The Government of Rwanda and Africa50, a pan-African infrastructure investment firm will set up a joint venture company that will be involved in developing, financing, constructing and operating commercial components of the Kigali Innovation City.
Africa50 is a special-purpose vehicle for infrastructure project financing in Africa founded by the African Development Bank, and different African governments.
The agreement signed Tuesday with Rwanda Development Board representing government will see government contributing land and finance ancillary infrastructure such as roads, lighting, power supply and other horizontal “plug and play” enablers.
According to the agreement, RDB will also ensure facilitation of macro and micro enablers including policy-led tax incentives that aid bankability of the transaction and allow for effective private sector participation.
In July, the Minister for Finance and Economic Planning, Uzziel Ndagijimana, told The New Times that the two parties were in talks over the best model for engagement.
At the time, he had said that they were seeking two outcomes which included making Africa50 stakeholders in project development, as well as have them acquire a stake.
Africa 50 had previously committed to invest in the Kigali Innovation City’s (KIC)’s Digital Innovation Precinct, an emerging tech hub which features 11 components with investment opportunities valued at about $420m.
KIC currently features an innovation and knowledge hub consisting of world-class learning institutions and tech companies with room for additional firms.
The project also has a component of Rwanda Innovation Fund, a privately managed $100 million fund for the development of world-class technologies with the private sector invited to join in.
From the government’s perspective, Paula Ingabire, Minister of ICT and Innovation said that the investment is aimed at among other purposes attracting innovation-driven enterprises.
“It will attract innovation-driven enterprises and stimulate strategic partnerships that will further develop our growing tech sector, by nurturing inclusive growth and impacting the lives of thousands of people in Rwanda and beyond,” Ingabire said.
Africa50 Chief Executive Alain Ebobissé said that among the impacts of the agreement is stimulating private sector investment.
“Signing the JDA will help crowd in private sector investment, which is in line with our mandate to mobilize financing to accelerate the delivery of infrastructure in Africa,” he said.
Clare Akamanzi, the RDB Chief Executive who signed the agreement on behalf of the Government said that they are keen to leverage on Africa50’s expertise to speed up project development, and the ability to structure the financing while leveraging funds from development finance institutions and private sector investors.
“KIC will enable investors to develop technologies, prove new concepts and scale in Rwanda,”Akamanzi said.
The partnership model is ideal for Rwanda as it guarantees less exposure to debt, brings on board technical expertise, and also creates investor confidence in the project for further investment and financing.
Africa50 officials in July told The New Times that they are also hoping to raise capital from Rwanda such as Rwanda’s sovereign wealth fund during a private capital mobilisation that is targeting $1bn to fund infrastructure projects across the country.
The firm is courting various potential sources of affordable capital such as sovereign funds and pension funds with a promise of high returns and reduced risks.
Rwanda’s sovereign wealth fund, Agaciro Development Fund, accumulated at Rwf184 billion (US200 million) as at the end of December 2018, up from around Rwf46 billion in December 2017.