption Barometer is based on its survey that involved 114,000 people in 107 countries, including Rwanda.

But here is what is most revealing. The 2013 Global Corruption Barometer is unlike previous Transparency International’s corruption index. While the corruption index relied on expert analysis, the 2013 Global Corruption Barometer relies on opinions from the general public on corruption. In other words, the 2013 Global Corruption Barometer does not pretend to be “scientific” but a collection of opinions of 114,000 people in 107 countries, including Rwanda. In Rwanda face-to-face interviews were conducted with 1,000 people for this exercise.
The findings in Rwanda are amazing and amusing. One of the questions the respondents had to answer was:

* “To what extent do you see the following categories to be affected by corruption in your country? Please answer on a scale from 1 to 5, where 1 means ‘not at all corrupt’ and 5 means ‘extremely corrupt.'” http://www.transparency.org/gcb2013

A. Political parties
B. Parliament/legislature
C. Military
D. NGOs
E. Media
F. Religious bodies
G. Business/private sector
H. Education system
I. Judiciary
J. Medical/health services
K. Police
L. Public officials/civil servants

Here are the Rwandan averages for each category:

A. Political parties: 1.2
B. Parliament/legislature: 1.2
C. Military: 1.1
D. NGOs: 1.6
E. Media: 1.3
F. Religious bodies: 1.3
G. Business/private sector: 1.7
H. Education system: 1.4
I. Judiciary: 2.0
J. Medical/health services: 1.3
K. Police: 2.1
L. Public officials/civil servants: 1.7

Let us look at the case of Canada, Germany and Switzerland for a comparison with Rwanda.

Here are the Canadian averages for each category:

A. Political parties: 3.8
B. Parliament/legislature: 3.4
C. Military: 2.6
D. NGOs: 2.7
E. Media: 3.2
F. Religious bodies: 3.0
G. Business/private sector: 3.4
H. Education system: 2.7
I. Judiciary: 2.8
J. Medical/health services: 2.7
K. Police: 2.9
L. Public officials/civil servants: 3.2

Here are the German averages for each category:

A. Political parties: 3.8
B. Parliament/legislature: 3.4
C. Military: 2.9
D. NGOs: 3.0
E. Media: 3.6
F. Religious bodies: 3.1
G. Business/private sector: 3.7
H. Education system: 2.7
I. Judiciary: 2.6
J. Medical/health services: 3.4
K. Police: 2.7
L. Public officials/civil servants: 3.4

Here are the Swiss averages for each category:

A. Political parties: 3.3
B. Parliament/legislature: 2.8
C. Military: 2.6
D. NGOs: 2.5
E. Media: 3.1
F. Religious bodies: 2.7
G. Business/private sector: 3.1
H. Education system: 2.7
I. Judiciary: 2.2
J. Medical/health services: 2.6
K. Police: 2.3
L. Public officials/civil servants: 2.7

What is the meaning of all this? According to the 1,000 Rwandans interviewed for the 2013 Global Corruption Barometer, there is almost no corruption in Rwanda. When we compare Rwandan to Canadian, German and Swiss public opinions, therefore, Rwanda is heaven on earth. Canada, Germany and Switzerland are way too corrupt when compared to squeaky-clean Rwanda!

RWANDA: THE LEAST CORRUPT NATION IN THE WORLD, OR TACTFUL CITIZENS?

If you believe the above Rwandan public opinion, you need urgent medical help. Get real!

If for example you are in Rwanda today, and you are asked to give an opinion on the levels of corruption in political parties, unless you are suicidal, you will not dare touch such issue. Who would dare discuss openly the fact that RPF owns the largest chunk of the Rwandan economy based on insider information where the RPF government routinely contracts RPF firms in the broad daylight? In any event, what other political parties are there in Rwanda, except those run by RPF stooges?

Which sane Rwanda would dare to frankly discuss corruption in the military?

Which sane Rwandan would have the nerve to give the interviewer the true picture of Rwandan Public officials and civil servants in terms of corruption or delivery?

Rwandans know they live in “the North Korea of the thousand hills” and therefore have developed tactics to survive day-to-day state repression and domination. The citizens tell the regime what it wants to hear. Likewise, Rwandans will share flattering comments about how great and clean the regime is with any visitor who wishes to listen. Yes indeed, Rwandans will tactfully say anything to live another day. And that is exactly what the results of the global corruption barometer tell us – how Rwandans survive an iron-fisted regime.

Source: David Himbara

Rwanda’s Junk-Bond ‘Dash for Trash’

By Matthew C. Klein Apr 29, 2013

Although low interest rates haven’t conquered unemployment in the rich world, they’re having a big impact elsewhere. Junk spreads are exceptionally low and the issuance of bonds with weak underwriting standards has soared. Yield-starved investors are gobbling up new “covenant lite,” “payment in kind” and “dividend recapitalization” bonds at a faster pace than during the credit bubble.

One recent beneficiary of this “dash for trash” is the small landlocked country of Rwanda. Last week, the government of Rwanda sold $400 million in dollar-denominated 10-year bonds at an annual yield of just 6.875 percent and a bid-to-cover ratio of nearly 10. (Typical U.S. sovereign debt auctions have a bid-to-cover ratio between 2 and 3.)

It’s the first time Rwanda has borrowed in the international capital markets. This might turn out well, but it could end badly both for the investors who bought the bonds and the nation that issued them.

Make no mistake: Rwanda has an enviable and hard-earned economic record. Output has grown at an average annualized pace of more than 8 percent since the beginning of 2004. This is despite having few natural resources available for export.

One reason is the quality of the country’s institutions. President Paul Kagame has consciously tried to turn Rwanda into “the Singapore of Africa.” According to the World Bank, Rwanda is an easier place to start a business than the U.S., a better place to borrow money than Sweden, a safer place to invest than France and a simpler place to pay taxes than the Netherlands.

Rwanda plans to use the money it has raised from the bond issuance to repay some existing bank loans and invest in infrastructure. This will save the government money if the interest rate on the bank loans is higher than the yield of the bonds.

Strikingly, Rwanda declined to borrow enough ($500 million) to have its debt included in JPMorgan Chase & Co.’s index of dollar-denominated emerging market bonds, which could have led to lower borrowing costs.

According to the Financial Times, someone close to the deal explained that the Rwandan government was more concerned with being “prudent” than being “index tourists.” (Still, the deal is equivalent to about 6 percent of Rwanda’s GDP.) The government wants to make it clear that Rwanda is a serious country worthy of investment.

Although the bull case is compelling, investors have plenty of reasons to be wary. Despite years of rapid growth, Rwanda is still very poor. About half of the population lives below the poverty line, while 90 percent of the workforce is engaged in what is mostly subsistence agriculture.

As a result, the country is heavily dependent on foreign aid, which covers about 10 percent of gross domestic product. This income stream isn’t dependable. Last summer, several Western donors withheld promised aid because of concerns that the Rwandan government was supporting rebels in the neighboring Democratic Republic of Congo.

The biggest problem of all is that Rwanda is borrowing in a currency it cannot print. Many countries in the euro area have had unpleasant firsthand experience with this over the past few years. Since the Rwandan franc has been declining against the U.S. dollar for years, the real burden of the dollar debt could rise far faster than Rwanda’s capacity to service it. At any point in time, lenders could panic about Rwanda’s ability to pay and pull their money out. That in turn could strangle business investment and consumer spending, plunging the economy into depression.

Rwanda does earn some hard currency by exporting coffee and tea. The prices of those commodities are very volatile, however. Moreover, any global downturn that affected the willingness of international investors to commit capital to Rwanda could coincide with declining demand for those exports. Ideally, Rwanda would hedge this exposure by indexing the coupon payments on its bonds to the prices of these commodities, as Michael Pettis suggested in his brilliant book “The Volatility Machine.”

The broader question is whether this money is flowing to Rwanda for the right reasons. As Pettis noted in that book, the flows of capital between rich and poor countries are generally determined by the domestic conditions in the rich countries, rather than the quality of the investment opportunities in the poor ones.

Right now, liquidity in the rich world is abundant, just as it was in the 1970s and early 1990s. While Rwanda may turn out to be a brilliant success story deserving of foreign investment, it should be wary of those earlier episodes.

Moreover, Rwanda is far from unique in its ability to borrow at very low cost for extremely long maturities. Panama has issued dollar-denominated bonds that won’t mature for 40 years, yielding less than 5 percent. Lebanon, which may soon have to deal with spillovers from the ongoing turmoil in Syria, has sold more than $1 billion in debt lasting 10 to 15 years at a lower interest rate than Rwanda.

Despite this seemingly headlong rush into anything with a positive real yield, there are still some lines that investors will not cross. The Wall Street Journal recently reported that Sallie Mae failed to sell bonds backed by particularly dubious student loans at the price that it wanted.

(Matthew C. Klein is a contributor to the Ticker. Follow him on Twitter.)

Source: Bloomberg.com

Rwanda: Adopting austerity measures after cuts in aid

Tuesday, 22 January 2013

Kigali (Rwanda) – Rwanda has frozen the recruitment of civil servants, citing ongoing reforms within the public service sector. The freeze on employment is being seen by many economists as part of the government’s wider austerity measures to tackle its budget deficit, occasioned by aid cuts by major donors.

All public institutions have been asked to suspend hiring of government workers, including support staff. Cases where the recruitment had started, but candidates are yet to be placed in their positions, must also be suspended, according to a memo signed by the Minister for Labour and Public Service, Anastase Murekezi.

The memo does not specify the kind of reforms being undertaken.

The Treasury is struggling to manage its budget after some donors suspended or withdrew aid to Rwanda over allegations that the country is backing the M23 rebels operating in eastern Congo.

In spite of Rwanda’s denial, Germany, UK, the Netherlands and the US announced they were suspending aid.

The accusations also affected an expected dispatch of crucial funds from the African Development Bank (AfDB). The shortfall in donor aid disbursements has prompted the Treasury to postpone spending on some unspecified projects in the agriculture, health, infrastructure and justice sectors.

In the past fiscal year, the government spent Rwf148.1 billion ($234.6 million) on salaries and wages. The wage bill was expected to rise to Rwf181.6 billion ($287.7 million) this fiscal year to cater for the proposed increases in salaries.

However, budget experts predict Treasury could slash expenditure on salaries and wages of civil servants when it presents its supplementary budget to parliament some time this month.
Some civil servants worry the reforms could result in massive retrenchment to reduce the wage bill, and there is uncertainty among business executives over the continued withholding of donor aid, which is hurting business confidence.

Businesses are concerned that if aid is not disbursed within the next few months, the economy could slow down given that the government remains the biggest spender, financing most of the development projects that also benefit the private sector.

In the financial year 2012/2013, the government had planned to increase spending by 16 per cent to Rwf1.3 trillion ($2.3 billion) from Rwf1,1 trillion ($1.9 billion).

“From a business point of view, the trickledown effect on deposits in the banking environment is bound to have an impact. We are already seeing deposit rates going up, which means banks in town are beginning to feel the pressure for deposits,” said Maurice Toroitich, managing director of KCB Rwanda.

“Either the pressure is there or banks are beginning to take a position,” he said, adding that aid suspensions are likely to affect the performance of banks.

Bankers say deposit rates are climbing steadily, signalling a potential liquidity crunch in the near future that could make access to credit very costly, if economic conditions do not improve.

Specifically, deposit rates have sharply risen to 15 -20 per cent from 9.3 per cent in November 2012.

This could lead to higher lending rates to businesses — which, banks fear, if combined with sluggish economic activity could increase default rates, affecting the asset quality of the banks.

While most business executives remain cautiously optimistic — given that Rwanda’s good track record on aid effectiveness could eventually make donors reverse their decision — the impact of the delayed disbursements will definitely be felt in the economy in the coming months.
However, the central bank sought to allay fears of a liquidity crunch, saying the country has enough reserves to counter any shortages.
“We have 4.3 months’ of imports, which gives us room to address any issues,” said Claver Gatete, the Governor of the National Bank of Rwanda, adding that the government is also currently negotiating with donors that could yield positive results.

He said the central bank had tasked banks to diversify their sources of deposits to mitigate risks associated with deposit concentration, which he says could have stressed bank deposits.
“This has been compounded by a small component of aid suspensions,” he said.

The recent decision by the central bank to auction Treasury bills worth Rwf12 billion ($18.7 million) was also seen by economists as a temporary effort to help the government bridge its funding shortfall.

However, the central bank said it aimed to tame inflation and shore up the Rwandan franc, which depreciated by 4.5 per cent against the dollar between January and November last year.
Analysts also say delayed aid disbursements will also force the government to delay some key projects that it had planned to implement in 2012 specifically strategic investments such as the multimillion-dollar Convention Centre and construction of a new airport at Bugesera.

Recently, the International Monetary Fund warned that prolonged aid cuts to Rwanda would hurt government efforts to fight poverty.
The decision is also expected to hurt Rwanda’s economic growth. Growth is projected to reduce by at least 1.5 to 2 percentage points to 6 per cent this fiscal year. Earlier forecasts had put the growth rate at 7.6 per cent.

Source: Afrika.no

Sir Ian Wood to invest in Rwanda tea industry

Tuesday 22 January 2013 16:14

SCOTLAND’S second richest man has announced plans to invest a total of £7.5 million from his family’s charitable trust in the development of the tea industry in Rwanda in Sub Saharan Africa.

Ian Wood will help to develop Rwanda’s tea industry

 

Sir Ian Wood, the recently retired head of energy giant the Wood Group, established the Wood Family Trust five years ago with an initial investment of £50 million.

But the trust’s annual report has revealed that, as a result of continued significant contributions by the oil tycoon, the funds in the trust now stand at approximately £114 million.

The trust, which also supports an initiative to develop tea farming by small holders in Tanzania., is already investing a total of £5.6 million on a six-year project, named Imbarutso, to aid 30,000 tea farmers in Rwanda by increasing their yield and income.

Bit Sir Ian, whose offer of a £50 million gift towards the transformation of Aberdeen’s Union Terrace Gardens was rejected last year by the city council, has now revealed that the trust is investing another £7.5 million to buy the majority shareholding in two tea factories, on behalf of about 12,000 smallholder tea farmers in Rwanda

The Rwanda tea factory purchase is being made under a partnership project between the Wood Family Trust and the Gatsby Foundation, Lord David Sainsbury’s philanthropic foundation. The eventual aim of the scheme is to transfer ownership of the factories to the farmer shareholders at no cost.

Professional management will be provided by the Kenya Tea Development Agency with Sir Ian acting as chairman. Sir Ian commented “This represents an innovative philanthropic intervention which, if successful and further developed, could transform the viability of smallholder tea farmers in Rwanda and pave the way for more smallholder farmers owning their factories across the region, which in turn will substantially increase the incomes of the smallholder farmer tea producers and their families.

“Experience in East Africa indicates that where the smallholder farmers own their own factories, they receive approximately 70 per cent of the made tea price against only 25 to 30 per cent if they simply sell their product to an estate owned factory.”

The trust is also planning to continue to invest in the UK through its Youth and Philanthropy Initiative which will be delivered in 81 schools across ten local authorities in Scotland.

The annual report states: “Sir Ian Wood has continued to contribute significantly to trust funds and, with the trust having spent about £13 million to the end of 2012, our funds going into 2013 are

approximately £114 million. “

The report also confirms that the Wood Family Trust spent a total of £1 million supporting the preparation and start up costs of the aborted city garden project and paying 80 per cent costs of the public referendum on the controversial scheme.

The report states: “Altogether, we will have spent more than £1 million and this is clearly a very disappointing outcome. However, the trustees judged this to be a high value transformational project for Aberdeen which would have facilitated the regeneration of its city centre with significant positive implications for the city’s long term economy. Thus the risk involved in providing the front end investigation and early design capital was deemed worthwhile.”

Source: Scotsman

US tea and tech firms in Rwanda, Vietnam win awards

28/11/2012

WASHINGTON — Secretary of State Hillary Clinton on Wednesday presented one of America’s top technology giants and a small tea importer with awards for their work in Vietnam and Rwanda.

Technology giant Intel was honored with the 2012 Award for Corporate Excellence for its work in Vietnam, while family-owned Tea Importers Inc based in Connecticut was rewarded in the small company category for its decades of doing business in Rwanda.

“In today’s global economy corporations of all sizes have more influence than ever on global affairs especially on growth in developing and emerging economies,” Clinton said at a State Department ceremony.

The conduct of companies working abroad is important to America’s foreign policy, Clinton stressed, because “most people’s impressions of our country will be shaped by our businesses.”

“It’s how millions and millions of people find out about our values, what we really stand for, what kind of people we are,” she said.

“So it’s critically important for the interests of our foreign policy for our American companies to operate responsibly and well.”

Tea Importers was established in 1953 and began marketing tea from Rwanda.

It was later asked by the government to open a factory in a remote area, leading to a joint-venture, known as Sorwathe, which is now the country’s top tea producer.

It works with 4,573 farmers, grows organic tea, and has been a pioneer on workers’ rights, campaigning against child labor and becoming the first firm to sign a collective bargaining agreement with its workers.

Intel has worked with USAID and Arizona University to help train the next generation of Vietnamese engineers by supporting eight Vietnamese universities, and providing scholarships — mostly for women — to study in the US.

Clinton said the technology giant had become a leader in promoting “education, sustainable development and empowering women” and highlighted how all its plants in Vietnam recycle and re-treat waste water.

Source: AFP

West must lift Rwanda aid freeze or risk crisis: AfDB

NAIROBI | Fri Nov 9, 2012

President of the African Development Bank (AFDB) Donald Kaberuka speaks during the opening of the conference ”Value for Money, Sustainability and Accountability in the Health Sector” in Tunis July 4, 2012.
Credit: Reuters/Zoubeir Souissi

(Reuters) – Western donors must lift an aid freeze on Rwanda, imposed over its alleged support for Congorebels, to avoid damaging its economy and causing a new crisis in the region, the head of the African Development Bank (AfDB) said.

Rwanda, which relies on donors for about 40 percent of its budget, has recorded robust growth rates in recent years on the back of increased investments and consumption.

But the Central African country’s Finance Minister John Rwangobwa said last week the economy could take a hit after Washington, Berlin and other donors suspended some of their aid over accusations Rwanda was backing M23 rebels fighting in eastern Congo.

Rwandan President Paul Kagame denies the allegations.

Aid to Rwanda should resume “as soon as possible and that means yesterday,” said AfDB president Donald Kaberuka who is Rwandan.

“The damage could be significant and the cost of recovery even higher,” Kaberuka told Reuters in an interview on Thursday, adding the cutting of aid flows could create a crisis in the region.

“There is no reason whatsoever to create an economic crisis in the Great Lakes because that would impact on all the countries in the Great Lakes.”

The economies in the region are closely linked and any slowdown in Rwanda could hit cross-border trade with Burundi and other neighbors.

Kaberuka said the aid cuts risked reversing development in Rwanda’s health, education and other social sectors, achieved as the country tries to recover from the 1994 genocide.

The country’s government says it plan to transform Rwanda into a middle-income country by 2020.

Kaberuka said he had also opposed aid stoppages to Ethiopia in 2006 and to Malawi last year over allegations of human rights abuses.

Kaberuka, who is on his second term at the helm of the Tunis-based bank, said the AfDB is offering Rwanda $45 million in budgetary support this financial year.

He said Sub-Saharan Africa, excluding South Africa, was likely to grow by 6.4 percent next year, buoyed by increased internal demand largely because of urbanization.

The International Monetary Fund sees a 5.4 percent growth for Sub-Saharan Africa this year from 5.1 percent in 2011.

Kaberuka said high prices of commodities like copper and global appetite for investment in Africa would also drive growth.

“The risk appetite for African assets seems to be very strong. The smart money is in Africa so we are cautioning countries, ‘watch issues of access to financial markets, manage debt very well, build debt domestic management,'” Kaberuka said.

The AfDB plans to launch a debut infrastructure bond to raise $22 billion in the second quarter of next year for investment in high-return projects such as power generation.

Kaberuka said the bank was considering guaranteeing Africa’s biggest wind energy generation project, which is expected to generate 300 megawatts from a base in Kenya.

“That is a transformative project for Kenya… if the government of Kenya requests for partial risk guarantees we will be happy to provide,” he said.

Partial risk guarantees promise investors repayment in the case of unforeseen risks like political upheavals. They usually act as an alternative to government guarantees, keeping public debt under control.

(Editing by James Macharia and Andrew Heavens)

Source: Reuters

INTERVIEW-Rwanda sees GDP growth hit if aid doesn’t restart

Fri Nov 2, 2012 2:22pm GMT

By Jenny Clover

KIGALI Nov 2 (Reuters) – Rwanda’s economic growth could be hit if donors fail to reinstate aid payments, with the economy only able to withstand the stoppage until the end of the year, the country’s finance minister said on Friday.

The United States, Sweden and the Netherlands have all suspended some aid to Rwanda, which relies on donors for about 40 percent of its budget, over a U.N. report accusing the central African nation’s defence minister of commanding rebels in neighbouring Democratic Republic of Congo.

In September, the European Union froze further budgetary support to Rwanda..

Another donor, Britain unblocked part of its cash in September, praising Rwanda for constructively pursuing peace.

John Rwangombwa, minister for finance and economic planning, told Reuters in an interview that he was at present unconcerned about the impact of the aid suspensions, but that if they persisted into next year, they could start hurting the economy.

“We think by the end of this year we should have resolved these issues of the donors. If it doesn’t go beyond December it won’t affect us, if it’s prolonged that’s when we will have effects,” he said.

“There’s the possibility of slowing down our economic growth because the government is part of the major players in this economy. It depends on the magnitude of the prolonged delay.”

The minister did not quantify the likely fall in growth.

Rwanda’s central bank says the economy will grow 7.7 percent this year. Output grew by 9.4 percent in its fiscal year ended June from 7.4 percent previously, thanks to robust growth across all sectors.

Like other countries in the sub-Saharan Africa region, the landlocked country has recorded robust economic growth rates in recent years, on the back of increased investments and consumption.

On Monday ratings agency Standard and Poor’s downgraded its outlook for Rwanda to stable from positive, citing the weakening in its external environment due to suspension or delay in disbursing aid.

It was the only country in east Africa that did not suffer last year from soaring inflation and steep currency weakening, faring better than its larger neighbour Uganda.

Rwanda receives about 40 percent of its budget from donors.

Rwangombwa said the only impact the aid suspensions have had so far was on the exchange rate and the delaying some expenditure programmes.

He said they had been working with the World Bank and the African Development Bank to explain the situation to donors, adding he expected the budget to be financed entirely by local resources within five years.

Five years ago, aid contributed 63 percent of the budget and that while the nominal value of donor funding had increased in recent years, its proportion has been decreasing, the minister said.

“I see in the next five years it should have gone down to around 20 percent. What we are doing in terms of increasing our development and our private sector, is we are widening our tax base,” he said.

“If minerals works out well, well and good, that will be a windfall and we will be happy to have that. But the main source of revenues is expected to be widening the tax base.” (Writing and Editing by George Obulutsa)

Source: Reuters

UPDATE 1-Rwanda keeps rates unchanged due to currency worries

KIGALI, Sept 25 (Reuters) – Rwanda held its key repo rate at 7.50 percent to curb demand for foreign exchange, which could weaken the local currency and feed inflation, its central bank governor said on Tuesday.

Claver Gatete said that although the bank was encouraged by falling inflation rates in Rwanda and in the wider east African region and globally by Europe’s latest efforts to resolve the euro zone debt crisis, it decided to hold rates due to concerns about rising imports.

“There is a risk of very high imports which we have to deal with … we have to be cautious, especially now that we have to contain the demand for foreign exchange,” he told a news conference.

Policymakers had noticed higher-than-expected imports of capital goods, intermediary goods and energy, reflecting robust economic activity, he said.

But the increased imports also put increased pressure on the country’s franc currency, which has edged down 2.9 percent against the dollar so far this year.

While the depreciation had a limited impact on inflation, further growth in imports could have negative consequences.

“While the exchange rate remains market driven, the central bank will continue to intervene to smooth exchange rate volatility,” Gatete said.

The landlocked central African nation was the only country in east Africa that did not suffer last year from soaring inflation and steep currency weakening, faring better than its larger neighbour Uganda.

Gatete said the economy was in line to achieve growth of 7.7 percent this year. Year-on-year urban inflation fell to 5.81 percent in August from just over 8.3 percent at the end of last year. (Reporting by Jenny Clover; Writing by Duncan Miriri; editing by Jane Baird)

Karnataka to provide ICT & electronics expertise to Rwanda

25 SEP, 2012, 07.03PM IST, PTI

BANGALORE: Karnataka State Electronics Corporation (KEONICS) and Rwanda Development Board (RDB) today inked a memorandum of understanding for promotion of bilateral trade and industrial relationship.

KEONICS will be expanding its wings to the East African country to provide expertise in information and communication technology (ICT) and electronics on mutually acceptable terms.

“This new bilateral venture will facilitate collaborative projects in the areas of IT education, ITeS and e-governance, etc.,”, said Chief Minister Jagadish Shettar, who was present along with High Commissioner of Rwanda, Williams Nkurunziza.

Officials said KEONICS will offer advise and provide capacity building in the fields of IT education, IT enabled Services, e-governance solutions, IT consultancy, IT infrastructure, engineering, electrical engineering, electronics, among others, “as need arises”.

Nkurunziza described the MoU as a “mile-stone document” providing a clear frame-work for cooperation between the ICT sector in Rwanda and Karnataka.

Nkurunziza and Honorary Consul of Rwanda here Mohan Suresh are in touch with several successful companies owned by Karnataka Government to take a delegation to Rwanda and organise a “Karnataka Show” there in December, it was stated.

Shettar said KEONICS earned a profit after tax of Rs 4.05 crore during 2011-12 on a turnover of Rs 143.71 crore.

Source: The Economic Times

 

Telecom Border Control – Rwanda learns from Ghana

From: Ghana/Samuel Nii Narku Dowuona/Adom News          September 18, 2012, 00:17 GMT

Adom News Editor, Nii Narku Dowuona, interviews Major Francois Regis Gatarayiha, Director General of RURA

The real time International Gateway Verification System is fully functional in Rwanda, unlike Ghana, but the Director-General of Rwandan Utilities Regulations Agency (RURA), Major Francois Regis Gatarayiha says the system is successful in his country because of lessons they learnt from Ghana and other African countries.

“Ghana installed a series system where all inbound international calls had to go through the international gateway monitoring equipment of the regulator before terminating on the network of the intended operator. But we have a passive system where our monitors are parallel to the connection between the international gateway and the operators’ network so we extract the statistical information at the same time the call goes to the operator’s network without we interfering with the content and quality of the call,” he said.

Maj. Gatarayiha made the statement in an exclusive interview with Adom News Editor Nii Narku Dowuona at the RURA office in Rwanda recently.

Nii Narku Dowuona was in that country to learn about the newly installed International Gateway Verification System, which has come under immense criticism from giant telecom operators in the western world because of the requirement on them to pay a fixed rate to telcos in Africa for calls coming into Africa from mainly Africans in the Diaspora.

The telcos in the west are gearing up to challenge African governments’ involvement in telecom border control at the forthcoming International Telecommunications Union (ITU) World Congress on Information Technologies (WCIT-12) in Dubai this December; and African governments are also preparing to make a case for state involvement in gateway monitoring as a means of ensuring sanity in the system and raising the accurate amount of taxes needed for the development of poor African countries, which is permitted by ITU’s decision at its Plenipotentiary Conference in 1998.

Ghana implemented aspects of the system in 2010, but the part that allows the regulator, National Communication Authority (NCA) to install real time verification equipment on the switches of the various networks was prevented by a court action because some citizens, believed to have been sponsored by telecom operators, felt the ‘series system’ would allow the managers of the system to listen into their private calls, and also affect the quality of the calls, since it has to go through an extra equipment before reaching the consumer.

But the NCA has since restructured the installation and adopted the Rwandan style of a ‘passive system’ that runs parallel to the E1s (channels) of the various networks and only extracts only statistical information such as the number of calls going through the gateway, how many of those calls are picked, and how many minutes each call lasts for.

Whereas Ghana’s the NCA has said the system is meant to monitor only inbound international calls, Rwanda’s system is a bit more elaborate and it monitors both inbound and outgoing international calls, and even local calls to ensure that the call data records (CDRs) generated by the telcos, are in line with what the RURA generates.

Maj. Gatarayiha said citizens of Rwanda have never complained about interference with their privacy and quality of experience because “our citizens are fully aware that we are doing this in their interest and we even have spectrum and quality of experience (QoE) monitoring vehicles that go round the country to check and ensure that operators are meeting their key performance indicators.”

He said the vehicles also check to know which calls are actually going through approved E1s (channels) and which ones are going through illegal channels like SIM Boxes so they could be dealt with, adding that SIM boxing has however not been a big issue in Rwanda.

Monitoring the Minutes for Revenue Assurance 

RURA DG, Maj. Gatarayiha (in blue jacket), explains how the real time verification system works to Rwandan Prime Minister, Pierre Damien Habumuremyi (in striped shirt) as some managers of the system look on

In Ghana, the implementation of the system was complemented with a law that fixed inbound international call rates at 19 cents per minute, and the state gets 6 cents on every 19 cents, and the telcos keep 13 cents, which is way higher than what they used to get prior to the price fixing.

The telcos in Ghana thought 19 cents was rather high and is an incentive to SIM Box fraudsters, but in Rwanda the rate has been fixed at 22 cents per minute, which is much higher, and the RURA D-G said telcos in the country (MTN, Airtel and Tigo) raised similar concerns but “we made it clear to them that is why we do spectrum inspection on their behalf for free so we can identify SIM Box fraudsters.”

Out of the 22 cents per minute, RURA gets 10 cents and the telcos get to keep 12 cents, which is higher than the 7 to 9 cents they used to get per minute of inbound international calls.

“The overseas giant carriers charge 50cents per minute of calls to Rwanda and they used to give the local telcos only 7 to 9 cents, but now we get 22 cents and those overseas carriers have not increased their rates because they know it is already too high,” Gatarayiha said.

MONITORING MINUTES
Since the implementation took off in Ghana, the NCA has been recording an average of 100million minutes of inbound international calls every month, from which it raises an average of $60million in taxes every month, but the RURA Boss says it has only issued its first monthly invoice, and it generated some 11 million minutes of calls, which means the country raked in $2.42 million in the first month of the implementation of the monitoring system.

Out of that money, the state of Rwanda gets $1.1million from which it would pay the equipment providers and managers, Global Voices Group; and the telcos get to keep the remaining $1.32million.

“Hitherto there was no revenue share between the state and the telcos and the state got absolutely nothing from these international calls except meager taxes that the telcos paid based on the CDRs (call data records) they generated and declared at the end of every year without any means for us to verify whether they are declaring the right figures or not,” he said.

“Now we are monitoring the calls in real time and we see the calls as they come in and go out and we know how many minutes each call lasts. The telcos claimed they were hiding nothing so there was no need to monitor. But we insisted that if there was nothing to hide then there was no need for them to be anxious about we seeing things for ourselves,” Maj. Gatarayiha said.

Maj. Gatarayiha believes the monitoring system is one of the best things the government could do for the people of Rwanda because it helps to ensure quality of calls, stem fraud and also provides revenue assurance for national development.

FACTS ABOUT TELECOMS INDUSTRY IN RWANDA
Currently there are four telecom operators in Rwanda, MTN, Tigo, Airtel and the state-owned Rwandtel. The three private telcos are mobile operators and Rwandtel is the only fixed line operator.

MTN entered the market in 1998 and it is currently the overwhelming market leader with 69% market share, followed by Tigo (2004) with a bit over 28% market share, and then Airtel, which entered the market only in 2010, has 2% plus market share.

Maj. Gatarayiha said the country planned to license a maximum of four private telcos but looking at the size of the population and purchasing power of citizens, they have no immediate plans to license a fourth operator.

Telecom coverage in Rwanda is currently 97% and mobile penetration is 45% against a population of 11 million.

The country has licensed 11 ISPs (Internet Service Providers) and seven of them, including all the three mobile operators, are currently operational.

Maj. Gatarayiha said plans are afoot to give the RURA regulatory powers over radio and TV stations through a memorandum of understanding, which would require the media to do self-regulation under the supervision of RURA.

RURA issues operational licenses to telcos through auctioning so there is no flat licensing fee, and the spectra fees is RWF1.2 million (about $2,000) per megahertz; and licenses are technology neutral, which means once a telco has a license it can have 2G, 3G or 4G network, but in accordance with what is stated in the licensing requirement. Telcos also pay a meager $10,000 per year for a block of one million numbers.

The RURA DG said telecom regulatory fees is one per cent of telcos’ annual turnover, just like in Ghana; but telcos also contribute two per cent of turnover into the Universal Access Fund, what we call the GIFEC Fund in Ghana. This is one per cent in Ghana, and it is used for providing last mile infrastructure in rural, un-served and under-served communities among other things.

Rwanda is also encouraging co-location and incentivizing telcos which extend services to the remote and less profitable un-served and under-served areas.

Maj. Gatarayiha said RURA, the telcos and the local authorities have an agreement which ensures that local government levies on telcos for installation of infrastructure are within reasonable levels, unlike in Ghana where local authorities charge telcos arbitrarily unreasonable amounts as compared to what they charge other commercial organizations.