Category: Economy

Bank of Kigali’s credit worthiness and stability has received a strong boost of approval from South Africa-based agency, Global Credit Rating Company, which has affirmed Rwanda’s largest commercial bank with an AA- rating for long-term credit and A1+ for short-term credit lines.

The stock market is expected to warm up to the development with a busy BK counter on the bourse, anticipated today on account of eager investors interpreting the bank’s positive rating as a vote of confidence in its operations.

According to the rating agency, an AA- rating for long-term credit means Bank of Kigali has a very high credit quality outlook and its protection measures are in very strong position.

However, the negative (-) means that adverse changes in business, economic or financial conditions would increase the bank’s investment risk, although not significantly.

On the other hand, an A1+ rating for short-term credit lines means the bank enjoys the highest certainty of timely payment to its creditors.

It also means that the bank’s short-term liquidity, including internal operating factors and/or access to alternative sources of funds, is outstanding with credit worthiness close to that of risk-free treasury bills.
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What it means}}

As a listed bank, the positive rating will boost confidence of shareholders as it means their bank is in sound position to earn them more dividends.

The rating is also likely to enhance the bank’s share value on the stock market with a busy counter expected this week.

The new rating also means that the bank can easily access both long- and short-term credit lines, especially from outside the country, without the need for creditors to worry about risks of default or difficulty to get their money back.

In its latest financial stability and monetary policy statement released last month, central bank revealed that Rwanda’s financial sector is “sound and well capitalised with adequate liquidity levels and good quality assets.”

The central bank also noted a positive trend of decreasing non-performing-loans at 5.9 per cent from 6.6 per cent and manageable inflation pressures in the near future and decided to keep, unchanged, its key repo rate at 6.5 per cent to encourage commercial banks to lend more to the private sector.

However, a leading challenge in the country’s financial sector is low deposits due to a weak saving culture and even those who save do so only to withdraw their money in the short-run.

Such dynamics compel banks to seek external alternative sources of credit lines for short but especially long term lending facilities to finance private sector investments.

Favourable credit ratings therefore help commercial banks to have it easy with creditors as they (ratings) boost confidence in the bank’s ability to repay the money, in the long and short run.

A bank with positive short- and long-term credit ratings also enjoys the advantage of borrowing externally at lower interest rates which often translate into lower interest rates on loans for domestic borrowers.

“We are very pleased with the credit rating affirmation by GCR. The affirmation serves to give confidence to our customers and investors both at home and internationally,” said Dr James Gatare, BK’s chief executive.

The NewTimes

Residents of Nasho Sector, Kirehe District, have found solution for the rampant drought in a new irrigation scheme being championed by Howard Buffett.

During his tour of Nasho II irrigation site, yesterday, Buffett, the chief executive of Howard Buffett Foundation, commended the progress of the construction works and assured residents that the project will change their livelihoods.

“Irrigation equipment will be here by December and we will start installation around the farm. We will use pivot irrigation and 63 pivot machines will run on solar energy. It is always hard to start but I am sure you will rejoice when the project starts yielding benefits,” he said.

The American philanthropist is the son of Warren Buffett, one of the world’s richest men.

Earlier this year, Buffett pledged $500 million (about Rwf345bn) toward support for agriculture initiatives in the country.

The support is aimed at transforming the sector’s productivity from subsistence to commercial farming through irrigation systems and skills development, among others.

The Minister for Agriculture, Dr Geraldine Mukeshimana, said the project covers 1,206 hectares of Cyambwe valley and it will use water from Cyambwe Lake.She said Buffett is fully funding the project with $22 million (about Rwf16 billion) in irrigation infrastructure, including roads, drainage, water tanks and irrigation machines, while the government will spend Rwf1 billion in expropriation.

Buffett said his Foundation decided to run the project in Rwanda because they are sure it will succeed for many reasons, including government support, and its commitment to development initiatives and stability.

“This area has been selected because it is prone to drought and that brings need for irrigation. The project is moving forward but it will take time because it is very big. It is a big undertaking and we want to do it on a larger scale thereafter,” he said.

“We are looking for a number of projects and apart from projects in agriculture, we also have 250 beneficiaries of a fully funded scholarship programme, now studying in the US and other countries.”Buffett took time to interact with farmers at Cyambwe valley and addressed their worries about the project before leaving for another visit to a Practical Agriculture Institute in Karama, Bugesera District.

The institute is also under construction and is fully funded by Buffett, who said it is intended to bring rural expertise, education and development in agriculture.

Minister Mukeshimana said the irrigation facility in Nasho will tackle the rampant drought that the area has been experiencing for long.

“This area often suffers droughts but relief has come as this project is going to end the problem and improve residents’ welfare. As the installation of irrigation pivots starts in December, every completed installation will start being used as the installation continues to take about a year,” she said.

Mukeshimana urged Nasho farmers to own the project and preserve the facility.

The minister said the irrigation master plan intends to cover 600,000 hectares in long term, but it currently covers only 40,000 hectares countrywide.Eastern Province governor Odette Uwamariya said the province looked to the project to boost agriculture.

“We are currently doing irrigation on 8,000 hectares and our target is to register 3 per cent annual increase. This project will significantly contribute to our targets when it starts,” she said.

Residents welcomed the project and pledged to make good use of the irrigation scheme.

The NewTimes

September 9, 2015 Port-Louis – MFS Africa, the Pan-African fintech company and largest aggregator of mobile wallets in Africa, announced today that its first East African xP2P corridor has now opened between MTN Uganda and MTN Rwanda. MTN Mobile Money users in Rwanda are now able to send money to Uganda seamlessly and affordably through the MFS Africa Hub. The Hub connects mobile wallet customers across networks and countries in sub-Saharan Africa, enabling convenient and affordable mobile-to-mobile international money transfer (“xP2P”).

The World Bank estimates that over $160 million is sent from Rwanda to Uganda each year in remittances, through formal and informal channels. Formal channels such as banks and traditional money transfer companies can take days and charge exorbitant fees, while informal money traders and couriers carry high levels of risk and uncertainty. As such, current costs of transfers to Africa average 12%, and transfers between African countries cost on average 20% – compared to a global average of 8%. In contrast, transfers through mobile money are instantaneous, secure, traceable, and dramatically cheaper.

“The MFS Africa Hub is bringing inter-operability to mobile money platforms – across borders as well as across networks. We’re excited to take this step with MFS Africa towards regional integration,” said Serigne Ndoum, Head of Mobile Financial Services at MTN Group.

“We are excited to extend our xP2P service to East Africa with our long standing Partners MTN Rwanda and MTN Uganda,” said Dare Okoudjou, founder and CEO of MFS Africa. “We look forward to opening up more xP2P corridors in the region to enable more people and business to send money across boarders at a fraction of current costs; we remain confident that we will achieve our of reducing intra-African remittances costs to a single-digit rate by the end of the decade.”

Rwanda’s national carrier RwandAir, and Airbus, yesterday, signed a purchase agreement for the two Airbus aircraft A330-200 and A330-300.

RwandAir becomes the first airline in East Africa to acquire this type of aircraft.

One of the planes has 261 seats and the other 300 seats, and will both come in a triple-class configuration with Rolls Royce Trent 772B engines.

They are expected to be delivered in September and December next year.

The A330 type of aircraft has an operational reliability of 99.4% and boasts efficiency for all market segments, thus making it a perfect match for RwandAir, according to airline officials.

This particular purchase order, according to Dr Alexis Nzahabwanimana, the State Minister for Transport, will help RwandAir to expand its flight coverage to both Europe and East Asia by the end of next year.

“It will also enable the national carrier to take advantage of lower operating costs. This will enhance the airline’s profitability in the long run,” Nzahabwanimana said.

John Mirenge, the RwandAir chief executive, said the deal reaffirms the airline’s efforts to contribute to national economic development.

“The deal is proof of good micro- and micro-economic management and our reliability, passenger comfort, versatility and fuel efficiency, which will enhance our competitiveness in Africa and beyond,” Mirenge said.

The acquisition of these two wide-body aircraft will significantly increase RwandAir’s capacity to effectively meet growing demand and provide exceptional service quality for the ever-growing Asia-China and European passenger markets, he added.

Christopher Buckley, the Airbus’s executive vice-president for Africa, Europe and Asia Pacific, said the deal reaffirms the confidence between RwandAir and the manufacturer, which the two can now leverage to grow and thrive in aviation business.

Recently, both RwandAir and the Eastern and Southern Africa Bank (PTA Bank) signed a financial line of credit worth $160m to support the purchase of the two airlines.
There is hope that with two wide body aircraft, the airline’s capacity could grow from the current 500,000 passengers annually to more than 3 million in the next five years.

The two airlines will see RwandAir fleet grow to 12 planes.

The national carrier was early this year recognised as one of the safest airlines by the International Air Transport Association (IATA) after passing the operational safety audit (IOSA).
It later became a member of the International Air Transport Association (IATA), joining a club of 250 member airlines in more than 150 countries.

The airline flies to more than 18 destinations, including Nairobi, Entebbe, Mombasa, Bujumbura, Lusaka, Juba, Douala, Dar-es-salaam, Kilimanjalo, Johannesburg, Dubai, Lagos, Libreville and Brazzaville, among others.

The NewTimes

The government collected Rwf871.4 billion in both tax and non-tax revenues during the Financial Year 2014/15, according to Rwanda Revenue Authority (RRA).

This represents a 12.6 per cent increase compared to the previous financial year, when Rwf782.5 billon was collected.

The figures were announced, yesterday, by RRA Commissioner-General Richard Tusabe during a news conference at the revenue body’s headquarters in Kimihurura in Kigali.

According to Tusabe, Rwf858.4 billion was collected in tax revenue against a target of Rwf878 billion for last financial year, reflecting an achievement of almost 97.8 per cent.

Equally, RRA managed to collect Rwf13 billion from non tax revenues against a target of Rwf10.2 billion, registering a surplus of Rwf2.8 billion (27.5 per cent) over the target.

“Decentralised taxes (trade licence, property tax and rental income tax) collection for 2014/15 was Rwf13.2 billion against a target of Rwf13.5 billion when you exclude fees. This means that total revenue collections grew by 12.6 per cent,” Tusabe said.

{{What this growth means
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According to Damien Ndizeye, a private economist and consultant based in Kigali, the growth means the country is moving towards self-reliance.

The government has said it expects domestic resources to finance up to 66 per cent of its Rwf1768.2 trillion National Budget for 2015/2016 financial year using domestic resources.

This means that Rwf1,174.2 billion must be sourced domestically, which puts more pressure on RRA to mobilise and collect this revenue.

{{Factors behind improved performance}}

Tusabe attributed the improved performance to good collaboration with various stakeholders, including Rwanda Cooperatives Agency, the Private Sector Federation and Rwanda Governance Board.

These, he said, played a big role in ensuring registration of quarries, maize milling business operators, commercial buildings and landlords within the City of Kigali for VAT.

Enforcement of the use of electronic billing machines (EBM) was yet another notable factor in the improved revenue collections, said Tusabe.

“We conducted regular checks to ensure that taxpayers were using EBM properly and filed their taxes. We also conducted more targeted campaigns about the new system,” he said.

So far, a total of 8,000 VAT-registered taxpayers use EBMs out of 12,000 in the country.

The revenue body is counting on this technology, among other strategies, to be able to meet its targets this fiscal year, Drocelle Mukashyaka, the deputy commissioner for taxpayer services, told The New Times.

Meanwhile, RRA cited the low inflation (1.3 per cent) during 2014/2015, the fall of global oil prices and reduced consumption of excisable products as some of the reasons they slightly missed the overall target.

As the revenue body sets its eyes at collecting resources that will help finance the National Budget by 66 per cent, the authority is still faced with resistance by some taxpayers to use EBMs as required by law, which, according to Tusabe, is affecting VAT collection.

RRA also decried non compliant taxpayers who they declare/file tax returns, but refuse to remit the due taxes, until they are forced.

“Some businesses also still undervalue their goods during import clearance process, which, in turn, impacts on the revenue collection,” Tusabe added.

{{Key priorities for FY 2015/16}}

According to RRA, the tax revenue target for the Financial Year 2015/16 is Rwf972.27 billion, which includes tax revenue equivalent to Rwf949.19 billion and the local government tax of Rwf23.08 billion.

In addition, the non-tax revenue target for the fiscal year 2015/16 is Rwf45.4 billion composed of RRA non-tax revenue of Rwf13.0 billion and local government fees totalling to Rwf32.4 billion.

To achieve these targets, RRA is planning to continue taxpayer registration process, enhance EBM monitoring systems and continue enforcing the payment of tax arrears among many other measures.

THE NEW TIMES

{ Airtel Rwanda took part in a two-day training of women to help them attain financial freedom. The training which took place at Lemigo Hotel, was organized by New Faces New Voices – Rwanda Chapter and facilitated by Centonomy, a Kenyan firm that specializes in training individuals and companies to attain financial freedom.}

New Faces New Voices is a member-based organization that was launched in 2015 under the patronage of Her Excellency the First Lady of the Republic of Rwanda, Mrs. Jeannette Kagame. The chapter forms part of the Pan-African advocacy movement founded by Graca Machel that focuses on expanding the role and influence of women in the financial sector.

The training aimed to achieve women’s access to finance, business and financial capabilities and participation in decision making positions in financial institutions. This is done through networking, mentoring and advocacy by providing information services, programming and investments.

Speaking about the training, Airtel Rwanda Head of CSR and Corporate Communications, Denise Umunyana said; “At Airtel we uphold women values and support the development of women in society. It is with such core values that we worked hand-in-hand with New Faces New Voices to give these ladies financial training.”

The training groups women in six clusters; young emerging entrepreneurs, junior and mid-level professionals, enterprise owners, senior professionals and established entrepreneurs.

Bank of Rwanda Vice Governor and Chairperson of the New Faces New Voices Board, Dr. Monique Nsanzabaganwa, commended Airtel Rwanda for the support it has showed women in Rwanda through its different women empowerment programs.

Commenting on the initiative, Airtel Rwanda Managing Director, Mr. Teddy Bhullar said, “Women remain major players in our society. With a society of equal rights, we need to support women so as they can be part of our nation’s development. .”

{ {{KT Press}} -Rwanda plans to uplift another million people out of poverty by 2016; the Word Bank has announced in its latest update on the country’s economic situation.}

The World Bank says, Rwanda’s economy will grow at a rate of 7.6% in 2016 and if this is maintained, the country will be able to cut down the poverty rate from 63% (2011) to 54% (2016).

This, in essence means about a million people will be lifted out of poverty.

The report, The Rwanda Economic Update: Financing Development, says, the country’s growth rate has tremendously recovered from its lowest of 4.7% in 2013 since 2003 to 7.0% in 2014.

Rwanda is currently experiencing a growth rate of 7.4% in 2015 after lifting at least one million citizens out of poverty between 2006 and 201.

In 2014, the government made a commitment of three million more people out of poverty in five years.

Yoichiro Ishihara, Senior Economist and Task Team Leader of the report noted that Rwanda’s recovery is largely led by; “Private and government consumptions reflected in the accelerated growth of the services sector.”

He said that developments of the monetary sector have also been supportive to the economy.

“Low inflation rate and appreciation of real effective exchange rate is favorable for the accommodative monetary policy to support the economy through financing,” says Yoichiro.

Meanwhile, the report says the drop in global oil prices has had a positive effect on Rwanda’s economy in both inflation and imports.

Transportation prices declined by about 4%, which brought down the overall Consumer Price Index (CPI).

On energy imports, prices started to significantly decline in November 2014, resulting in energy import values drop of 20-40% until April 2015.

However, the report notes that although Rwanda’s GDP investment of 24% is slightly higher than the average of low/medium income countries, it is still mostly financed by foreign savings, including aid.

Experts recommend that the country needs to find alternative means of funding.

“Workers remittance and foreign direct investment are potential sources…they have steadily increased without significant volatilities in the past several years,” says Carolyn Turk, World Bank Country Manager for Rwanda.

{Effective today, motorists will have to dig into their pockets deeper after the Ministry of Trade and Industry announced new pump prices for petroleum products.}

According to a statement from the ministry, both diesel and petrol should not exceed Rwf935 per litre, each rising from Rwf840 per litre, a price set in May.

The ministry attributed the increase of the price to changes in international prices, which “since February increased by 14 per cent.”

The government has been responding to global oil price changes since March 2014, when the ministry announced fuel cuts from Rwf 1,030 to Rwf1,010, and later in November, from Rwf1,010 to Rwf960 per litre.

Petrol and diesel went down to Rwf895 per litre in December, and further went down in March to Rwf810 per litre this year.

The statement also says that the increment is part of the levy contribution that will feed into construction of the national fuel reserves and road infrastructure.