The battle between a city tycoon, Eugene Nyagahene and the environment protection agency, REMA, will soon end. But there are fears that the controversy will end while opening doors to another.
Information reaching Insight desk says the REMA-Kigali City Park (KCP) scuffle had been triggered by state interests, which the government does not want to explain in detail.
Nyagahene was allocated a posh wetland in 2003 by the Kigali City Council (KCC) to put up a City Park, but no sooner had his businesses started gaining momentum than the government thought otherwise. The land has been re-allocated to another investor, who the government preferred to Nyagahene.
Although no government official admits the allegations that REMA was systematically used to squeeze KCP project out of the land, Nyagahene believes there were state interests to face, though he is only an investor and a developer.
“It is clear there was a hidden agenda,” Nyagahene said last week in an exclusive interview at his office. However, officials have only admitted that the land has been given to a potential investor, Dubai World.
Dubai World, an investment holding entity for the Arab Emirates became interested in investing $230 million (Frw127bn) in Rwanda.
Their business is regarded as giving a boost to the nation’s efforts to recover from an economic blow caused by the 1994 Genocide.
Their investment arm, Istithmar Real Estate, which has only started working on tourism projects in South Africa and Zanzibar, will develop eight tourism facilities in Rwanda.
A number of Luxury hotels; a residential golf course development; residential, high-end eco lodges; and camp will be established.
Why Dubai World?
A document signed by various ministries, REMA and the KCP shareholders, one of the reasons why REMA halted KCP businesses is because the business would strongly affect the environment.
Article 7(1) of the environmental law, second paragraph states: “The activities suspected to have negative impacts on environment shall not be implemented even if such impacts have not yet been scientifically proved.”
A local paper (Focus) quoted RIEPA authorities saying the above article gives room for taking arbitrary decisions by the implementing authority (REMA), since it is not based on scientific and substantial evidence.
“A decision not to implement a project should be based on an Environmental Impact Assessment report, backed by scientific evidence,” RIEPA was quoted as saying.
Later on, KCP was allowed, however, to engage in specific activities even though the land was reduced from close to 80 to 29 acres.
Initially, KCP was a joint venture of four shareholders; KCC which provided the land worth Frw750m, the Rwanda Development Bank (BRD) with Frw100m, Nyagahene and Thadeo Ndamage both investing Frw280m.
The joint venture was a project to create a huge entertainment facility in the city, with a swimming pool and splash, health club, cultural centre, kid’s games and rides area, cinema, casino, shopping centre, horse riding and supporting infrastructure and others.
In a power point presentation, a year after the agreements, Theoneste Mutsindashyaka, the then mayor of Kigali City and now governor of the Eastern Province, said the project met world standard of entertainment facilities.
Many were excited that it would extract revenues in terms of dividends and taxes and would create a lot of jobs.
Environmentally, according to a document obtained from KCC, “This will be the biggest and eco-friendly green area in town.”
Shortly after agreements were signed, an artificial lake was established, 500 beautiful trees planted and a ring of roads constructed around the area. The project was popular and looked at as a milestone in achieving the country’s Vision 2020.
Suddenly, all these plans become useless as KCP kept encountering a lot of challenges. In an exclusive interview, the State Minister for Commerce, Industry, Investment Promotion, Tourism and Cooperatives Vincent Karega said there were reasons why the government decided to give the land to Dubai World.
“There are no buildings that will be established in the marshland,” Karega said explaining that, “It will be a botanical garden which is appropriate for environmental conservation and eco-tourism.”
He said the government believes their plan is very much in favour of environment protection and responsible tourism than that of KCP.
Karega guaranteed Dubai World will implement their project after they carry out an Environmental Impact Assessment (EIA).
“They have an international calibre of doing business and usage and habits of doing and envisaging EIA which is part of their business orientations towards final business plans,” he said.
KCP had also hired a reputable American Company to do the impact assessment, though this would not stop the government plan.
“It is all about golf and the only golf place in Rwanda is Nyarutarama golf course,” the minister said. “And that is where they (Dubai World) chose.”
However, when the Insight Crew visited this spectacular high-class neighbourhood, with a nice environment it found the two plots to be far apart. The golf course is about 200m away from the KCP plot.
When asked, the Minister explained that the place was given to Dubai World because it is a beautiful location in the city and is close to other hospitality facilities.
“We got them to see different places but they chose and preferred Nyarutarama and came up with a proposal that suits the golfers and at the same time attracts tourism.” But Nyagahene, who is among the Kigali Golfers, said there were clean negotiations between golfers and Dubai World.
“But Kigali City Park was left in a black and we don’t know why they decided to ignore us,” the Tycoon lamented.
Despite all the frustration, Nyagahene said he understands the government’s interest. “It is economically understandable,” he said and noted, “Moreover they are investing more money than I was, but they have to make me involved in discussions so we can get compensated fairly.”
On Wednesday, all shareholders held a meeting but they had one stand. For fears that Kigali City Council would be involved and keep out KCP, Nyagahene said yesterday that, “KCC has a clear position.”
He added, “The mayor (Aisa Kirabo Kacyira) said we should be compensated fairly. She said there is need to protect local investors.”
Before KCP’s business was hampered, Bambino Entertainment Club, a similar business venture in a Kigali suburb, also located in a wetland, was allowed to go ahead. There are also other businesses being conducted in wetlands, though they have not been stopped.
La Pallise Nyandungu, also doing entertainment businesses, is installed in the middle of a wetland about 10km from the city.
Mulindi One Love, a bar and restaurant pub, is built in a way that the river flows under the structure. This has also not been stopped.
Nyagahene wonders why it was only KCP. He noted that KCP created a lake, which is a very important geographical feature but in return, they have been ignored.
But Minister Karega said the government has the right to put up infrastructure anywhere when it is for the good of the country.
“As long as he is compensated, his business cannot stop the country’s interests.”
He said there should be no problem at all. He lied that there was a Memorandum of Understanding (MoU) that was signed between the BRD, Kigali City Council and Dubai World.
But Nyagahene, who is the chairman of the KCP, denied all shareholders have met with Dubai World.
“I don’t know why the minister says that, I am the chairman of the project and I am telling you we have not yet been involved in any negotiations,” he said.
“I have never met anyone and I just heard it over the radio that they (Dubai World) were given the land,” he lamented.
The two shareholders; City Council and BRD, are both government entities, but Nyagahene and Ndamage are private businessmen.
Although Dubai World will compensate KCP for its investments, Minister Karega said they (Dubai World) will not compensate for the KCP equipment, which Nyagahene said cost close to Frw700million.
“They are not buying the equipment because they are not doing the same business,” the Minister said adding that, “probably he planted trees, fenced…..and those are the things he will be compensated.”
Government involved in negotiations
According to the law in Rwanda, Karega says, “when there is a better development, the new developer pays for the expropriation and the value of assets of the former investor and then the new developer takes over.”
Formally, the negotiation is a deal between the two parties with a mediator, if necessary. However, in this particular case, the government is actively involved in the negotiations.
“We are negotiating through RIEPA,” the Minister said, adding, “It met all the stakeholders of this project and if they are not happy, they can still lodge their claims with RIEPA.” It is close to two months but the parties haven’t met yet.
“We haven’t reached a time for the KCP stakeholders to come in a specific MoU with Dubai World.”
He said they have been told there will be direct negotiations with Dubai World. They are willing to put up whatever cost they want for discussion on the table, so long as it is based on evidence.
“Patience is also very important. We will facilitate getting both parties together and looking into the ‘national interests’,” Karega said.
He noted, “We are in a modern world and there are ways of evaluating the assets, but not with eyes. We will make sure there is productive dialogue, no undermining and cheating.”
How did Dubai World come in Rwanda?
Dubai World companies have a string of projects in Africa.
They recently unveiled plans to invest $150 million in developing a luxury resort in Zanzibar.
Last year, Istithmar purchased the V&A Waterfront in Cape Town for $1 billion. Another arm, Nakheel, developed Djibouti’s first Five Star-Hotel.
DP World, also another Dubai World company, is investing $534 million in port facilities in Senegal. It now has an interest in boosting up Rwanda’s efforts to recover economically.
“We, from the top leadership, trade and business people in Rwanda go on many trips mobilizing different investors in the world; it is in that same vein that Dubai world became interested in discovering what is Rwanda, how it is governed and the potentials in our country.” He said Rwanda’s policy is promoting high end tourism and attracting selected investors at the same time.
“This means, we are aiming at, high quality, few people, and more money and longer stay.”
He added that this goes with their (Dubai World) concept of not coming in with projects for massive tourism just to attract massive people, but also selected people. They have already started in a process of formalizing paperwork, land surveying and designing.
Construction on the developments will begin later this year and an office will be opened in Kigali to manage “the existing trading operations”, the Minister said.
He added that the final amount will come with a bill of quantities of each and every project. In a statement, the Dubai World said the projects will be developed in partnership with the Rwanda government.
Surpassing annual target
By December 2005, Investment and Export Promotions Agency (Riepa) had reaped Frw14.9billion ($26m) in operational investment on the ground. December 2006 proved to be a bigger harvest with Frw80billion.
But this time round, the institution has a target of getting every single penny in terms of investment. Clare Kamanzi, the deputy director general of RIEPA told The New Times earlier this month that 2007 target is approximately Frw127billion.
“Our target this financial year is $229 million (Frw127bn),” she said. She was excited that one investor has thrown in more than they had targeted.
Dubai World is tossing in only 100.43% ($230) of the annual target ($229), and Kigali City Park invested a mere $20millon; about Frw11billion and has been working on the project for the last four years.
Do local investors enjoy such favours?
After authorities landed on a posh investor; Dubai World, probably early or mid this year, he was invited to discover the opportunities on the ground.
“We make no differentiation between local and foreign investors in terms of treatment. We welcome investors with good plans; whether they are local or foreign,” the Minister said, emphasizing that Dubai World was particularly favoured because they are open and are partnering in different projects with local business people.
The government appreciates them because they have international experience and are familiar with international standards.
“They have capital,” Karega said stressing that “it is a very competitive advantage to have them on board.”
REMA stops KCP again
KCP was initially supposed to be an amusement park in Nyarutarama. It took him some time to start construction as equipment was ordered from abroad.
Before starting construction activities, there was no law on environment. The City Council gave certificates to allow construction activities.
Later, in May 2005, an Organic Law on protection of the environment was approved; consequently establishing REMA.
Among its obligations is to prevent and protect the environment.
The law was enacted after KCP had started some work on the ground. But since the law was in place, KCP had to respect it, even though it says all businesses in place before the law was passed are not affected.
“We wanted to be professional and to ensure that our project did not affect the environment in any adverse way,” he says. While REMA started implementing the law, KCP became one of a target because of its location.
Nyagahene said a number of meetings were held at REMA offices between Nyagahene and Kigali City Council. KCP was requested to provide an EIA. An American company was contracted to carry out the assessment (EIA).
On July 10, 2007, after an assessment was done, the City Council requested REMA, to provide a certificate giving KCP a go ahead.
The copy was also sent to the Land Ministry, commerce and industry ministry, RBS, Rwanda Development Bank(stakeholder), the private sector federation and KCP. A meeting was held and agreed on reassessing the site.
“REMA granted us permission to resume the first phase of activities,” Nyagahene said.
According the minutes of the meeting, it was agreed that all incompatible activities with the wetland be shifted to another area and only light activities like waking and sightseeing remain.
They (KCP) were told the artificial lake would remain, but would be subject to some mitigation measures. However, stakeholders believed the project had collapsed because REMA ordered KCP to stop again.
KCP was notified to stop constructing two weeks after they had imported their equipment. Installation was supposed to start immediately, Nyagahene said.
“It looked like many were surprised when the equipment arrived and that is when all the problems emerged,” the Tycoon lamented and added “Suddenly REMA stopped us just after two weeks.”
REMA, Land ministry, KCC, the private sector federation (RPSF), RIEPA, BRD and others were invited to a meeting to discuss the sudden closure.
“It was clear there was something behind this. We accepted whatever they requested us to do but it was discouraging,” Nyagahene said.
The Director General of RIEPA told Focus a few weeks ago that, on the question of whether or not REMA demands actually slow down or discourage business, Francis Gatare said, “We keep asking REMA to resolve any outstanding conflicts.”
Since this is a massive endeavour with more than one project, the Minister said it will take some time, as construction will take two or three years to mature, especially on the Golf Hotel.
The timeline is not as long as Kigali City Park’s, which has spent four years in waiting.