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Cablegate: Rwanda Monthly Economic Review

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DE RUEHLGB #1114/01 3441512
ZNR UUUUU ZZH
R 101512Z DEC 07
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC 4964
INFO RUEHDS/AMEMBASSY ADDIS ABABA 0145
RUEHJB/AMEMBASSY BUJUMBURA 0206
RUEHDR/AMEMBASSY DAR ES SALAAM 1022
RUEHKM/AMEMBASSY KAMPALA 1782
RUEHKI/AMEMBASSY KINSHASA 0341
RUEHNR/AMEMBASSY NAIROBI 1092
RUEHFR/AMEMBASSY PARIS 0385

UNCLAS KIGALI 001114

SIPDIS

SIPDIS

DEPARTMENT FOR AF/C
DEPARTMENT PASS USTDA: EEBONG
DEPARTMENT PASS USTR: WJACKSON
DEPARTMENT PASS COMMERCE: RTELCHIN
DEPARTMENT PASS OPIC: BCAMERON
ADDIS ABABA FOR LISA BRODEY

E.O. 12958: N/A
TAGS: EFIN ECON PGOV EINV ENRG ETRD EPET BTIO RW
SUBJECT: RWANDA MONTHLY ECONOMIC REVIEW

REF: KIGALI 1092

DONOR SUPPORT
---------------
1. EU Increases Aid: The European Union (EU) Commissioner
for Development and Humanitarian Aid Louis Michel announced
that the EU will increase its aid to Rwanda by 30 percent to
USD 313 over the next five years. Michel announced that the
EU considers Rwanda one of the three best performers among
the Africa, Caribbean and Pacific (ACP) countries, and the
increase is in recognition of that accomplishment. In fact,
80% of the EU's aid will be channeled to direct budget
support. In the last five years, the EU has given Rwanda
approximately USD 204 million in aid.

2. UN Consolidates Assistance: Finance Minister James
Musoni announced that under the "One UN" program, UN agencies
will make a contribution of USD 488 million to Rwanda over
the next five years. The "One UN" program consolidates UN
agencies operating in Rwanda under one roof to achieve the
eight Millennium Development Goals (MDGs). A single UN
budgetary framework will provide a complete picture of total
support to Rwanda under the UN Development Assistance
Framework (UNDAF). The program will focus on five key areas
drawn from national priorities articulated in the Economic
Development Poverty Reduction Strategy (EDPRS): good
governance, education, health, social cohesion, and
environmental protection. Rwanda was selected as one of the
eight pilot countries for the "One UN" program.

3. Hydro Power Grant: The EU announced a USD 3 million
grant to carry out feasibility studies that will help Rwanda
produce hydroelectric power at the Rusizi River falls, which
has the potential to produce 82 megawatts (MW) of electricity
(Note: total annual electricity demand for Rwanda in 2006 was
80MW. End Note). If successfully developed, Rwanda would be
able to export power to countries in the energy-hungry Great
Lakes Region. The study is expected to take two years and
will be carried out by German firm Bureau Fichtner.

4. New Weaving Center: The German Cooperation (GTZ) opened
a USD 35,000 training center for a basket weavers'
cooperative in the Muhanga district of the Southern Province.
The baskets will also be sold at the center. GTZ will also
attempt to find new markets in Europe.

5. Development Partners Meeting: The Government of Rwanda
(GOR), in collaboration with the donor community, hosted a
two-day conference under the theme "Stimulating Growth for
Poverty Reduction." The conference's goals were to provide a
framework for predictable funding to successfully implement
Rwanda's EDPRS andarticulate Rwanda's key strategies for
development (reftel).

NEW LOANS
---------
6. Infrastructure Loans: The Arab Bank for Economic
Development in Africa (BADEA) approved a loan of USD 10
million to the GOR to rehabilitate the Gitarama-Mukamira
road. BADEA's total loan portfolio in Rwanda is now USD 82
million, all for infrastructure projects - road repairs and
hydroelectric power station rehabilitations.

DEVELOPMENT INDICATORS
----------------------
7. Increased Life Expectancy: According to the recently
released World Bank Africa Development Indicators (ADI),
Rwandans have made the greatest gains in life expectancy in
Africa over the last decade. Rwanda registered a 12-year
increment (FYI: For the purposes of comparison, Uganda had a
seven-year increase. End FYI). Rwanda's life expectancy
increased from 38.99 years in 2001 to 52.73 in 2007.

ENVIRONMENT AND CONSERVATION
----------------------------
8. Annual Tree Planting: The Ministry of Lands,
Environment, Forestry, Water and Mines announced plans to
plant at least 100 million trees across the country during
the annual tree-planting campaign. The UN Environment
Program (UNEP) ranked Rwanda among the world's best
performers in terms of planting trees. Rwanda is ranked
sixth in the world and third on the continent behind
Ethiopia and Kenya after planting over 50 million trees from
January to the beginning of this December.

COMMERCIAL NEWS
---------------
9. Increased Airport Charges: The Civil Aviation Authority
(CAA) announced plans to increase airport charges, some by
more than 50 percent in 2008. This increase would double
CAA's revenue from the current USD 8.5 million to an expected
USD 17 million. CAA is also looking to raise money from
increased rent charged to duty-free shops and airline
companies.

10. Cement From China: The Ministry of Commerce Secretary
General Justin Nsengiyumva announced plans to import cheap
cement from China to augment the local supply, as the price
of cement in Rwanda has increased by 25 percent in the past
three months alone. The country's current annual demand is
estimated at 25,000 tons while domestic production is only
12,000 tons. Imports of cement from China will reduce the
price of imported cement to USD 16 per bag of 50 kilogram
from USD 20.

11. Oil in Rwanda: Vangold Resources Limited, a Canadian
firm specializing in the exploration of energy resources,
signed a technical evaluation agreement with the Ministry of
Infrastructure to explore potential oil deposits in the Kivu
Graben basin along the frontiers of Rwanda and Democratic
Republic of Congo (DRC). Structurally, Kivu Graben is the
southern extension of the Albertine Graben in Uganda, where
companies Tullow Oil and Heritage Oil have made major oil
discoveries. The aeromagnetic and gravity surveys will be
conducted over a period of 18 months at an estimated cost of
USD 1.2 million. Vangold was also granted a "Right of First
Option" to negotiate and execute a contract for the
exploration and exploitation of the hydrocarbons if deposits
are identified.

12. Regional Farmer Support Center: Starbucks chairman
Howard Schultz announced that his company will open a
regional Farmer Support Center in Rwanda. The facility will
have an agronomist on its staff and will collaborate with
farmers in Rwanda and in the East African region on
production volume and quality. Starbucks' commitments
include doubling the amount of East African coffee purchased
by 2009 and more than USD 4 million to help East African
coffee farmers improve their communities through funding
projects such as schools and bridges. Schultz also announced
plans to provide USD 1 million to provide access to low
interest loans to East African coffee farmers through the
non-profit lender Root Capital.
ARIETTI

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