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A large financial institution (FI) was looking at setting up its Investment Bank’s Rwanda Branch. The new entity will be a global special purpose Investment Bank that mobilizes funds from private sector equity funds, pension funds, banks, and large corporates, etc. in Rwanda on a project basis with a promise of premium returns. The funds from each client are invested in selected high return start-ups, existing businesses with high potential growth opportunities, and in selected public-private partnership projects (PPPs) in Rwanda and globally. The promised target minimum annual rate of return on investment averaged on a 5-year cycle is 18%.

The Bank hopes to leverage on Rwanda’s emerging prominence as an investment destination in Africa and Financial Hub in Eat and Central Africa by targeting key multimillion-dollar projects in Rwanda’s agricultural, manufacturing and real estate sectors and investment projects in neighbouring countries.

Considering the long-term nature of special-purpose investments, we developed a 10-year strategy for Rwanda.

Outline of the investment banking landscape in Rwanda. Outline of the existing banks (we do not delve into details of individual banks), their target market segment, and their performance last few years and future of investment banks.

With its long-term Vision 2050, Rwanda is engaged in mobilizing private investment. The finance and investment ecosystem in Rwanda identifies partners and opportunities to leverage resources and strategically fund for pre-investment support, and de-risking instruments to scale and expand finance for infrastructure, housing, mining and SMEs in agribusinesses, manufacturing, tourism, etc. that are preparing to access the capital markets.

Local Rwandan Investment banks (mainly public) raise resources by offering services such as underwriting, brokerage, acting as an intermediary between an issuer of securities and the investing public, facilitating mergers and acquisitions, and other capital market activities.

The existing banks are:

I. Local investment:

· Crystal Ventures Limited (previously Tristar), a large portfolio of investments in food processing, logistics, construction, and civil engineering,

· Horizon Group, investments in infrastructure, road and bridge construction, logistics and real estate development

· RNIT Ltd, manage funds including unit trusts intending to encourage savings for investment in the capital market.

· Agaciro is the Rwanda sovereign wealth fund. Most of its investments were in government treasury bills bonds and commercial bank term deposits

· Fonerwa, Rwanda’s Green Fund, is an initiative of the GOR to support environmental protection and deal with the impact of climate change.

II. International Investment

· Oiko Credit, investing in agriculture and microfinance, the basic product is a line of credit, with a one-year duration renewable for up to three years.

· Business Partners International supports SME growth by providing financing, specialist sectoral knowledge, and value-added services to viable SMEs

· GroFin, private development finance institution specialized in financing and supporting SME

· AgDevCo is an Africa-based debt and equity facility that invests in African agribusinesses that create jobs and improve food security.


Opportunity and future of Investment banking, in the backdrop of Commercial Banks’ performance:

o Banking Assets are growing at an average of 5% p.a. , ROA @ 1.6% & ROE@9% (2019)

o Commercial Banks NPL are improving but still around 5-6% (Rwanda Dev Bank – NPL level at 15+%)

o Large Corporate comprise more 70% of the overall banking assets

o Pressure from various parties for reduction of the pricing of facilities

o High collateral requirement for lending in commercial Banks

o High-Risk aversion & limited availability of long-term funds

There is a growing requirement for -

§ establishment of more commercial & agricultural banks in rural areas.

§ competitive loan facilities to agricultural sector and investors in the industrial sector (SMEs & export-oriented units)

§ scope of Investment banking for advisory services and wholesale banking, including Trust funds and Pension funds.

§ promoting or arranging to underwrite the issuance of securities.

§ housing bank sub-sector in mortgage financing to encourage collateralization of loans and mobilisation of savings.

§ Prospects for the development of insurance given their complementary role in improving the population’s income levels, and the promotion of trade and industry; and

§ Direct services like stock-broking, public offering of securities, etc.

Banking assets in Rwanda of circa USD 3 Billion spread across 11 commercial banks and 4 Microfinance Entities and a small portion remain with the NBFI (Non-Banking Financial Institutions). The overall banking assets are largely skewed towards the Corporate Book as compared to the SME and Retail Book.

The industrial sector in the economy has been growing at around 10% with manufacturing growing between 25-38% (textile clothes & leather products 26% & metal products at 38%). This displays a significant opportunity for growth in the industrial sector thereby contributing towards the growth in the economy. The strategy might be to continue doing what you are good at and driving the competitive advantage. The ICT sector has shown particularly good prospects of growth as witnessed in the early years of the govt’s strategy for a digital economy powered by 4G/LTE internet connection and 1 laptop per child policy. However, the services sector being tertiary shall also be largely dependent on the growth in Agriculture. Agri based food processing and industrial sector.

With growing opportunities for entrepreneurship and success, Rwanda offers a good opportunity for start-ups and new investments into existing trading & manufacturing facilities. With growing urbanisation low affordable housing has become a top priority for the economy. The govt. focus on growth in urban housing & infrastructure shall lead to growth in the ancillary industries like iron & steel, cement etc. The new entities and expansions require long term sources of funds which may not be the focus area for regular commercial banks given their unavailability of long term sources of funds ( portfolio duration mismatch), IFRS guidelines, and prudential guidelines of the Central Bank.

Some commercial banks in Rwanda like Bank of Kigali, I &M Bank have already started getting into the Investment Banking portfolio through tie-ups with multilateral and international entities like EIB (European Investment Bank) & IFC (World Bank ). EIB has recently committed a Euro 45 Mn long term (10 years) fund for the Bank of Kigali. The focus being private sector investment which would be crucial towards creating jobs, unlocking opportunities, and enabling businesses to succeed.

The business case for this Special Purpose investment banks in Rwanda, highlighting the opportunities that exist and potential gaps to exploit.

Opportunities and Potential Gaps in Investment Environment:

As per 2018, Investor Perceptions Study of World Bank, Rwanda comes out as a preferred investment destination over other EACs, given its strengths in political stability, safety, economic growth, and ease of doing business. The international investors are looking at invest in greenfield, joint ventures, strategic partnerships, and mergers and acquisitions with local firms. Although the limited market size and landlocked geography are the main weaknesses, the small size may be an advantage for pilot testing. The small market comes as a challenge, with the quality of labour and high production costs due to higher input & transportation costs in manufacturing.

Existing foreign investors in Rwanda consider Rwanda as an attractive investment location, the ease of registration, and strong contract enforcement at the corporate level. As such, private sector companies found it easy to engage with government, although noted a desire to be more involved at earlier stages of large government investments.

Unavailability of investment Banks in Rwanda that may function in bringing in diversity to the earning potential of Banks :

1. Arranger and sourcing of long-term funds to finance long term assets and projection

2. Investment Advisory towards Growth, Merger, Acquisition

3. Sourcing of funds from multilateral for onward lending through established local Banks, MFIs ( Microfinance), etc.

4. Impact investing – improvement in livelihood, job creation, & development

5. Green Investment Banks – financing gap, bridge finance, climate adaptation finance, etc.

6. Non-deposit taking Investment Banks may have a lower level of regulations

Here we are using either a low or high appetite approach to decide, we outline briefly the key risks the bank is likely to face in Rwanda

Because of the high IRR expectation: identification of the asset shall be the key, which can mitigate the credit risk as well as generate higher returns on investment. The business should have adequate opportunities and strategies to market its products locally as well as internationally. Therefore, project appraisal (understanding payback period, BEP analysis, industry trend analysis. Structuring of the repayment of the loan basis of the cash flow. Providing a combination of fund-based and non-fund based facilities. Tie up with other commercial banks for multibank lending, working capital finance et al. Business failures attribute to one of the key reasons for NPLs in Rwanda followed by inadequate marketing avenue and higher interest rates

Risk-based pricing for the facilities to be implemented

Structuring of the loans with a step-up step-down facility, the ability to monitor the business with proximity, regular technical evaluation of the project shall play a key role in NPL management.

Sector-wise cap on exposures to be maintained & closely watch the sector behaviour in the EAC economies.

Maintain a system of proper monitoring through measurements of:

i) Portfolio at Risk (PAR)

ii) Adequacy of capital

iii) Ageing analysis

The regulatory framework for investment banks in Rwanda that the Bank must face and comply with.

The primary regulators for set up and functioning:

- National Bank of Rwanda (BNR)- Prudential norms, operations, IFRS, Basel III

- Ministry of Trade & Industries (Minicom)

- Competition and Consumer Protection Regulatory body – RICA

- Capital Markets Authority

- Office of the Ombudsman

The regulations that will have an influence on the economy and access to credit for the private sector:

· Enactment of law on Mortgages – compulsory registration of mortgages, enabling lenders to fast track foreclosures on default

· Establishment of commercial courts dealing solely with commercial disputes

· Strong creditor & insolvency framework and notice based collateral registry

· The reorganisation of the land Centre with computerised records and timely operations

· Establishment of credit reference bureau to improve information sharing among banks and financial institutions for credit risk assessment

· Enactment of company law ensuring “lifting of the corporate veil” & strict compliance to corporate governance norms

· Improvements expected in Pro-competitive regulations to increase competition in markets. Adoption of RICA (Rwanda Inspection & Competition Authority) & competition laws. Lower protection to SOE (State Owned Enterprises) & removing barriers of entry for new investors

· Adoption of the PPP (Private Public Partnership Law)


Developing a marketing strategy that you would use to win key PPP projects and attract investment funds from large institutions in Rwanda including Banks, Pension Funds, private companies, etc.

§ Special focus on EOU and export processing zones with tax benefits offered by the Govt.

§ Affordable Housing Project partnership and being able to capitalise on the growth of the ancillary industries to support the growth locally.

§ Utilisation of the industrial data and analytics

§ Partnership with Innovative Digital Platforms for creating business opportunity in Agriculture ( allied products ) & Education Sector

§ Increase Brand Awareness and Marketing activities

§ Conduct market research – GAP Analysis ( Products, Services & Tariffs )

§ Bring on board PR and advertising firms

§ Media appearances in print

§ Corporate program on Tax Management & IFRS 9

§ Boost and monitor social media publicity: Linked in, Instagram, Facebook, youtube.

§ Online advertising and website

§ Increase on Outdoor/external branding

§ Trained Feet in the street

§ Co-branding and Alliances

§ Brand activation Events

§ Sponsorships and events / Townhall and customer meetings.

§ Internal branding & creating internal brand ambassadors

§ Visibility in Govt. initiatives, traders & manufacturers association, Kigali SEZ ( Special economic zone)

The promise of ‘premium returns’ in a small economy country like Rwanda with its high exposure to external shocks as realistic or feasible. Other models of private fund mobilization that may work instead of promising premium returns

Diversify revenue stream through advisory, wealth management & insurance distribution. Cross-selling on the existing portfolio

Strategic Intent:

1. Develop a strategic partnership with brokers, fund houses and financial solution providers servicing clients across Africa

2. An experienced, multi-disciplinary team with a strong focus on designing tailored financial solutions

3. Leverage on customers having presence across East Africa

4. Targeting sectors attracting high FDIs

5. Strategic partnership with Banks & Financial Institutions across East Africa

6. Identify international funding /multilateral agencies /institutions ( IFC, Proparco, Norfund, Growfin, etc.) who incline investment intro East African countries

7. Develop customised products well suited to the local market

8. Drive research and market report that would influence decision making

9. Better TAT, Response time, Relationship Management

10. Explore Trade Finance Opportunities

11. Explore opportunities for the securitization of receivables

Wealth Management

- ETF (Exchange-traded Funds)

- Attracting investors into the East Africa Equity & Fixed Income fund

- Tie up with some Global players for distribution of debt and derivative products

- Distribute high-quality Insurance Products

- Customised Corporate Insurance Offering

- Insurance Premium Financing

Financing & Fund Raising though:

- Private Placements

- Syndications

- Private equity

Pension funds across Africa & EAC have been an excellent source for the investment of long-term savings. Quite often they would invest in profit-making corporates as a matter of diversification of their investment strategy of earning good returns with social impact. RSSB (Rwanda), NSSF ( Uganda) are some examples. RSSB has invested in various portfolios. It holds assets in bank term deposits (33.9 percent), 25.9 percent in local equity, 14.4 percent in real estate, 12.2 percent in treasury bonds, 5.7 percent in treasury bills, 4.7 percent and 2.6 percent in foreign equities in current accounts, among other smaller investments as per 2016 available public data. While RSSB does not have a minimum nor maximum transaction size limits, they do depend on thresholds in the equity arrangement.

Advisory (Technical & Transaction):

- Mergers & Acquisitions

- Technical evaluation

Capital Market Channels through:

- Corporate Bonds

- Initial Public Offers (IPOs)

Real Estate & Infrastructure Finance /PPPs

Distinct investment banking approach towards the asset class enabling the facilitation of multi-disciplinary and innovative solutions for our clients spanning multiple jurisdictions across both the listed and unlisted real estate sectors.

Structured advisory and financing solutions to substantial real estate investment trusts, private equity sponsors, investment holdings companies, and family offices through:

Project finance – development financing across sectors, greenfield, and brownfield development projects.

Portfolio finance – term financing across the capital structure including senior, mezzanine, and equity financing.

Acquisition and bridge finance – structured finance solutions that enable our clients.

Corporate lease discounting/securitization –lease discounting financier in the real estate sector with a deal footprint of several high-profile transactions.

Share cover-based financing – Assist key financial sponsors to efficiently raise financing which is secured against listed shareholdings.

References :


Fueling Enterprise Innovation, Growth and Job Creation

Program Title: Sponsoring USAID Office: Contract Number: Contractor:

September 10, 2018


Transforming for the Jobs of Tomorrow


March 2019 – IFC – World Bank Group

BK Group PLS

Investor Presentation 2019

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