The catalyst to enhance regional exports

You were appointed as CEO of BRD in 2013. What objectives have you marked for your term as CEO and what have been the achieved milestones?

First of all, we have successfully re-organized BRD’s structure by isolating the commercial aspect of our bank. We then concluded the merger with Banque Populaire du Rwanda –BPR, an operation that I personally oversaw.

Secondly, we have re-oriented our strategic plans to address the key issues of housing, energy, agriculture and exports. 2016 marks our first year with regards to this new strategy. Our objective is to grow BRD’s assets to $712 million by 2020.

Furthermore, we want to have a distinct impact on Rwanda’s cross-sectorial economies by assisting various projects instigated by the private sector. In numbers, we want to increase cross-sectorial investment to $1 billion. We brought in $60 million to the peat to power projects, while other sources brought in over $320 million.

Regarding housing projects, we have partnered with Shelter Afrique and have commonly brought in over $30 million. Another $133 million investment operation is in the pipelines and will be followed by another investment of $160 million. If we add up all the current initiatives, we expect to reach a one-billion-dollar investment program by 2020.

BRD recently underwent structural reforms, which saw the bank split into two sections – the one you head has a focus on financing long-term projects with a broader impact on the economy. BRD says it’s putting emphasis on sectors that are critical to the country's growth prospects. The 2016/2017 National Budget observes a trend to increase self-reliance and less donor dependence in funding it, and focuses on Made-in-Rwanda products. Which sectors do you see have the best potential for investment and why?

First of all, we are looking to support projects in the manufacturing sector. This “Made-in-Rwanda” initiative is something we support and wish to enhance. From construction industries to agro-material fabrication, we will support all projects aimed at producing transformative products here in Rwanda. The private sector is aligned with this Rwanda-made initiative, as the latter will allow us to significantly increase our export revenue. To give you an example, the only granite factory in the East African Community is producing granite not only for Rwanda, but is also exporting to Tanzania and Uganda.

You recently said that there is a need to change mindsets towards agriculture finance because bankers and financiers tend not to think innovatively when it comes to agriculture finance.  What innovations is BRD thinking about?

There are two fundamental things that need to happen to boost the agriculture sector. First of all, we need to transform agriculture into a market-oriented business. We must look at agriculture as a profitable business opportunity rather than as a survival activity. The traditional way of farming must mutate into an activity aimed at making profitable returns. We are currently working with the East African Commodity Exchange, a platform established a couple of years ago in order to boost agro-farmers’ and traders’ competitivity. By establishing regulated prices, ensuring standardized quality and providing proper warehouse logistics, we bolster the agriculture value chain.

The second thing regards agriculture’s risk management. The government has been introducing targeted schemes to reduce risk potential. For example, Rwanda provides an irrigative water system aimed at reducing one’s dependency on weather conditions. By doing so, we are able to minimize the impact of temporal droughts.

In the areas of crop diseases and price vitality, we work together with our key stakeholder to mitigate risk. Once we have successfully and meaningfully reduced these negative uncertainties, the financial sector will grow aware of agriculture’s potential and will provide financial services to farmers and small cooperatives, hence, increasing productivity.

We discussed with Governor Rwangombwa how the entrance of Atlas Mara and the merger of BRD Commercial will raise the level of competition. From your point of view, does Rwanda offer room for new players and mergers and acquisitions?

The answer is simple. Since our economy is growing at a steady rate, there is an increased demand for financial services. This gap for capital is there and it must be answered, and while I cannot answer how many banks will be needed, I can assert that there is a need for new innovative services. There is room for new players.

Rwanda is undergoing mayor infrastructure projects, such as the recently commissioned KivuWatt plant or the future Vision 2020 City. BRD will also invest $185 million in the energy sector and $674 million in housing, together with the private sector and the government. What are the challenges financing these mega projects?

The number one challenge is to finally cover the country’s demand for energy. Energy is crucial for development and we must therefore address this issue in a timely and effective manner. Subsequently, these megaprojects demand power sources, innovative skills and professional solutions. Our international partners, such as Symbion Power and Hakan, help us to mobilize the tools necessary for success. At BRD, we are pleased to partner with them by providing the needed financial support. It is a win-win situation, we provide them with assistance, and they provide us with the necessary tools and know-how.

In the midst of a complex global economic scenario, i.e. slowdown of Europe, China and Emerging Markets, depressed commodity prices, diverging monetary policies and depreciation of emerging currencies… what is your vision regarding the economic outlook for Rwanda in 2017-2020 and its competitiveness?

Rwanda’s economy is resilient as it diverges from the recent international economic environment trend. The macroeconomic frameworks, and the fiscal and trade policies installed allow for stability and growth to be implemented. Rwanda is independent to the extent that it is not reliant as to what is happening elsewhere. This self-determination allows us to find our own way, and while we are affected in some ways by this global meltdown, we have the system needed to remain self-resilient.

Christine Lagarde, Managing Director of the IMF said that three of Africa’s biggest challenges were to build people, build infrastructure and build institutions. How would you assess the work done by Rwanda regarding building institutions?

Rwandese institutions were born 20 years ago. One of Rwanda’s celebrations today is to have built strong institutions from the ashes of the tragic 1994 genocide. These organizations were a building block in the process of national development. Today, these bodies are strong enough to work independently and they are the fuel to reaching the national objectives of the country.

Regarding the financial sector, we used to have two commercial banks only, as compared to 16 today. Our National Development Bank, the BRD, has been growing steadily to become the financial tool of the private sector. The National Bank acts as a strong regulator to accompany an organization’s growth.

Regarding the insurance sector, we have also quintupled our agencies, passing from a mere two in the mid-90s to 10 today. Private and public institutions are growing. The Rwanda Revenue Authority (RRA) collects taxes and revenues for the government, and it is so successful at doing so, that today, the government is able to finance 60% of its budget thanks to the RRA. Our institutions were built from the ashes of the genocide to become the driver of Rwanda’s socioeconomic empowerment.

Africa’s largest untapped market and its biggest opportunity for progress are right on its doorstep. In 2014, intraregional exports in Europe were at 69%, Asia 52% and in North America 50%; and Africa had the lowest level of intra-regional trade at 18%. Now plans such as the Northern and Central Corridors are being developed. BRD says it will invest $222 million to support export development in the next five years. Please discuss Rwanda’s regional integration efforts and BRD’s role as a balancer of the export-import sheet.

When you look at the priority sectors considered by the bank, you will notice that we touch upon many various activities. From exports to agriculture, through to housing, energy and education, we aim at making a real impact on Rwanda’s society by providing financial support. Our main goal is to make a tangible contribution to Rwanda’s cross-sectorial activities by reducing the trade deficit we are currently experiencing. Furthermore, we are highly considerate of our regional market. Many of our projects are focused on boosting inter-regional and continental trade. Cross-border trade has been growing and we want to be the catalyst to enhance regional exports. In order to boost our activities to another level, we will keep on collaborating closely with the private sector.