Rwanda Development Board (RDB) recently appointed African Parks Network (APN) as new management agents for the world famous Akagera National Park. Within the management agreement it is envisaged that RDB and APN will incorporate a special purpose company to be known as Akagera Foundation to run the park. The New Times’ Fred Oluoch-Ojiwah spoke to APN CEO Mr. Peter Fearnhead about the key attributes of this new management agency at Akagera.
What new management style do you bring to Akagera National Park?
APN as an organization has a management style that we apply to all the parks that we manage. This includes a combination of professional management with a set of systems and procedures that are pretty much tried and tested across a number of national parks.
In this we bring in some values in which management is allowed to have a little bit of their initiative to maximise a combination of individual drive but within a system of procedures that ensures that park management heads in a particular and set direction.
Share with the readers the key aspects of the 5 year strategic plan that forms part of the management agreement signed.
One of the key aspects of the plan is to make sure that the park becomes financially sustainable. Reason being that if this is attained then it can be independent of donor funding.
To achieve that the budget agreed upon is just over US$10 Million. This amount comes from three primary sources. The first source is donor component. The second source are revenue streams from actual operations.
The third is the Government of Rwanda itself. I have to point out the fact that Rwanda offers us a unique working relationship.
This is due to the fact that the Government here is financially committed to the management by making a financial contribution compared to any other country we have worked in.
How much of your own cash is in this deal?
We are a management entity meaning that for purposes of meeting obligations we raise such budgets from various sources. In this particular deal we are raising over US$5 Million from such sources.
In that case how do we explain the justification of APN owning a 51% stake in the new management company?
One thing I must say clearly here is that the park is still fully owned by the Government. All that we are doing with RDB is establishing a management company for this national resource.
So there is actually no value in the management company itself. It is just a legal entity which will be able to apply skills and other resources for the optimum running of the park.
What kind of market study preceded this deal?
I am talking about some sort of due diligence kind of thing undertaken prior to signing off the deal which I consider to be critical.
There is a little bit history to this partnership. Some time back the former Rwanda Tourism Board invited APN to come make an assessment of the park in which we happily made an analysis and looked at needs assessments with a view to informing any incoming management of what needs to be done to turn around its fortunes.
We later on came back in this assessment project even with a funding entity to make sure that project costs could be met.
How then did Dubai World came into the scene?
At around the time we had made the assessment Dubai World was scouting for investments in this country. The Government of Rwanda was enticed by Dubai World’s offers which involved not just tens of millions but hundreds of millions of dollars.
Part of that was that they were going to take over Akagera. We as APN we were disappointed in that we were very much committed to the project of turning around Akagera.
But you have to take note of the fact that Dubai World must have come in with a completely different business model from yours and that must have enticed Government.
I am not intimately familiar with Dubai World’s business model. All that we do know is that while they are commercial we are principally not for profit.
That is how we differ. The point that I must put across here is that we were actually happy for Rwanda when Dubai World came in. We looked at it as something of a huge deal that was beneficial to the people of Rwanda.
Especially after the Government had actually exercised their minds to do a deal with Dubai World. We absolutely assumed that it was the right thing.
Obviously things changed. Dubai World ran into some sorts of challenges which you are pretty aware of. For us it was a pleasure to get a call from RDB to say that are you willing to come and get involved?
So you are saying that the global financial crisis was sort of a blessing to you as it enabled you to clinch a deal that had been given to Dubai World?
The financial crisis has impacted negatively on everyone not just Dubai World in isolation. However I must say that we at APN were lucky in that our financial backers were not severely affected by this crisis.
But coming back to Dubai World issue I must say that when they were not able to support their commitments to the Government of Rwanda for us we remained supportive of the whole project.
It only became a pleasure for us to reengage with RDB for the purposes of structuring the partnership. We then revisited the entire business plan including the assumptions we had made including the needs assessments that we had made. We also looked at the financials afresh.
Prior to making commitments we had to make sure that parties were all satisfied. By June 2009 our board undertook a final due diligence of the project and approved that we could engage RDB in a deal.
You have incorporated a special purpose vehicle for this deal. When do you foresee breaking even and to register profit?
The nature of our operations are such that we are not for profit. The nature of this deal is not one that would be looking at making a return on investments.
So how does this deal work even with this registered new company?
One thing is that we had to satisfy local laws. Because that is a set of legislation that looks at a set of investment made.
Correct. But kindly note that if investments are made via a limited liability company such as the new company you have incorporate then naturally it has to be oriented towards making a profit. That is my understanding of the basic workings of a limited liability company. I have to put it to you that I have also read through the background documents to the agreement you have signed. Meaning that I have seen that you have a business plan which was actually made with an intent of making returns to investments like the one you are making. Correct me if I am wrong.
That is not correct. African Parks Network is what we call a section 21 company under South African company laws. What that means is that it is not for profit company. It is a public benefit organization so to speak. That is the entity that is partnering with the Rwanda Development Board. When RDB says what legal vehicle do we use? There are a number of options available. In one country the laws will suggest one thing while in another the laws will suggest something completely different.
We are talking about Rwanda.
In Rwanda the legal advise we got was that the best option was to incorporate a limited liability company only because the company law was good and also because of ability to have various things such as duty exemptions for the importation of equipment. However the nature of the company is not profit oriented.
Our basic intention is to enable this resource to be financially sustainable. We cannot ask donors to put money into it only for us to take money out. That is not possible neither is it ethical for us. We just want this resource to stand on its own feet.
Human and animal conflict is a serious issue at Akagera. So what is the new solution to this?
This is invariably one of the major issues to be addressed in any area with large game concentrations such as Akagera. One of the primary things that has to be done under this management agreement is a commitment to built a fence along the western boundary of the park.
This will be done in the northern most point going down to the southern most point. The purpose of that investment is to reduce significantly the amount of human wildlife conflict.
That means that game such as buffaloes, elephants and hippos stay inside the park rather than wondering outside the park. But building a fence is one thing. Maintenance is another.
By the way this is an electric fence meant to keep animals in. Meaning that it is significant investment in making sure that animals are kept away from straying into areas where there are people living.
Let’s talk about new compensation packages you intend to come up with once stray animals have wreaked havoc on human settlements as part of your new management duties at the park.
The first point of defence is in avoiding the human wildlife conflict is to keep the animals within the park. In this we are building a US$2 Million fence. This is to make sure that animals do not stray.
If animals ever stray out of the park?
When it does happen I must say that as a philosophy it is not fair to have an individual bear the cost of what is effectively a public benefit. Wildlife diversity conservation is a public benefit.
You can not then ask an individual to bear the cost of destruction by a stray animal. So the principle of compensation in Rwanda is part of a formal policy process.
It is going to be passed into law. Our role as park managers is to be able to implement the laws of the country. Our role is not to determine the laws of the country.
What I want to know is what is currently available as you get in and what difference you are likely to make.
My understanding at the moment is that there is either little or no compensation package at the moment.
Our guidance in terms of what we will do will come from laws that will be put in place. We cannot determine it. We do not make laws. We implement the laws. That entirely depends on Government to decide.
In the new company you are the majority shareholders. What does that mean because in the previous answers you have given me you have indicated that the APN is a not for profit outfit.
The issue of shareholding in this partnership is actually irrelevant.
So why was it made into existent if it is irrelevant?
Because the mechanism and vehicle to choose is the limited liability company due in part to various issues we had to consider. What you need to understand fully is the nature of decision making within this company.
In this the chair of the board is an RDB appointee along with three others. We have four appointments. Thus decision making is defined by the constitution of that board. It is also defined by the context of the agreement we have just signed.
Let us make a clarification on that element in which 51% belongs to APN and RDB is clearly left as a minor partner. To me in a typical board room scenario APN then carries the decision making not unless there is something different.
Decision making does not come from the board strengths but from the articles of the associations of the company.
Within the article it is stipulated that decision making is by consensus. You have to know that we will be instituting best practise approaches at Akagera. We will not operate outside of that. More so we cannot operate outside the laws that govern the park.
OK. What happens if this agreement is abused?
If RDB is not happy with our work it has powers to call for a redress and if that cannot be done then it has the powers to terminate this agreement.
Prior to things getting out of hand what security does RBD has over decision making in a situation whereby the park is a national resource whose custodian is RDB itself?
Within the board the chair of the board has veto rights over key decisions such as the whole management plan, any changes to the boundaries of the park, entrance fees changes or any degazettement of any agreements existent prior to this deal. All that security is built into the mechanism.