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Cablegate: Rwanda Monthly Economic Review

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RR RUEHWEB

DE RUEHLGB #1145/01 3610918
ZNR UUUUU ZZH
R 270918Z DEC 07
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC 4991
INFO RUEHNR/AMEMBASSY NAIROBI 1102
RUEHDR/AMEMBASSY DAR ES SALAAM 1031
RUEHJB/AMEMBASSY BUJUMBURA 0213
RUEHKM/AMEMBASSY KAMPALA 1790
RUEHFR/AMEMBASSY PARIS 0391
RUEHKI/AMEMBASSY KINSHASA 0347
RUEHDS/AMEMBASSY ADDIS ABABA 0147

UNCLAS KIGALI 001145

SIPDIS

SIPDIS

DEPARTMENT FOR AF/C
DEPARTMENT PASS USTDA: EEBONG
DEPARTMENT PASS USTR: WJACKSON
DEPARTMENT PASS COMMERCE: RTELCHIN
DEPARTMENT PASS OPIC: BCAMERON
ADDIS 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 1016

DONOR SUPPORT
------------------------

1. Loans: The International Finance Corporation (IFC) and
Germany's KfW Banking Group have signed a deal with the Aga
Khan Fund for Economic Development (AKFED) to invest USD12
million to rehabilitate, expand and finance a 30-year lease
of the Kigali Serena and the Lake Kivu Serena hotels.
"IFC's investment reflects our commitment to supporting
Rwanda's nascent tourism industry," the IFC representative
said.

2. Aid: USD 5.2 million program extension. The
government of Japan will extend a grant program that
assists with Rwanda?s import-export imbalance and further
develops its rural roads. Under the program, the
Government of Rwanda (GOR) make purchases from a pre-
approved list of 106 items, including petroleum and leather
materials, which the government then resells. The proceeds
of the sale are used to improve Rwanda?s rural roads
network.

MACRO ECONOMIC INDICATORS
--------------------------------------------- -
3. 2008 Budget: Lawmakers passed the 2008 government
spending plan with an increase of approximately USD 2.9
million from Finance Ministry submissions. The 2008 budget
now totals USD 1.2 billion, with spending up by 18 percent
from the previous year (the Finance Ministry had asked for
a 15 percent increase). The three percent increase will go
to rural development projects and public finance oversight
programs. Donors will fund up to 54 percent of the total
budget.

COMMERCIAL NEWS
-----------------------------

4. Rwanda and China: Chinese firm ?Star Communication
Network Technologies? announced a USD 20 million investment
in pay-TV and internet provision. A multi-million phone
sets assembly plant also plans to invest in the country.

Note: In 2006, the two countries total trade was USD 34.5
million. The Chinese General Administration of Customs
recently reported that imports from Rwanda increased by 89
percent to USD 22 million in 2006 (mainly minerals). China
exported USD12.5 million to Rwanda in 2006, a 3.3 percent
change from 2005. With trade increasing, the Kigali
Institute of Education is beginning a Chinese language
program for Rwandan students and businessmen.

5. Methane gas: Gee-ten Ventures Inc, a Canadian mining
company based in Quebec, is now in the country to continue
negotiations with the Rwandan government for possible
investment in the methane gas business. A previous
Memorandum of Understanding on methane extraction from Lake
Kivu has expired.

6. Mobilizing local investors: To foster development in
the southern province, provincial officials and the Rwandan
Chamber of Commerce recently garnered pledges of over USD
3.6 million towards the launch of the Southern Province
Investment Corporation (SPIC). The corporation will
spearhead investments in cassava plantations, tea
processing and manufacture of pharmaceuticals. Provincial
districts are expected to raise jointly approximately USD
275,000 as part of their contributions to the corporation.

7. Dubai World Investment: The Government of Rwanda is
engaged in obtaining 100 hectares of land from property
owners near Kigali Golf Club for a Dubai World facility for
upscale tourists, consisting of luxury townhouses, a five-
star hotel and golf course. Chairman of Dubai World Sultan
Ahmed bin Sulayem announced that architectural design has
begun (see reftel).
8. Electronic banking: SIMTEL, Rwanda's national
electronic transaction provider that links all commercial
banks' automated teller machines (ATMs) and most
businesses? debit card systems, has entered into a joint
venture partnership with the African Development
Corporation (ADC) consortium, led by XCOM, an IT firm from
Germany specializing in electronic banking. The USD 3.5
million deal gives the consortium a majority stake in
SIMTEL and control of the company. The investors hope to
make Simtel a third party processor (TPP) certified for
international transactions. The investors will also bring
other electronic-based banking products and solutions,
further enhancing ICT development in Rwanda in the area of
payment technology. (Note: SIMTEL is a privately owned
company with the National Bank of Rwanda (BNR) and the six
licensed commercial banks in the country as shareholders).
9. Cement: The Rwanda Investment Group is planning to
build a second cement factory to help address a shortage
brought on by the recent construction boom. The consortium
of mainly local investors announced plans to construct the
factory next year, at a cost USD 25 to 35 million,
producing more than 20,000 tons of cement annually. Cement
demand is currently exceeding supply despite imports from
the Ukraine and China.

10. Coffee: The volume of coffee produced in Rwanda may
reach 37,000 tons by the year 2010. Export statistics from
OCIR-Cafe, Rwanda?s coffee regulatory authority, indicate
that out of 15,461 tons exported through November 2007,
12,261 tons were semi-washed. OCIR-cafe is promoting the
production of specialty or fully-washed coffee. With the
assistance of USAID, construction of coffee washing
stations began in 2004. Last year, the country had 76
washing stations; this year an additional 48 stations were
built for a total of 124. Three laboratories to ensure
coffee quality have also been built and are in operation.
(Note: one kilogram of semi-washed coffee sells for about
USD 2.00 in New York wholesale markets; fully washed coffee
sells for an average USD 7.00 per kilogram wholesale).

SIM

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