Last week Rwanda’s sovereign fund, the Agaciro Development Fund (AgDF), advertised positions of fundraisers, among other posts. The new development is a shift in strategy as the Fund managers aim to raise more funds through different avenues.
This is also meant to revive enthusiasm among Rwandans and well-wishers toward the Agaciro Fund as less collections have been realised over the last nine months. According to Vianney Kagabo, the chief executive officer of the trust, the decline in enthusiasm from Rwandans and well wishers is responsible for the reduced contributions to the Fund and the new initiative is expected to address this challenge.
The sovereign fund, which was launched by the government about two years ago, has so far raised over Rwf23.8 billion in total collections. The initiative is based on voluntary donations by Rwandans, well-wishers and corporate companies. It is aimed at making the country self-reliant as far as funding development ventures is concerned.
Kagabo is however, upbeat they will drum up interest among the public again, saying the Trust law passed June last year gives them a leeway to make the Fund permanent.
“When foreign aid was cut, and we were canvassing donations for the Fund, people who contributed then thought that was enough,” he explained. However, now we have come all-out to raise awareness about the importance of the Fund and why Rwandans should continue giving in their contributions. The approval of the law will bolster our efforts…In fact, we are presently moving around visiting private and public institutions as well as the media to spread the message about Agaciro and encourage them to continue supporting the Fund, he said.
Kagabo is optimistic that overtime; more people will start contributing to the Fund in a continuous manner.
The Fund was transformed into AGDF Corporate Trust limited last year after it became permanent. It is currently investing some of the money in government bonds and short-term bank deposits, which earn an annual interest of between eight and 12 per cent.
The fund receives between Rwf150 million and Rwf250 million a month mainly from government institutions like the Rwanda Defence Forces, which contributes Rwf43 million every month, the Police (Rwf32 million), the Rwanda Revenue Authority and the Rwanda Environmental Management Authority.
Paint makers, Ameki Color, has been the only private firm making monthly contributions raised from employees to the fund, according to Kagabo.
“The others have promised to start contributing in the coming months, and we are hopeful this will greatly expand the Fund,” he said. He added that they also encourage individuals to contribute to the Fund in a more sustainable manner.
Since most people had stopped contributions, the monthly collections are short of the target. But things could improve if each of the estimated 1.32 million Rwandans who receive regular income contributed about Rwf3,000. This would translate into about Rwf4 billion monthly or Rwf47.4 billion annually, according to Kagabo.
“That way, the Fund will grow faster and be used to support development projects sooner,” he said recently.
However, some people think the government should start using whatever money it has so far collected to finance the country’s development initiatives.
“I am ready to contribute Rwf5,000 to the Agaciro Fund monthly (for the rest of my life) if I see they are investing the money in projects such as schools, access to clean water and electricity for all Rwandans,” said Rob Mugi, a city resident with a keen eye on development issues. He argued that it is not a good idea to invest the money in government paper, claiming that the yields are not that big.
Mugi said contributing a fixed amount of money to government to support developmental projects would have a ‘profit maximising effect’ for both parties.
“For the government, it will no longer have to borrow, while for Rwandans, they will be benefitting from the projects,” he claimed.
However, Kagabo said that would be exposing the Fund to risk when it is still in its infancy.
“If we burn our fingers at this stage, we will withdraw and then people who are contributing will start raising questions over our reputation and capability. That’s why we opted for fixed income money market investments,” he explained.
He urged Rwandans to be patient, saying close to Rwf24 billion cannot do much. He added that it does not make sense to lose the money in unprofitable ventures as that would be betraying the country and those who contributed to the Fund.
Kagabo said apart from investing in the money markets, they were looking at the possibilities of going into equity financing and funding projects like electricity in the near future.
“When you invest in sectors like electricity and housing, you are assured of getting a return on the money,” he said.
Last week, the Minister for Finance and Economic Planning, Amb Claver Gatete, urged Rwandans to support the Fund, assuring them the money would be put to good use.
“We will be updating you on the Fund’s performance and how it is being used; as well as audit it and publish statements regularly,” he said on Friday while receiving a Rwf67.2 million contribution from the Association of Passenger Transporters.
Gatete said it is important to have such initiatives in order to have a fall-back position in case of financial difficulties in the local or global environment.
What Rwandans say...
Celestin Biziyaremye, 65, from Kimihurura sector
The government should remember to support the vulnerable old men with basic needs. I have so far contributed Rwf3,000 to the Fund.
Francois Xavier Nshimiyimana, a city taximoto rider
I contributed Rwf25,000 at the beginning and, in May this year, I also contributed Rwf20,000 through our co-operative. I think the government should use the Agaciro Fund money to support promoting rural development, especially in agriculture and infrastructure like electricity and water supply.
Therese Nyiramakuba from Remera sector
I do not know anything about Agaciro. However, if there is such money, I think the authorities should use it to fund projects that benefit widows and students who cannot afford to pay fees in secondary school and at university.
Susan Munganyinka from Kinyinya sector
Although I have no capacity to contribute to Agaciro Fund, I think the money should be used to help women hawkers and unemployed youth to set up sustainable businesses and create jobs. There are also Genocide victims who also need health support, so this money could come in handy.
WHAT EXPERTS SAY
Eric Rutabana, the country manager of Business Partners International (BPI), a private investment firm targeting small-and-medium enterprises, said to ensure people contribute in a sustainable manner, the Fund managers should devise ways that will attract small but stable donations.
He argued that Rwandans should be encouraged to donate say Rwf500 or Rwf1,000 regularly, depending on one’s income.
“They need to show people how simple it is; how one can contribute and it does not hurt their well-being,” he said. Rutabana added that if the money is invested in projects that have an economic impact right now, it would attract contributors, especially repeat donors.
“If the money is invested in an energy project, which will ease the power challenge, create jobs for people and trigger industrial development, that’s what contributors want,” he said.
He argued that what has been raised so far is enough to fund an investment venture. “Investments in health, education, energy or a venture capital would do.”
He pointed out that if the AGDF structure does not have the required investment expertise, they should consider placing the Fund under a private equity firm to manage it better, as well as guide them on investment strategy.