Friday, Dec 15, 2017
Conglomerate | Africa | Rwanda

Rwandan Investment

Ngali Holdings identifies strong development leverage in key sectors


1 year ago

Wilson Kagabo, Acting CEO of Ngali Holdings
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Wilson Kagabo

Acting CEO of Ngali Holdings

Multifaceted Ngali Holdings is involved throughout Rwanda’s private sector and aims to lower the risk in strategic sectors of the country’s economy. “We want investors to feel that Rwanda is the perfect place to invest, and to project themselves on the long term,” says CEO Wilson Kagabo who, in an in-depth extended interview with The Worldfolio, details the opportunities investors should know about in Rwanda, particularly in ICT, energy, agriculture, health, and systems integration.

 

Africa is undergoing a transformation and is attracting global attentions. What are the key factors putting Africa at the forefront of investors’ minds?

Transformation is happening mainly because of Africa’s mindset change – very visible within our youth. Africans are realizing that focusing on themselves as part of the development agenda is crucial. We are not expecting someone from outside to assist us anymore in our development; this has taught us to become more proactive. We have started taking initiatives in order to grow by ourselves.

Africa today, and especially Rwanda, attracts young graduates that are willing to take part in the optimistic adventure that is to come. They have the desire to play a roll, the desire to use their skills and knowledge, to participate in their country’s development. High profiles coming into Africa are important, as this will attract high-tech companies willing to take advantage of what the continent has to offer in terms of human resources.

Policies are also changing in order to attract foreign investment; the continent is aware of the fact that it also has to change on an administrative level. Africa is opening up to competition. It is by no means only considering its former colonizers as exclusive economic allies; Africa is now seeing investment from across the globe – Asia, North and South America, Europe, and whoever is willing to invest in the African continent is welcome on competitive terms. Africa’s perception to be unsafe for investments is fast changing. The threats that exist here in Africa are exactly the same ones that exist elsewhere.

Obviously the natural resources aspect is extremely important for Africa’s development and this is getting understood by our people. Commodities’ transformation is now under way locally, or will shortly be if it isn’t the case. Africa needs to participate in value addition through processing her abundant locally available natural resources. What is going to lead Africa to success is the combination of many aspects.

 

It is also the youngest continent in the world: by 2040, the continent is projected to boast the largest labor force in the world – 1 billion workers strong, and more than China and India combined. What are the challenges and how should they be addressed?

It is true, the humongous potential that we have in terms of young professionals is an asset. But the real question that should be asked is the following one: how educated are these people? Then you will be able to see what and where the problem is. The gap must be closed. Our education programs should take into consideration job creation, industrialization and investments. What do you want? How are we going to achieve our ambition? This needs to be answered by a proper, attractive education system. Africans tend to leave the continent to educate themselves elsewhere. How can we change this paradigm in order to make foreigners come to Africa?

In Rwanda, for instance, we are fortunate enough to have some of world-class universities offering Masters-level courses locally: for example Carnegie Mellon University. How can we attract more of these universities in many more African countries? The goal is to match the number of educated people with the number of job openings in order to mitigate all challenges that the continent may face.

 

Apart from industrialization, regional integration is also high on the African agenda, as its largest untapped market and its biggest opportunity for progress are right on its doorstep. What are the tangible efforts put in place to increase this integration?

A good illustration of regional integration is driven by different factors. The first one of which is value-added creation. How are we able to transform raw materials into something else, a finished product for instance? For the moment, we are still not able to entirely transform our natural resources into finished products. So many untransformed materials and commodities that we send abroad are then sent back to us in a consumer-ready state, which are considerably more expensive than if transformation would have been done locally.

Regional integration will allow us to elaborate joint manufacturing and processing projects. For instance, in the aviation industry, production of an aircraft is a good example of joint projects: various parts are produced by different players from different countries and assembled into an aircraft by one systems integrator such as Boeing and Airbus. Regional integration enables this kind of project to be undertaken. Industrializing Africa calls for putting an end to the old isolated ways of doing business and adopting more collaborative strategies that are well proven. We have to think bigger and holistically.

 

There are definitely transformation trends towards manufacturing technological products. Uganda is building electrical buses, Ethiopia trains and Tanzania even said that it wanted to manufacture its own helicopters. Technology-driven industries are coming for good to Africa…

I do agree. But instead of having each individual country manufacturing its own high-value-added goods, I reckon it would be better for the entire region to benefit from these. Regarding the helicopter industry, this is an industry that requires a lot of R&D as well as significant capital. Many African countries cannot yet afford such investments on their own; this is why allocating tasks to different countries would make more sense. This would obviously lead to commonly elaborate products but also to improve our skills and capacities.

 

Ngali Holdings was established in 2010, specializing in long-term, wide-scale infrastructure projects with a holistic focus. What are the milestones achieved since then?

Ngali Holdings specializes in developing long-term strategic infrastructure projects that require patient capital and early-stage development. Our model is based on injecting capital into risky projects in order to make them viable and bankable so that we can open them up for other investors, to participate as equity partners as well as senior debt lenders.

Our goal is to attract investments in areas of the economy representing strong development leverage. When we are looking at a project, we scrutinize it with that provision in mind. Since the beginning of Ngali Holdings (formerly Digitech Solutions) six years back, the company has invested in the establishment of five notable companies, each with a specific focus area. Those companies that Ngali is the sole or part shareholder include: Ngali Energy, RwandaOnline (RoL), EAX, AFEX, and Mediheal Diagnostic and Fertility Centre.

Ngali Holdings is currently an important player in the following sectors of the Rwandan economy: ICT, energy, agriculture, health, and systems integration.

Ngali Energy’s mandate is to participate in compensating for the lack of sufficient electrical energy supply in Rwanda, as it is a true development challenge to any country. Ngali Energy is currently operating a 9MW hydropower plant and is developing a portfolio of five mini hydropower plants totaling a projected generation capacity of about 13MW. We also have power production projects, at deferent stages of development, in other countries, namely: Kenya (45MW), South Sudan (3MW), and Congo Brazzaville (25MW).

RwandaOnline was formed to create an e-commerce platform for the Government of Rwanda (“GOR”), which acts as a portal to deliver e-governance services. The objective of this program is to provide Rwandan citizens and businesses improved interaction with the government, to enable efficient government service delivery, and to pursue continuous innovation and improvements in e-service delivery. We have an ambitious goal of putting at least 100 services online by 2017. Currently we are on the right path to achieving that goal.

Ngali Holdings is also invested in the healthcare sector, as aforementioned. The services we offer are both unique and have a direct impact on the Rwandan and regional population. Rather than seeking in vitro fertilization (IVF) services abroad, Rwandans and others have the option of receiving similar services with the same level of professionalism and integrity, here in Rwanda. We have partnered with an Indian company, Mediheal Group of Hospitals, that specializes in that type of treatment and services in Kenya. In the near future we expect to expand in capacity and diversify in service delivery.

 

Nyaruguru’s District Mayor said the new hydroelectric dam you are building will increase access to electricity among its residents, and challenged people in the district to start planning on how best they will use the energy and create SMEs. How would you describe your impact in Rwanda’s socioeconomic development?

As an independent power producer (IPP), we play a role in increasing electricity generation capacity. Other players in our economy have also got a role to play in order to make this agenda a success. I assume that the Mayor’s comments are in line with this role I just mentioned.

Speaking as an IPP it is definitely better to have the assurance of the electricity market before investing in generation. However, it is also true that once there is sufficient electricity, more markets will be created. It is in this regard entrepreneurs and SMEs are encouraged and challenged to start ventures that will make good use of the available power capacity. Once this has been achieved, the impact on the Rwandan economy will be significant.

Additionally, from a corporate social responsibilities (CSR) point of view, ever since its inception Ngali has played a humble role in all areas of our operations. For Ngali, CSR and giving back to the communities we operate in and serve is an on-going commitment.

In the past Ngali has supported various youth initiatives promoting innovation and entrepreneurship, such as Emerging Leaders and Entrepreneurs (ELE Rwanda).

Ngali Energy has supported the local government of Kibirizi sector, in Nyamagabe district, through donations of office materials. Ngali Energy employs about 60 casual workers every three months at Rukarara I Hydro Power Plant; the rotation is meant to have as many beneficiaries as possible in the surrounding community.

To contribute to the national capacity-building efforts, RwandaOnline together with Carnegie Mellon University have set up internships and a practicums program. This year RwandaOnline recruited two Carnegie Mellon University graduates and a certain number of practicum business cases are to be conducted here by the next in-take, in early September 2016.

This year on May 16, 2016, we held our Kwibuka 22 at RwandaOnline. Some of the poetry was featuring Elysee, a genocide survivor, who is a promising computer engineer. Our plan is to follow and empower him, offering him an internship and mentorship to see him succeed in his professional undertakings.

Other commitments RoL is making in connecting local government to the digital world include: connecting 100 cell offices with both solar energy, internet and tablets/laptops and allow them to provide e-government services by the end of September, 2016, and create a Wi-Fi zone at every cell office of the 100 connected. This will allow people with smartphones in the cell area to come and use the Wi-Fi. It also involves training 200 young people in those cells to use RwandaOnline’s Irembo platform as well as making them mobile financial service agents for telecom companies operating in Rwanda.

 

Rwanda aims to transform into a knowledge-based economy and the way to achieve this ambition is to leapfrog into the digital economy using various digital platforms. In this sense you had a key role with RwandaOnline, offering G2B and G2C services. What are the tangible results observed so far?

In addition to the abovementioned CSR contributions, RoL has evolved from a small start-up to a well-established company currently offering 35 online government-to-citizen and government-to-business services. This growth is in line with our mandate enshrined in the BOT signed with the Government of Rwanda. We will continually keep adding more new services with a schedule of achieving 100 online services by 2017. The most important part is that the platform to host all 100 services is ready and this has been our major development focus in the past two years. One must understand that even though the platform is ready, we can’t just put online all 100 services at once; there are other considerations in play. Other support services and agencies need to be equally ready for a service to be put online. Our partners – the Government of Rwanda and others – understand these requirements and we are working collaboratively in addressing all challenges standing in the way.

 

Regarding agriculture, in July 2014, Presidents Kagame, Museveni and Kenyatta officially launched the East Africa Exchange (EAX), which is owned by you in Rwanda. It links small-scale farmers in the East African community (EAC) to agricultural and financial markets so they can get competitive pricing for crops and access to finance. How did this change Rwanda’s agriculture sector and increased regional trade?

Let me first clarify, EAX is a joint venture between four investors of which Ngali Holdings is part of. Now back to your question, let us first examine some statistics readily available online. Agriculture is a significant driver of African economies, contributing on average 30% to the continent’s GDP, employing 60%-90% of the workforce, and accounting for 25%-90% of export earnings. With agriculture commanding such a large percentage of the continent’s commercial activities, the function of a commodity exchange becomes significant.

The continuous growth in agriculture results in increased public and private investment, greater regional integration between the countries, demographic expansion and shifting consumption patterns. In Rwanda and Kenya, EAX is currently filling the gap in the Africa’s commodity value chain by formalizing the trade of key commodities through certified warehouse operations, professional collateral management and a structured trading platform.

 

The CEO of the Ethiopian Commodity Exchange told us that different African countries wanted to replicate their system. Do you have plans to export your platform to other regions?

EAX’s agenda is definitely to expand to other EAC member states; at the moment it operates in Rwanda and Kenya. With time, EAX will establish itself in other member states.

The Ethiopian Commodity Exchange is one of the oldest commodity exchanges on the continent and I am pretty sure that there are plenty of lessons to learn from their experience. We also have to open our minds to learning from other successfully models of commodity exchange across the globe, and apply best practices to the EAX.

 

Ngali Holdings is investing in a wide range of industries across the African continent. What is your international strategy?

Ngali is a Kinyarwanda word, synonymous with multi-dimensional, big, broad, large, and infinite – in line with activities we are engaged in and/or with regards to physical expansion. 90% of our operations are currently done in Rwanda, as we want to be a key player in this economy, but we do have projects at various stages of development in other African countries as mentioned earlier.

Within Rwanda’s borders we do operate with international partners from Singapore and the Netherlands on ICT projects, and our transaction advisor is based in London, etc. We decide on adequate partnerships depending on the industry and the companies we are working with. We do not claim to have all expertise in-house – this is the reason why we do call international partners to forge partnerships with us.

 

Regarding international partners, what are the facilitations you could provide interested investors?

This depends on the sector. For instance, investors should value our huge expertise in the energy sector. We understand properly how to interact with the country’s economy, environment, and the energy sector’s dynamics. We have the relevant knowledge and expertise required to secure necessary guarantees, licenses and documentation for power projects. Additionally, we are quite familiar with the due process for developing green and brown field power projects, and we proactively engage all key players in the process.

For every sector were are able to make it possible for investors to perform and close faster, and generally speaking we have less turbulence in fulfilling this promise because we understand very well both the local and regional context.

Investors interested in big data projects coming to us would make sense, as we are already operating in that space. Also one shouldn’t forget our objective, which is to lower the risk in strategic economic sectors for Rwanda; this obviously helps to attract investors. We want investors to feel that Rwanda is the perfect place to invest, and to project themselves on the long term.

Rwanda is an easy place to invest in. All government offices are open for discussion, and answering doubts and questions that one might have. Rules and local structures here are transparent. Starting a business for foreign investors here in Rwanda is quite easy. But if an investor has a lack of inspiration, you may knock on our door and we’ll arrange relevant projects and help with administrative procedures.

 

After the US Secretary for Commerce’s visit in January the US Government stated Rwanda is a key ally in enhancing trade in the region. What is your assessment on the diplomatic and commercial relations and how could they be enhanced?

The United States is a huge market for various products and services. This same market can be extremely interesting and a huge source of profit for Rwanda’s agricultural sector. However, as Rwanda aspires to becoming a service-based economy, there is plenty of business potential both Rwanda and the USA need to explore.

In the most recent past and going forward, Rwanda has and is still investing significantly in quality higher education and ICT infrastructure. Initiatives such as Smart Africa, Africa Institute for Mathematics, and the Carnegie Mellon University’s (CMU) Information and Communication Technology (ICT) Center of Excellence are here to assure investors that there will be a sufficient local supply of skilled, innovative and creative workers in the ICT, science and technology sectors.

I would therefore encourage multinationals, especially American ones, to set their African and EAC regional offices headquarters in Rwanda. Government of Rwanda support, good doing business policies, and well developed financial services will make it possible to achieve higher profitability margins for companies willing to take the challenge of establishing themselves in Rwanda.

Due to its geographical position, setting up manufacturing and mineral processing plants in Rwanda would reduce costs of production and ensure improved financial returns. This is because most high-tech products, such as phones and vehicles (both air and ground based), are made of parts produced from minerals that are found in Rwanda and in the surrounding countries. I believe this is the time to move production to Africa. All the required ingredients are in place and frankly speaking I think this is the time for pan-African-themed products.

 

You have very diverse experience, from being a writer, researcher, coordinator, actor, educator and a manager. How do these former experiences help you face present challenges as Ngali Holdings’ CEO?

I believe that life experience plays a big role in how one sees things. I look at things in a multi-dimensional way because of the multi-faceted experience I’ve had from different environments I’ve operated in. I am aware of the fact that for one to be able to solve complex challenges, such as those Ngali Holdings seeks to solve, teamwork is paramount.

Some skills I have learned from past experience and continue to improve and apply to Ngali Holdings include being open-minded, brainstorming, flexibility, and willingness to learn from everyone, among others. Thinking outside the box is crucial.

We have a very diversified team composed of various academic background; engineering, science, technology, finance, logistics, etc. Many of the amazing professional team members of Ngali have international exposure, giving us a global vision in business. My vision is to use this multicultural asset to create innovation, and activity.

 

How would you like to see Rwanda in 2030?

My vision for Rwanda is guided by Ngali’s long-term strategic plan with the highlight being to improve the performance of the energy portfolio, and aim to garner 30% market share of the Rwandan energy production sector. Also, to improve the existing commodity exchange system and create a comprehensive financial services platform to catalyze the agricultural potential, so as to achieve food security and maximize the earning potential of farmers.

We want to bridge the ICT gap in Rwanda by building an integrated digital platform to provide government services to citizens and businesses. Essentially, to put all government services online and participate in digitizing various transactions.

The Ministry of Health of Rwanda projects approximately 7% yearly increase in outpatient visits and 10% increase in hospitalizations. The healthcare sector in the country is currently saturated and dominated by public healthcare facilities primarily. The increasing demand will continue to increase the gap, indicating the opportunity for investment and growth in the Rwandan healthcare industry.

Ngali together with our partners in this sector plan to close this gap by investing in a state-of-the-art diagnostic and fertility center for the region, offering both inpatient and outpatient treatment. The center aims to be a “one-stop” facility to provide services efficiently and effectively. Some of the envisaged services include providing pathology, radiology and fertility services.

With regard to achieving the transformation of minerals and materials available locally, I would like to see significant value addition in every material and mineral Rwanda is currently exporting. I am convinced that by 2030 Rwanda will be participating in the production of hi-tech systems, such as vehicles. I would like to see Rwanda’s IT community take advantage of big data, and become a hub for analytics software and apps development. 



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