The government of Rwanda and Africa50, a pan-African infrastructure investment firm, are exploring avenues of infrastructure financing and investments that could see Rwanda become a beneficiary as well as an investor.
Rwanda is a shareholder in Africa50 Infrastructure Fund having joined and committed $10 million to the fund, and then released 25 per cent of the amount as of June 2018.
Africa50 is a special-purpose vehicle for infrastructure project financing in Africa founded by the African Development Bank, and African governments.
Prime Minister Edouard Ngirente and AfDB President Akinwumi Adesina (2nd left) during the meeting. Courtesy.
Africa 50 has already 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.
The Minister for Finance and Economic Planning, Uzziel Ndagijimana, told The New Times that the focus of Rwanda’s engagement with Africa50 centres around the Kigali Innovation City.
He said that they are looking at two interventions, which include making Africa50 stakeholders in project development, as well as have them acquire a stake.
He said that the model is ideal in that there is less exposure to debt, brings on board technical expertise, and also creates investor confidence in the project for further investment and financing.
Alain Ebobissé, Chief Executive of Africa50, told The New Times that they would decide on the exact investment in the project over time as they consult other partners and potential investors.
Africa50 is also hoping to raise capital from Rwanda like in other countries during a private capital mobilisation that is targeting $1bn to fund infrastructure projects across the country.
The firm will be 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.
Rwanda Social Security Board (RSSB) is another major potential source of financing as an institutional investor.
Africa50’s Board Chairperson, Adesina Akinwumi, who is also the President of the African Development Bank, said that the firm will not only guarantee a return on investment but it also has adequate risk mitigation mechanisms.
“What we do is reduce the risk of investment and scale up the returns. Look at energy; you can look at it as a problem or an opportunity.
“It’s an opportunity to invest in grid systems and the energy potential we have. We also have tools within AfDB that can help reduce the risk element through ways such as partial risk guarantees, partial credit guarantee among others,” he said.
He said they are going to engage sovereign wealth funds across Africa, and pension funds, including RSSB.
“There is about $1.8 trillion in pension funds which is often invested in money market instruments outside the continent that have low returns. We are already starting talks with them to consider investing,” he added.
Prime Minister Edouard Ngirente yesterday called on countries to get increasingly involved in shaping and creating their agenda, especially in innovation and technology, and be committed to invest across multiple areas.
“As a continent we need to create, shape and own our agenda when it comes to innovation and technology, among others. This journey will require us to invest across multiple dimensions, from connectivity in rural and urban areas to digital literacy to increase adoption and to prepare our young people to be successful in a digital world,” he said at the Africa50 annual general shareholders’ meeting in Kigali.
The Africa50 general shareholders’ meeting brought together ministers of finance from the 27 shareholder countries and representatives of the African Development Bank, the Central Bank of West African States (BCEAO), and Bank Al-Maghrib.
The fund currently has about $871m in capital and is looking to raise about $1bn from private capital all to be invested in infrastructure development.