Rwanda’s Minister of Finance and Economic Planning, Claver Gatete, discusses both the East Africa Exchange that is headquartered in Kigali and Rwanda’s investment landscape in general.
What does the East Africa Exchange do and how do you see it benefitting the region?
Claver Gatete: The East Africa Exchange (EAX) is the first exchange of its kind in the region. It initially targets East Africa, but might also be used by other regions. Here in Rwanda, it is initially for the sale of agriculture products such as maize, beans, and other goods, but could also be focused on minerals, on energy and other commodities.
The EAX utilises modern software, the sort that is used in European countries and the US, such as on the NASDAQ OMX. The EAX works in Uganda, Kenya, Tanzania and other markets to create an East African regional exchange, which will also stimulate investment in agriculture.
They are setting standards for the warehouses, and once they set the standard for the warehouses, the people who are working in the sector have significantly better access to finance as they can use their stored products as collateral against loans. This improves the investment in agricultural inputs and helps farmers plan for the long term. It also enables farmers to access credit as it is a guarantee; this is something that is very important for us.
How supportive have the other countries been towards the EAX initiative?
This year they have been very supportive, particularly along the northern corridor, that is Kenya, Uganda, South Sudan and Rwanda.
In the East African Community as a whole, they have discussed this project and recognise that it is very important for improving agricultural commodity trading.
With this kind of market we can sell more within the region and also globally. International organisations can get information from the exchange that helps them purchase from East African farmers.
From an international investment perspective, this means that farmers in East Africa will be investing that back into the land. But what do you think are the most important factors about the East Africa exchange for the wider international community, both elsewhere in Africa and beyond?
The EAX is underpinning agricultural development, both foodstuffs and other commodities, which will be significant in helping our economies. Farmers can get the right prices for their produce, which allows them to commit more resources and improve productivity with modern seeds and so forth.
Credit has always been very difficult for the farmer, but now they can get it with the help of warehouse credit receipts that are virtually financial instruments recognised by partner banks. These are the most important benefits to the farmer and the people in rural areas as they will have much better access to money to invest in their farms and other initiatives.
For the international investor, you know that you have a modern commodity exchange where the crops are certified to meet international standards.
One of the main investors in the EAX is Heirs Holdings, the investment company led by the prominent Nigerian businessman, Tony Elumelu. Do you think that having Africans supporting projects such as the EAX is the way forward?
What I would say first of all, is that any investment is a good investment, whether it is Rwandan, whether it is African or non-African; it is a very useful investment. But what is also encouraging is Africans wanting to invest in Africa, especially because they understand the market, they understand the people and we believe that they can easily attract others who are from outside the continent, who are not very knowledgeable about the continent, and then this way they can be leaders for investment.
Africans are seeing opportunities and are leading by example, especially in agriculture in Africa.
Leaving the East Africa Exchange aside for the moment, and considering the investment landscape more widely in your country, what are the key sectors where you are looking for investors?
First of all we are seeking investment in agricultural industries. We want to link primary production to industry in order to maximise benefits to the country.
We are also looking at the tertiary and financial sectors, from telecoms to banking. We are hoping that investors can look at energy to support our high growth; and also other infrastructure opportunities. There are many great opportunities depending on the investor’s taste.
You stated earlier that all investment is good investment; what sort of partners do you look for? What does Rwanda do to make sure they are getting the best quality investors?
Rwanda has worked hard to lift itself up in the rankings of countries to do business in. We look to make sure we do everything right for investors. But at the same time make sure that we have the institutional capacity to make sure that the investments that are being made are the right investments for Rwanda.
This helps us negotiate to make sure we get the best deal that we can get. This applies in all sectors, whether it is transport, infrastructure or finance. We need to be able to discuss and make sure the investors are the right, long-term investors for Rwanda. Then we need to ensure that we have the capacity to make sure that investors are following all the rules.
As you know the Global African Investment Summit is all about bringing longterm investors and the right investors into Africa. How important is it for governments like your own to interact with investors in the world marketplace; in places like London, Beijing, New York, what do you want investors to know about Rwanda?
It’s very positive that our government gets involved in events like the Global African Investment Summit in London to profile investment opportunities here in Rwanda.
What we want investors to know is that we need their investment; we provide the right incentives and we have invested heavily and worked tirelessly to create one of the best business environments to be found anywhere in the world.
We are doing everything to make sure there is the rule of law; that there is peace and stability. We have also established many institutions that make investors feel comfortable and free to conduct their business in a responsible manner. And it’s working, there are many people that are invested here for the long term. For us as a country, investors are welcome, no matter from which country or region, all of them are treated equally.