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Rwandan Bankers Predict Economy May Recover After 5 Years

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Local bankers in Rwanda predict that the economy might continue to suffer for the next three to five years because of negative effects of the #COVID-19 pandemic.

Taarifa talked to the industry captains Hannington Namara, the Managing Director of Equity Bank Rwanda and Robin Bairstow, CEO of I&M Bank Rwanda.

“The lockdown put a complete stand still to Rwanda’s largest contributor to its GDP which is services specifically tourism and travel”, Namara says.

According to Namara the dire economic situation will hang on with us for more than three years. And that paints a depressing picture that the local business community and the general citizenry should get used to, the so called new normal.

“While looking at events surrounding the #COVID-19 pandemic, we do not know how long the pandemic is going to be with us,” says Namara, whose Bank made about Rwf2billion of profit in the first quarter of 2020, but says the second quarter, even shareholders might have reinvest because there is no money expected.

Rwanda has been deeply reliant on tourism and travel for its large contribution to the country’s GDP. But disruptions of the travel industry supply chain that feeds into Rwanda’s hotel and tourism sector means that arrivals of visitors into the country is expected to drop below expectations.

“Leisure product is something that will take more than 5 years for the major source markets of Western Europe to think about as virtually the entire world has been hit badly by the pandemic”, he explained.

To create a sense of trust that their livelihoods will be safe in far flung markets such as Rwanda, Namara says that this is something that will take a bit of time.

“This means that investments in these sectors will remain largely dormant with negative spillover effects to be felt in several others including banking,” Namara explains.

“This paints a scary image but what investors ought to do is to reinvest in their businesses with a view to hold on to hope for a brighter future.”

Meanwhile, a major player in the tourism sector told Taarifa that they have some relief from the local tourism sector.

“Unless a miracle happens, the international segment is dead, let’s not debate that, but we believe the local tourism segment can be revived and made profitable,” he says, and hesitant for his name to be mentioned.

He insists that Rwanda Development Board needs to create local tourism products defined in the confines of the pandemic.

“Who will sleep in that small hotel at Musanze or Kibuye in the next six months so that they can make a bit of money too?” he asks, adding that In brief, “there is no clear plan for the tourism sector, the plan announced recently targets international unlikely to respond positively until a later stage.”

To be a little specific, “how many Rwandans will spend $1000 a night ($250/per family member). We need a robust plan for products tailored made for Rwandans and regional tourists, if don’t do it that way, the sector will suffer miserably.”

Away from a depressed tourism sector, Namara painted a picture of looming innovation likely to cut across all sectors of the economy.

“There is an opportunity for innovation. Question is; what else can people do to make money in the post lockdown economy?”

“That thinking now needs to become more eminent”.

So, where are the pointers to the new normal taking shape in Rwanda’s banking sector within post lockdown era?

“Agricultural sector is one key area. Food is a basic need and areas such as value addition of basic production remain an area worth deploying our capital into,” says Namara.

An interesting prospect is referred to- that the pandemic is likely to unleash within Rwanda’s banking sector. This is with respect to warming up by local bankers to get more into making investment into agricultural sector.

There is an opportunity for everybody to fit into agricultural value chain.

“#COVID-19 has changed the “how” of doing things. Bankers need to figure out how to remain relevant to the business community. It will take time but it needs to happen”.

The brick and mortar practice of traditional banking, as we know it, will increasingly becoming more diminishing.

Robin Bairstow talks about the ongoing construction boom that will offer a real buffer to Rwanda’s economy in the next coming years thereby shielding it from the severe effects.

“Rwanda’s continuous focus on huge infrastructure projects will generate demand and positive stimulus into other sectors while we are adversely taking a strain from tourism and travel sectors,” says Bairstow.

He says; “Demand for cement in Rwanda is growing which is a key indicator of demonstrating that the construction boom is not reducing.”

Mid June, government launched a national wide project for construction of school blocks across the country, thus employing thousands and increasing volumes of production of contrition materials including cement.

Also, Bairstow says, one of the best shots for Rwanda in the post lockdown era is boosting consumption expenditure, and strongly advocates for international trade (at least cross-border).

Rwanda’s economy is slowly raving back despite at a reduced pace going by key areas such as agriculture, community trading and importation of goods.

Infrastructure Minister, Amb. Clever Gatete told journalists on Friday that trade volumes are healthy, with almost 600 cargo trucks entering Rwanda in 24 hours, despite economic activities closed on borders.

“Demand for foreign exchange which is key for sustenance of the business community for instance has reduced slightly by less than 25 percent across our counters,” he says.

This points to a fact that wheels of the economy are in motion albeit at a slower pace.

Bairstow’s view on the government’s recently launched recovery plan meant to cushion affected sectors, is that, “The recovery plan is meant to reduce cost of operations by those affected by #COVID-19 by over 20% which is significant only worry being that it is not generating revenue.”

If the demand has been affected, it makes no business sense for the supply side to produce or burn more money.

Bairstow, like Namara says agriculture is one key area that is very promising.

RDB CEO, Clare Kamanzi told us a few weeks ago that indeed “agriculture is top of our post #COVID-19.”

For the very first time in a very long time, Rwanda is facing a real prospect of reduced growth.

From double digits figures registered in last decade, official statistics are indicating a slowdown to single digit growth of 3.6%.

How the country emerges a victor out of this excruciating pandemic remains a mystery on one hand and mastery in policy orientation on the other.

And the burden to win seems like it hasn’t fully been discussed by all stakeholders.

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Business

Kagame Advocates For Investment Into Africa’s Agriculture Value Chain

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Agriculture and agri-business, especially in Africa, will drive the continent’s attainment of the Sustainable Development Goals, President Paul Kagame has said.

“This is especially true as we work to make
up for the time lost to the Covid-19 pandemic,” he said adding that, “Each country and region must chart its own pathway to transformation, but this is also a global challenge that we must address together.”

Kagame was speaking in his capacity as the Chair of the African Union Development Agency-NEPAD, Heads of State and Government Orientation Committee at the official ceremony of the UN Food Systems Summit 2021 Pre-Summit.

In Africa, he continued, 70% of the working-age population is employed in the agricultural sector.

“But our continent’s food markets are often fragmented, and links to food processing and value addition services are sometimes lacking,” the President said.

He noted that digital technologies and biotechnology are playing a greater role in African agriculture, but too many farmers do not yet have reliable access.

And that financial services and products for farmers, including insurance, are generally inadequate.

“As a result, Africa’s food producers do not earn the level of income that they deserve, and they must cope with high levels of economic risk and uncertainty,” Kagame added.

According to the Executive Director of the UN World Food Programme, David Beasley, 41 million people are on the brink of famine today.

“Planet earth, shame on us that we let a single person go to bed hungry,” said.

“We have the expertise to end hunger, but we urgently need the money. This is a global call to action – all hands on deck,” he added.

Transformation is a necessity, according to Presidemt Kagame.

This is why the African Union Development Agency, NEPAD, has worked to facilitate an African Common Position in advance of the Food Systems Summit, in line with the African Union’s Agenda 2063 and the SDGs.

Kagame offered two proposition.

Africa will pursue solutions in the following priority tracks:

One, adopt nutritious food policies, establish food reserves, and expand school feeding programs.

Two, support local markets and food supply chains, invest in agro-processing for healthy foods, and expand trade in food products within Africa.

The UN Secretary-General’s special envoy for the UN’ Food Systems Summit, Agnes M. Kaliba,  told participants that the summit is much very powerful than she thought.

“The energy,  and hopes in each room today were palpable!. We need to leverage the incredible power of food to deliver a step change in the SDGs- this is a one in a generation opportunity,” she said.

Myrna Cunningham, speaking for Indiginous People, said that, “Our current Food Systems is based on extreme irresponsibility; We need a food system that is based on rights including Economic empowerement and rights and rights to land.”

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Business

Airtel Rwanda MD Steps Down

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It is learnt through reliable sources that Amit Chawla has decided to step down after completing a three-year term as Managing Director for Airtel Rwanda.

Normally, he would have had his contract extended or rotated to another operation in the company’s footprints, but a source told Taarifa that he is leaving the industry to do other businesses.

A new executive will be announced soon, it is said.

Amit, who took over the newly merged entity on August 31, 2018, during which time he oversaw the achievements of several milestones.

Chief among his accomplishments include the consolidation of the brand Airtel after the takeover of Tigo, its people, products and services as well as modernization of the country’s network, a project that saw the expansion of the Airtel Rwanda Network and saw the consolidation of Airtel’s reputation as the internet provider of choice for Mobile Internet in Rwanda.

During his time with the organization as MD, Airtel Rwanda oversaw great changes. Under his leadership, programs grew and services became more easily available to all customers.

Chawla led the company’s pandemic response that saw Airtel Rwanda direct its CSR budget towards governments efforts to tackle the initial response to the Global pandemic.

Under his leadership, Airtel has gained a reputation for launching ground breaking and bold campaigns such as the recent Va Kugiti Campaign that generated a lot of buzz in the Rwandan market.

Chawla, also oversaw the successful roll out of the Airtel Money Branch (AMB) concept, with 71 shops opened in Kigali alone.

The AMB’s concept has completely revolutionized the proximity of a telecom operator to her network of Agents and Freelancers, enabling them to access up to Rwf5 million within walking distance.

Chawla was unavailable for comment.

 

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Business

First Chinese Electric Car To Reach Europe Disrupts Markets

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Chinese automaker Aiways has resorted to livestreaming its all-electric cars to potential clients across the globe.

“The design is very simple and uncluttered,” one of the presenters said as she detailed the U5’s design and capabilities. “The car is modern, and even the mode of distribution is modern.”

“Modern” distribution here means replicating the “live commerce” experience of Aiways’ home country — using livestreaming events to drum up interest and sales online. The company ships its cars through local partners to customers in Europe from its factory in the eastern Chinese province of Jiangxi.

That arrangement helps Aiways keep prices down. The U5 is priced from around 39,000 euros ($46,000), 10% to 15% cheaper than its rivals, according to the company.

Alexander Klose, the Aiways executive vice president in charge of overseas operations says, “We have some challenges, but overall, I would say it has been fairly positive for us, and we have seen a fairly positive recognition.”

Aiways is not alone: A growing number of Chinese EV makers are setting their sights on overseas markets — and they intend to compete on quality as much as price.

BYD, the Chinese automaker backed by U.S. investment guru Warren Buffett, is betting on Norway. It shipped its first 100 European-specification SUVs to dealers there this June, and it plans to deliver 1,500 by the end of the year.

Like Aiways, BYD is keen to take advantage of overseas consumers’ improving perception of Chinese products.

“We are not going to make the same mistakes as other Chinese brands did more than 10 years ago in the European theater. They tried to launch vehicles in a very cheap and rushed way, without being fully prepared,” a BYD spokesperson told Nikkei Asia.

“Most people haven’t heard of BYD until now, so it is more important to do things right than [to] start talking about [sales volume].”

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