Rwanda’s Kagame Pursues Investors With Debut International Bond

Rwanda will sell its first international bond by the end of July as it seeks to improve infrastructure strained by a decade of economic growth faster than 8 percent, President Paul Kagame said.

The East African nation will sell about 350 million euros ($458 million) in debt before the end of the budget year as Kagame seeks to overcome “constraints” in an economy that doubled to about $6.4 billion in the nine years through 2010. The land-locked country, ranked the second-highest in sub-Saharan Africa on the World Bank’s ease of doing business index, is also courting private investors to take part in a $4.7 billion regional rail project.

“We are on a good path,” Kagame, 55, said in an interview in Miami, where he attended a forum for emerging-markets investors. “It is going to be a challenge of course to keep that high growth but then we are prepared for the challenges and also the opportunities in our country.”

Less than 20 years since a genocide cost the lives of more than 800,000 Rwandans, the president has vowed to pull citizens out of poverty and transform the tea- and coffee-growing country into a middle-income economy by 2020. Growth will climb to 8 percent this year, Kagame said, from 7.4 percent in 2011. That’s almost double the 4.2 percent forecast by the International Monetary Fund for neighboring Burundi and Uganda.

Rwanda has a credit rating of B from Standard & Poor’s, five levels below investment grade, putting the country of 11 million people in the same category as Ghana, Ecuador and Lebanon. Kagame didn’t say what the maturity on the bonds would be. The yield on Ghana’s dollar bonds due October 2017 dropped 4 basis points, or 0.04 percentage point, to 4.68 percent yesterday after reaching a record low of 4.26 percent on Jan. 9.

Debt Rush

The nation will debut in the international bond market as African countries from Angola to Nigeria plan record debt issuance. Nigeria is seeking to borrow $1 billion on overseas markets, twice as much as it sold in 2011, while Angola wants to raise $2 billion selling securities. Tanzania is selling $600 million of seven-year debt.

Rwanda ranks eighth out of 185 countries in the ease of starting a business, according to the World Bank. It ranks 52nd globally in the ease of doing business, the highest in sub-Saharan Africa after South Africa. Kagame also led the installation of a 2,500 kilometer (1,554 miles) fiber-optic network and oversaw a health system that cut child mortality in half to 23 per 1,000 since 1990, according to the United Nations Children’s Fund, or Unicef.

“Rwanda has had good governance,” said Marko Dimitrijevic, founder of Everest Capital, which manages about $2 billion mostly in emerging and frontier markets including Rwanda. “They rank higher than Brazil or China in the overall ease of doing business.”


Kagame said economic growth was damped over the past year after a UN report accused the government of supporting a rebel movement in eastern Congo, prompting the U.K. and other Western donors to suspend aid projects, a charge he rejected. About 40 percent of the country’s budget is financed by grants, accounting for 11 percent of gross domestic product in 2010-2011, the World Bank said.

The country’s dependence on getting its exports to markets via neighboring countries is also a strain on the economy, Kagame said. The World Bank index ranked Rwanda 158th in ease of trading across borders, a figure Kagame seeks to improve with a regional rail project that would better connect the economies of east Africa. Construction should begin in 2014, according to a presentation by the Rwanda Development Board.

Kagame, who has been president of Rwanda since 2000 and won elections in 2003 and 2010 with more than 90 percent support, said last month that he doesn’t plan to run again in 2017. He rejected criticism from “outsiders” that the country is effectively under one-party rule, saying countries have to be understood in their particular context.

“It was just 1994 when we lost one million people,” Kagame said. “It was a political issue that caused all this chaos and we are coming out of that.”

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