On May 15, 2018, the Governments of Rwanda and India signed a concessional loan agreement worth US$66.60 million (about Rwf65 billion) for the construction of the Base-Butaro-Kidaho road Project.

The loan was provided by the India Export-Import Bank (India Exim Bank).

But, almost three years after the loan was secured, the road has not yet been constructed, and the Government of Rwanda has announced it is looking for another financier to implement the project.

Located in Northern Province, the 63-kilometre road project would connect the districts of Rulindo and Burera, thus facilitate tourism and boost economic activity, according to information from the Ministry of Finance and Economic Planning.

The road will connect the emerging touristic centre of Burera, Ruhondo lakes and key infrastructure like University of Global Health Equity, Cancer Reference Hospital of Butaro, as well as link the country to Uganda through Cyanika border.

What exactly happened?

While responding to senators’ queries related to malpractices in expropriation recently, the Minister of Infrastructure, Claver Gatete said that the loan from the Indian bank was charged at 2 percent interest, but indicated that it was like a ‘tied aid’.

"It was a tied aid because most of the road construction materials – about 65 to 70 percent – would come from India,” he said.

He said that the government realised that it was impossible to source construction materials at that rate from India, especially those that were readily available locally like citing sand and cement.

Gatete said that [under the agreement], the construction works had to be undertaken by Indian companies, indicating that all these conditions would have increased the cost of the road over 100 percent.  

Ordinarily, the cost of a tarmac road is estimated at between $800,000 (about Rwf800 million) and $1 million (about Rwf1 billion) a kilometre.

"However, Indian companies were charging us $2.1 million (about Rwf2 billion) a kilometre,” which he said was more than double the ordinary cost.

He said that the negotiations whereby the Government explained to their Indian partners that importing materials such as sand and cement from India was a difficult condition to meet, "took very long”.

Meanwhile, Gatete said that the Government decided to redirect the loan to funding its energy, a process that he said was time-consuming as it was completed last year (2020).

New potential financier

Senator Faustin Habineza said that the delays in constructing the Base-Butaro-Kidaho road was adversely affecting movement of goods and people in the Northern region, calling for expedition of its construction works.

"Residents wonder when the construction of the road will resume. Some have started requesting that if that is not in the near future, the road can have some urgent works including fitting it with laterite (murram) to ease movement in the short run,” he said.

However, Gatete assured Senators that in 2020, the government started looking for another funder for building the road, adding that they are in advanced stages.

"We requested a loan from the African Development Bank (AfDB), and we are currently in the process of signing a $200 million (about Rwf200 billion),” he said, explaining that the money would fund the construction of roads including the Base-Butaro-Kidaho one.

He indicated that after the loan agreement is signed between the Government and AfDB – which he said is probably expected within this year – the procurement process for the contractor will begin.

"This is one of the priority roads,” said Gatete, expressing optimism that its construction is in the offing.