EABD eyes Rwanda, Burundi market

The East African Development Bank (EADB) sent a three-man delegation to Rwandan and Burundi mid September to assess the degree of interest and readiness of both countries to subscribe to the bank’s financial services.

The East African Development Bank (EADB) sent a three-man delegation to Rwandan and Burundi mid September to assess the degree of interest and readiness of both countries to subscribe to the bank’s financial services.

The move is intended woo them join the EADB as member states.

The two countries had, however, not yet made any official application in order to be incorporated as member states.

The delegation, led by Godfrey Tumusiime, the Director General of the bank together with William Kasozi, the bank’s director Legal Affairs and NK Passwell Shapi the Director of Operations, among other things, were disseminating information to major stakeholders about requirements that would see these states included as members.

They were hosted at the Private Sector Federation (PSF) headquarters on Wednesday 14th September, 2007 by top management team including; Faustin Mbundu the 1st Vice President of PSF; Prisca Mujawayezu the Deputy Secretary General at PSF; and John Bosco Kalisa, the Director of Trade and Regional Integration.

Currently, the governments of Uganda, Kenya and Tanzania equally own majority shares in EADB totaling to about 82 per cent, equivalent to about $82million paid up capital.

The rest is jointly owned by other financial institutions.

Tumusiime said once Rwanda and Burundi decide to join as partner member states they must too subscribe to share capital, “which will certainly increase shareholding of the bank.”

He said majority…. about 95 per cent of the EADB loan portfolio target private sector growth. “We are so much inclined to projects that enhance private sector growth, which have a social economic benefit”.

He added that, the instances where the bank lends to governments are mostly in areas of infrastructure development.

He cited the $10million loan the bank recently extended to Civil Aviation Authority (CAA) of Uganda to improve the Entebbe Airport in preparation of the November 2007 Common Wealth Heads of Governments Meeting (CHOGM) in Kampala.

The infrastructure ministry of Rwanda (MININFRA) is apparently working on a project to construct a new international airport in Bugesera District.

This could perhaps be a good source of funds for the government in the project.

Kasozi explained that for Rwanda to become a member, it will apply first by writing a formal application to EADB Board of Directors for recommendation to Governing Council.

The council is comprised of equal [one] representative of; permanent secretaries of finance ministries, private sector, shareholders and finance ministers of member states.

The current Chairman of the EADB governing council is Dr. Ezra Suruma, Uganda’s Finance minister.

Thus, the Private Sector Federation (PSF), Finance ministry (MINECOFIN) will have direct interests in the bank once Rwanda subscribes.

However, if Rwanda and Burundi are to join there will be amendments to the EADB charter—an international treaty.

“And once this is accomplished both countries will the have to ratify the charter which then gives them lee way to do local registration,” explained Kasozi. A full member state is accorded with immunities and privileges, according to Kasozi, such as; diplomatic immunity and tax waivers among other benefits.

Rwanda will have to part with lots of dollars to become a member. But Tumusiime consoles that once the government accepts, modalities will be designed for a flexible payment schedule over time.

Speaking on behalf of PSF, Mbundu observed that there’s positive commitment on government’s part to subscribe to EADB, “and this will certainly make it easier to expedite the whole process”.

He, however, asked the EADB delegates how prepared the bank is to fill gaps that the Development Bank of Rwanda can’t apparently fill in financing projects at the grassroots especially in agribusiness like coffee washing stations.  

In response, Tumusiime said: “This is basically EADB’s domain, although we do not do it directly.

Through the bank’s “tier one” system, we finance, by lines of credit to well established [on ground] development financial institutions like Development Bank of Rwanda (BRD) to enable them finance Small and Medium Enterprises (SMEs)”.

He said the bank has only 80 permanent staff, across the three member states…indeed not enough to go up to the grassroots.

Jack Nkusi Kayonga, the Deputy Managing Director and Director of Investments at BRD who had also accompanied the delegation added: “Although BRD apparently doesn’t have a network of branches that covers the entire country, it also operates a “tier one” system where it finances microfinance institutions with network of branches across the country and the success stories are numerous”. So far BRD has only two branches in the countryside.

Over 85 per cent of Rwanda’s private sector are SMEs. Mbundu said SMEs are challenged by capacity to do competitive business. However, he added that the federation has received a four year grant from the African Capacity Building Foundation (ACBF) worth $1.7million (about RwF 918 Million) to build capacities of private sector in Rwanda.

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