Rwanda country of opportunities

Cases, ready for investment

RCF: Folkert Casteleien www.rwandachamber.org

Rwanda Trust: (for profit)

- Business Development, projects

- Creating local companies, JV’s

- Management (director) of local companies

- Secretarial support

- Administration services

- Payroll services

- Legal advice

- Office support

-Telephone Services

- VAT services

-Tax Advice

- Accounting

- Bookkeeping

RCF services & RwandaTrust activities RCF: (non-profit)

Managing feasibility studies

Finding local counterparts

Contacting Rwandan governmental instances

Investigation for financing

Helping designing the business case

EAC common market: 130 million people

Rwanda, Kenia, Tanzania, Burundi, Uganda

Duty free access

COMESA: Eastern- and South Africa.

19 member states, 500 million people.

Be aware: D.R.Congo is big as

Europe , Sudan is bigger. From

Rwanda to Mombassa (South of

Kenya, is 1400 km. Dar-es-

Salaam (Tanzania) is 1600 km.

Matadi (Congo) is 2200 km.

Mombassa

Dar-Es-Salaam

Karisimbi, vulcano Rwanda's highest point at 4,507 m.(14,787 ft).This western section of the country, which

lies within the Albertine Rift montane forests ecoregion has an average elevation of 1,500 metres (4,921 ft)

to 2,500 metres (8,202 ft).The centre of the country is predominantly rolling hills, while the eastern border

region consists of savanna, plains and swamps. Source of the river Nile in Nyungwe Forest.

4507

m

Nile

2006

One stop border post

Universities

10.5 mln. people,

75% of The

Netherlands. Only

52% is usable

More rain

Less rain

Climate change:

Attractive climate to invest

Economic ranking out f 183 countries (Worldbank)

Stabile currency, well developed financial sector, stock marget, low inflation compared with others.

Rwanda economic indicators

Corporate tax is 30%, on dividend 15%, however, all kind of incentives for FDI:

License to import agricultural inputs is free of charge. Same for livestock.

Investment incentives:

- An investment enterprise benefits from a flat fee of 5% of the CIF value of

building and finishing materials

- long list of tax exemptions for imports of specific goods like machinery,

specialized vehicles, equipment for tourism and hospitality industry, etc.

RRA website: http://www.rra.gov.rw/rra_article280.html

Free economic zones / International company with headquarters in Rwanda:

- Is entitled to import machinery, equipment, raw materials for he industrial

purposes and other goods free of duty

- is exempted from corporate income tax

- is exempted from withholding tax on payments

- is exempted form tax on repatriation of profits abroad

- there is a discount on export earnings

- a discount for creating employment

- incentives for construction projects

If the determination of business profit results in a loss in a tax period, the loss

may be deducted from the business profit in the next five (5) tax periods,

earlier losses being deducted before later losses.

Tax regulations: many rules to support FDI

Employment income:

0 - $600 = 0 %; - $2000 = 20%, more is 30%

Worldbank figures

Economic ranking out of 183 economies

2nd global reformer 2006-

2012 (World Bank)

Republic of Rwanda facts:

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.

Huge program in land registration (Kadaster) up to 12 mln registered ownerships of land.

There is an open trade policy, a favorable investment climate, cheap and abundant labor,

tax incentives to businesses, stable internal security, and crime rates that are comparatively

low. 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)

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 1,900; today, Rwandan university

graduates exceed 55,000.

GDP growth 2011 was 7%. GDP $6 billion:

Agriculture 33.6%, industry 14.1%, services 52.3%

Cultivated land is 46%, 1.8m ha..

Fertilizer us 16 kg / ha.

Export 2011, $300 million. Kenya 36.6%,

Democratic Republic of the Congo 14.7%, China

9.1%, Swaziland 5.9%, US 5.3%, Pakistan 4.6%

Imports 2011, $1,307 billion. foodstuffs,

machinery and equipment, steel, petroleum

products, cement and construction material

x1000

Agriculture, export & import

Products--coffee, tea, pyrethrum (insecticide made from chrysanthemums),

bananas, beans, sorghum, potatoes, livestock and nuts. Coffee and tea

account for 50% of all export, (minirals like tin, tungsten, wolfram, chromium,

etc. 40%, manufactured products 5%, orther agriculture & livestock 5%)

Wheat milling industry is the third sector ($50m).

The livestock sector contributed US$60m to GDP in 2011, the fishery sector

$11.5 m. (consumption is 1 kg pp / year. But Rwanda has 24 large lakes.)

Initiated Investment projects in Rwanda

Scaling the Poultry chain: feed – hatchery – rearing layers - eggs

broilers -

- slaughtering – processing – distribution - export

Animal feed: Maize Mill factory 5 MT / hour $500,000; dosing $180,000; pelleting

$300,000; Soybeanprocessing 2 MT / hour $575,000. ROI > 10%

Parent-stock (10,000), 2 buildings, & hatchery (1 building, 35,000 chicks / week)

$435,000. ROI 20%

Pulletfarm (100,000 18-week chicks/year) $600,000

Broiler farmhouse (5000) $60,000. 35,000 x 2.2 kg broiler / year

Layer farmhouse (5000) $55,000. 1.5 million eggs / year

Egg-tray factory $ 100,000. EBIT $175,000 / year

Slaughterhouse & meat processing plant 15 MT/day $4 million

Buildings (storages, factories) & affordable housing

Mobile factory for local production

of bricks: € 100,000

Mobile factory for local production

of steelframes: € 100,000

Energy, an interesting challenge

Energy

Solar power: 10 KW turn-key off grid system $55,000. Tariff from the grid is

$0.225 / KWh. Gasoline & fuel is $ 1.65

Microfinance refrigerators & battery & ledlight chargers on solar panels.

Stand‐alone 50W system $195 (CIF)

Powerplant or CHP on methane gas. 3.3 MWe is $2.2 million delivering also

3.4MWh and CO2, usable for greenhouses . Income 3300 x 8000 hour x $0,156

= $4,118,400 / year. Cost of CH4: 850 x 8000 x $0.45 = $3,060,000 / year.

Exploitation, maintenance & depreciation $400,000 / year. EBIT $658,400 ./ year

Off-shore plant for winning CH4 in lake KIVU plus 5

MW powerplant, infrastructure: $15 million. Hydragas,

KIVUgas, Worldbank $7 million. Search for $8 million

Current installed generation capacity is 93.27 MW, generated from hydropower

(57MW, 59%), thermal energy (40MW, 40%), and PV (0.25 MW%). To be added:

methane, peat, waste, and wind. Many projects waiting for investors.

Greenhouse tomatoes

5 ha investment turn-key $8.5 million. Revenue 2.5 million kg tomatoes / year

= $ 2.5 million. EBIT about $900,000 .

With 20 ha over 10% of synergy

Investment: GoR grant support (via IFAD) of ~700K $ over

the next five years. $1million in new equity (FDI), 250K USD

in debt.

Projected Investor / Shareholder ROI greater than 30% and

IRR of 22%

BIO-oil: Ikirezi Natural Products produces quality organic geranium oil.

Ikirezi currently has approximately 30 Ha of current land under cultivation and

distillation capacity to produce over 2.5 MT of geranium oil annually. The five

year plan targets an expansion to 400 Ha of geranium and patchouli producing

6MT and 9MT respectively, with an annual turnover of approximately two

million USD/yr.

Agriculture & processing

Beans: Rwanda Agri-Business Industries Limited (RABI) is engaged in the

business of processing agricultural commodities (mainly beans) into pre-

cooked and packaged food products for sale inRwanda and also in the regional

market.

Fruitprocessing: SONAFRUITS has made its primary business in the

processing of fruit, into concentrate and ready-to-drink (RTD) fruit juice for

subsequent sale to the local Rwandan market. Primarily focused on the passion

fruit market. Investment required $ 490,000 in new equity.

Projected Investor / Shareholder ROI greater than 13%.

Avocado: Avocado exports from Rwanda and Revenues are

projected to be 4,000MT and $7.8M respectively by year five. The

initial investment will require $2.9M for sourcing and packaging.

Project IRR is forecast to be 38%, with Net Income of $1M by 2017

The opportunity to invest $8M–$10M into a common beans

processing and canning business will yield an expected IRR of

30%–35%, with net income of ~$3M (by year five of business)

Fertilizers: import & distribution

.

The Government of Rwanda’s strategy to increase agricultural productivity

through increased fertilizer usage has grown the fertilizer market to 32,000

MT over the last 6 years

The Government now plans to privatize the market and encourage the

entrance of more private sector players to increase market efficiencies,

fertilizer utilization and technical agro-capabilities

With privatization and the planned market building initiatives, Rwanda’s

fertilizer market has the potential to reach 48,000 MT in volume and over

$46M in revenue over the next 5‒7 years

Utexrwa, textile factory. 565 employees.

Investment Required: New equity investment of $960,000 and New debt of

$975,000 with preferential terms.

Projected Investor / Shareholder return on equity of 41% and payback by year

three.

Wheat: SOTIRU plays an important role in establishing the wheat value chain,

developing wheat farmers.

New equity investment of $325,000. Plus $730,000 in commercial loans. And

$400,000 in MINAGI directed farmer support.

Projected Investor / Shareholder ROI up to 17% with an annualized return on

equity of 5% by year 3; IRR of 12% over 5 years.

Dairy processing: Rubilizi (1952). A 5 year plan is in place to increase

production capacity from its current 2,000 L / day to a still modest production

capacity of 8,000 L /day across pasteurized milk, fermented milk and yoghurt.

Investment Required: $400,000 in new commercial loans and $250,000 in new

Equity.

Projected $2.16M by 2016; 25% Gross Margin; 10% Net Margin.

Seeds: The Government of Rwanda currently provides seeds for free for

crops such as maize and wheat through the Rwanda Agricultural Board

(RAB), which buys certified seed through the Crop Intensification Program

(CIP). Agrotech and Africhem are small local private importers.

The Rwandan climate is perfect for seeds. There are a lot of possibilities to

start production in seeds for export of forage seeds, legume, flower, grass.

Leather: Rucep is the only leather company and producer of wet blue skins

in Rwanda. In 2005, Rwanda exported 5 million USD in leather goods and by

2012, leather exports are projected to reach 12.6 million USD.

Investment Required: FDI $350,000.

Projected Gross Margin of 38% and 2016 Revenues of $2.1M.

Projected Investor / Shareholder ROI more than 30% and payback within 1

year. Return to farmers (agricultural laborer incomes total $2.7 million over 5

years)

Soybeans. There is a high, unsatisfied demand for soy-based cooking oil,

which is currently imported. Also high demand for protein in animal feed.

The scale of the opportunity is confirmed by Soyco’s $15m investment in this

sector, aimed at producing soybeans for local consumption and processing oil

and animal feed.

Mushrooms: growing on the residues of rice, maize, sorghum, a.o., in 30

cooperatives (1000 growers). The national demand of over1600 mt doubles

the supply. Market price is high, $3.25 / kg.

In March 2012 a new seeds production factory was launched by Minagri, to

produce 20,000 seeds / day.

Challenge is the costly production methods from today.

Tourism

Number of hotel nights is growing 50,000 / year !