Saturday, Oct 21, 2017
Infrastructure | Africa | Rwanda

East African Regional Integration

A joint vision for regional infrastructure development


5 months ago

National carrier RwandAir continues to expand its fleet
share by WhatsApp

Regional allies show there is power in numbers as they combine forces to carry out vital energy and transport projects

Rwanda may now be a progressive African leader, but it is not alone on its journey. Mechanisms for greater cooperation across African borders are at last a real possibility. Ironically, in a region of the world where foreign aid has long represented the driving force, this progress is African-generated and inward-focused. Countries on the continent are now looking to each other for growth, and it is working.

“Rwanda belongs to a number of regional bodies such as the East African Community (EAC), the Common Market for Eastern and Southern Africa (COMESA), which is a bigger market by itself, and the Economic Community of the Great Lakes Countries (CEPGL). All these bodies have presented opportunities for member countries to enhance their social, economic and political relations to attain economic growth,” says Rwandan Minister of Infrastructure, James Musoni.
“To date, member countries have responded instinctively to the regional initiatives by allowing free movement of labor, goods, services and capital. It has further created ease of access to market through the creation of customs unions to promote production and consumption of locally manufactured products.”


“Member countries have responded instinctively to the regional initiatives by allowing free movement of labor, goods, services and capital. It has further created ease of access to market through the creation of customs union to promote production and consumption of locally manufactured products”

James Musoni, Minister of Infrastructure


Mr. Musoni adds that road infrastructure has been developed to facilitate transport, from Mombasa in Kenya and Dar es Salaam in Tanzania to Kigali, and to open a transit path to the neighboring countries of Burundi and the Democratic Republic of Congo (DRC).

“The Central Corridor member states have established the Central Corridor Transit Transport Facilitation Agency (CCTTFA) to expedite the implementation of the East Africa Standard Gauge Railway Project. With the northern corridor, preliminary market-studies were conducted and construction started in Kenya. It’s expected that the completion of this project will significantly reduce the cost of transport for both exports and imports to facilitate regional and international trade,” he explains.

In power, regional alliances are constructing substations and transmission lines that will facilitate power trade and cooperation. The power potential of Lake Kivu, for example, is jointly shared between Rwanda and the DRC, with each country managing half of the lake’s 700-megawatt capacity. Sharing resources, as this region of Africa is discovering, makes everyone stronger.

As Jean Bosco Mugiraneza, CEO of Rwanda Energy Group, explains: “In Africa, we have many energy sources but we are poor in energy supply. The solution to this problem is to share energy resources between countries.”


“African leaders understand that there is no way of industrializing the region without common sources of energy. To develop our industries, we must invest in energy sources and we must share our production. Power trade is also key for security and stability”

Jean Bosco Mugiraneza, CEO, Rwanda Energy Group


To make this happen, he says, the region must put in place basic infrastructure and common networking standards. There are five power plants in Africa that belong to the East African market, and there are other shared energy projects between Rwanda, Kenya and Uganda for the construction of transmission lines and power plants. Transmission lines have been completed from the Ugandan border to Kigali, and lines are being constructed to link Rwanda, the DRC, Burundi and Tanzania. Within the next two years, Rwanda expects to be trading 30 megawatts with Kenya.

“African leaders understand that there is no way of industrializing the region without common sources of energy. To develop our industries, we must invest in energy sources and we must share our production. Power trade is also key for security and stability. If we have common interests, we will be keener to help each other. These projects are key to developing diplomatic ties and uniting populations,” adds Mr. Mugiraneza.

The private sector has also been quick to support regional integration and to applaud efforts by government to improve the connectivity that supports business growth. Liliane Uwanziga Mupende, CEO of Ultimate Developers Ltd. (UDL), the company behind Kigali’s Vision City, Rwanda’s largest residential housing project to date, points to recent EAC achievements in logistics and human capital, as well as in infrastructure investment.


“We started Vision City in Kigali as one of our pioneer projects, but our interest is to start investing in these secondary cities as well. The next step will be to invest within the commercial area of the Muhanga district, as it is strategically placed as a city that helps us to extend out to neighboring countries too”

Liliane Uwanziga Mupende, CEO, Ultimate Developers Ltd.


“Several joint initiatives that have already been successfully rolled out, such as the East Africa Tourist Visa, unified immigration and administrative procedures and online government solutions. Major infrastructural investments made as a region rather than as individual nations such as the oil pipelines and railway, and the creation of one-stop border posts are all aimed at making our economic integration easier,” she comments, remarking on improvements in the elimination of double costs and in creating simplified business environments.

“Many companies that are establishing in Rwanda are looking at the entire region as an investment opportunity. At UDL, we are convinced that being successful in the Rwandan market will help us to expand within the entire region. We want to increase our economy’s potential. We want Africa to be perceived as a strong cluster, with Rwanda being one of this initiative’s drivers.”

Derek Claassen, Director of Roko Construction is counting on regional infrastructure cooperation to alleviate his business’ importation challenges. “We are hoping these pipelines and the rail system that is now being worked on will be game changers. In East Africa at the moment, in Uganda or Rwanda, you don’t have a lot of transport options. There are still constraints in terms of road traffic. Vehicular traffic from South Africa works a lot quicker. We have found, for instance, that certain materials can be trucked from South Africa, which is about four or five days, covering five or six thousand kilometers. Depending on weight and size, we can fly certain items in, but it is hugely expensive as you pay per kilogram. The COMESA initiative to open the borders more freely for trade will help with a lot of those issues,” he explains.

Mr. Claassen also believes that infrastructure improvements will lead to the emergence of regional industries to support his business. “Cement suppliers and concrete suppliers are moving into East Africa, with large companies like Lafarge, who are now the biggest concrete suppliers in the world, moving in to Uganda and Rwanda. That can and will make life a lot easier,” he says.

The fact that regional integration is now on the agenda highlights just how far Rwanda has come over the past two decades. Major advances and investment have been made domestically in the development of the country’s transport, energy and social infrastructure. The country now boasts one of the densest road networks in Africa with over 12,000 kilometers. Paved roadways in the country have more than doubled in the last 20 years, with hundreds of new kilometers being covered each new year. More than 350 kilometers were paved in 2016 alone.

The Rwandan government is also working to boost air transport links, with the expansion of national carrier RwandAir and the construction of a new international airport in Bugesera, which will intially be able to handle 1 million passengers and 150 million tons of cargo.

“RwandAir is an integral component of the government’s Vision 2020,” states Jean Paul Nyirubutama, deputy CEO of the airline.

“By 2020, we want to become a mid-sized airline with a strong global footprint. We want to connect Rwanda with long-haul destinations in Asia, Europe and the U.S. All of that is based on a strong African network.”

Infrastructure minister Mr. Musoni reiterates RwandAir’s important role leading up to 2020, and points out that while Rwanda may be landlocked, it is not “air-locked”.

“To transform our country into an aviation hub, we must first develop strong and sustainable aviation infrastructure,” he says.

“RwandAir’s fleet is growing and growth will continue up to 2020 with the addition of more planes. This will allow us to serve the entire region and to connect Rwanda to the rest of the world. The construction of the new airport in Bugesera will commence in the next few months and will have other auxiliary services to make it an airport city.”

Beyond Bugesera, secondary cities are also being constructed to act as hubs for non-agricultural industry development, investment in affordable housing is being made, and power grids and sanitation infrastructure are being extended. Information and communications technologies are also being extended into rural areas to connect the country’s population electronically. Perhaps a singular sign of the country’s progress is the fact that Kigali now boasts an international-class convention center, along with hotels including a Radisson Blu and a Marriott.


The City of Kigali


“Rwanda is a country that is developing at steady pace. We have made some good achievements in infrastructure development,” says Mr. Musoni. “However, the government is making more efforts in constructing and completing projects in the pipeline and improving the existing ones to reach the desired levels. For example, efforts are being made to ensure universal access to electricity and 100% water distribution coverage, among others, by the year 2020.”

To meet its electrification goals, Rwanda is looking to a variety of solutions including sustainable energy sources, particularly solar.

“We recognise that as we are yet to explore and produce the natural resources that are beneath the surface, Rwandans can benefit from the energy above the surface of the earth,” says Serge Kajeguhakwa, the Chairman and CEO of Energy Resources Petroleum.

“We have made significant strides in developing our solar and renewable energy strategy in tandem with the government’s objectives and will focus initially on solar power through basic household solar systems, followed by development of mini-grid solutions and then large-scale solar projects. We expect to be able to produce around 50 megawatts from solar energy alone, and have entered into joint-venture partnerships to achieve this target.”

Electrification coverage jumped 34% between 2014 and 2015 to a total installed capacity of 170 megawatts, and in 2016, goals included increasing this by an additional 70 megawatts, while constructing 835 kilometers of new transmission lines and adding 60,000 new households to the grid. Off-grid solutions supplied electricity to 11,000 additional families in 2016. These moves support the government’s bid to expand electricity coverage to 75% of all Rwandan households by 2018.

“In our strategy to accelerate electricity access, we have targeted 48% from on-grid solutions and 22% from off-grid solutions, with an emphasis on solar power. Using solar home systems allows us to serve even the most remote places. To this end, the Mobisol project currently under implementation has a target of serving 49,000 households. Combining on- and off-grid strategies will drive electrification like never before,” comments Mr. Mugiraneza of Rwanda Energy Group.

The two largest independent power producers in Rwanda are Symbion Power and ContourGlobal, both American. The companies were attracted to Africa by former President Barack Obama’s ‘Power Africa’ initiative, says Mr. Mugiraneza. “Investors know that there is no place for trade if there is no infrastructure. If the U.S., China and other countries are investing in our continent it is because they see an immense trading opportunity,” he adds.

ContourGlobal currently produces 26 megawatts at the KivuWatt plant in Lake Kivu. A second phase of this project will add 75 megawatts. A power purchasing agreement has been signed with Symbion Power, to develop methane gas production in Lake Kivu and Turkey’s Hakan has been contracted to construct a peat power plant with a production of 120 megawatts in two phases. There are also 80 megawatts to be added from the Rusumo HPP Project, a regional collaboration between Rwanda, Tanzania and Burundi. Rusizi III, a shared 147 megawatts power plant project between Rwanda, the DRC and Burundi is in the pipeline, and the Rwandan government is also working on a power sharing agreement with Ethiopia and Kenya. “We are committed to enhancing regional power trade to meet the demand, and our projections are showing that we will be successful,” says Mr. Mugiraneza.

Moving forward
Growth of this sort has a domino effect on a country’s construction industry and Rwanda is no exception. The government’s secondary cities program is aimed at providing a balance between the rural and urban poles, and meeting a demand for new housing in the capital that has reached 3,000 units per year.

UDL’s Ms. Mupende comments, “We started Vision City in Kigali as one of our pioneer projects, but our interest is to start investing in these secondary cities as well. The next step will be to invest within the commercial area of the Muhanga district, as it is strategically placed as a city that helps us to extend out to neighboring countries too. People crossing in through the southern border have to go through Muhanga, which has already started to attract regional investments in addition to national ones.”

She adds that this project, along with subsequent phases of Vision City, offer potential areas for investors to partner with UDL.

Roko Construction’s Mr. Claassen says his company is also actively seeking new partners as projects across the region ramp up: “Construction has grown over the years in East Africa, and the company has grown to the extent where we are turning over about 80, 90, or 100 million dollars at the moment, which allows us to tender only to specific projects. If a project comes out tomorrow worth 820 million dollars, we may not be financially able to get involved in building it, which is why we are looking at joint ventures and at partnerships, and even equity at the end of the day.”


  0 COMMENTS







RELATED NEWS






BLOG
405

ENTREPRENEURSHIP: An overused concept for an underused reality.

2017/07/13

When being part of a generation on which the flag of entrepreneurship seems to be constantly waving in the sea of young professionals looking to succeed in the business world, more often than not, we tend to drown in the... Read More


ADVANCED SEARCH

COUNTRY REPORTS

FOLLOW US
          
SUBSCRIBE


FACEBOOK
LINKEDIN
TWITTER




COUNTRY ARTICLES AND INTERVIEWS







© Worldfolio Ltd.

The Worldfolio provides intelligence about the economies with the highest growth potential in the world, with a focus on understanding them from within.

SUBSCRIBE


FOLLOW US                   | Terms and conditions - Privacy policy - Cookies policy.