Government is set to surrender 75 per cent of its stake in the Development Bank of Rwanda (BRD) to Atlas Mara Investment Company, as part of efforts to expand access to finances and financial outreach across the country.
The deal involves splitting the bank’s activities into two business entities; the commercial operations to be run by Atlas Mara, and its development work, to be retained by government, according to the Memorandum of Understanding (MOU) signed between the Government and Atlas Mara Investment Company backed by former Barclays boss Bob Diamond.
According to the MOU, the takeover could start in two months time. The government will then announce how much it will receive after selling its stake.
The Minister for Finance and Economic planning, Claver Gatete, said the takeover is in line with government’s bid to encourage privatisation and foster economic development.
“The government is committed to privatisation in a sense that attracts foreign direct investments. This does not only give investors good business opportunities but also boosts economic growth,” Gatete noted during the signing ceremony in Kigali, yesterday.
He said the bank’s capitalisation and liquidity could also be boosted from the current 25 per cent, making it more attractive and lucrative for investors.
The deal follows concerns about the bank’s inability to deliver to its economic objectives – an issue that came up during the recently concluded national retreat.
“We have decided to involve Atlas Mara because of the expertise, resources and connections they will be bringing on board,” Gatete told this paper.
Bob Diamond, co- founder of Atlas Mara, said they chose to invest in a Rwandan bank because of the excellent general performance of the economy, and its great leadership.
“Rwanda is a model economy that will continue to benefit from the private sector,” Diamond, a former Barclays head, said.
He further noted that while it’s important for the government to privatise the bank, certain aspects of development are better off in the hands of the bank.
“We are going to carry out technical work and see which areas will remain under government’s management as we try to streamline the commercial aspects of the bank. However, the overall objective is to try and turn Kigali into a financial hub for everyone on the continent,” Ashish Thakkar, co founder Atlas Mara, said.
Experts react to the sale
Alex Kanyankole, BRD’s chief executive officer, said the deal is timely and will enable the bank to extend its financial outreach across the country.
“We are not only talking about bringing more resources on board and boosting our capacity to deliver but also expanding on the bank’s investments and financial outreach through opening various branches across the country,” Kanyankole told The New Times.
Valentine Rugwabiza, Rwanda Development Board’s CEO, noted that the new partnership has the potential to increase access to finance for Rwandan businesses, especially small and medium enterprises (SMEs).
Despite listing on the London stock exchange, recently, Diamond’s Atlas Mara investment company agreed to buy 47.1 per cent ABC Holdings, 9.1 per cent from the Union Bank of Nigeria and acquire reasonable shares at the African Development Corporation worth $265-million.
Atlas Mara is an African investment company started by former Barclays Chief Executive Officer, Bob Diamond and Ugandan entrepreneur, Ashish Thakkar.