The last time I made a comment on the district investment companies was when Gicumbi district incorporated its own new company. These companies have been formed and modelled along the lines of Rwanda Investment Group. Since Gicumbi Investment Company was formed I have been asking myself one question.
The last time I made a comment on the district investment companies was when Gicumbi district incorporated its own new company.
These companies have been formed and modelled along the lines of Rwanda Investment Group. Since Gicumbi Investment Company was formed I have been asking myself one question.
Forming a company is one thing. Operating the company seems to be another thing altogether in this case. Put it another way-what is the way forward for these companies?
I will briefly dwell on the potential of these new companies, as per the idea that led to their formation. If one district can raise US$500,000 as private capital then nationally we could potentially raise over US$15,000,000 as start up capital.
This kind of financial kitty anywhere within the EAC is serious cash that can move mountains. That is the potential of all these companies put together.
I really don’t want to talk about the opportunities that will meet this kind of capital that has been raised. That is within the public domain. Rather I want to dwell on the challenges that are likely to be faced by the promoters of these companies.
Challenge number one is sourcing management talent. It is well known that a shortage of qualified and experienced managers is one of the gaps within the various districts.
Secondly, Rwanda’s financial services industry is still at infancy stage. This means that we still don’t have the fund managers capable of taking charge of this large amount of capital. For instance, US$15 million, as initial capital, can easily attract more if it has top management talent to utilise it.
What I am saying is that with the necessary management skills set the companies formed so far can generate additional capital to reach over US$80 Million for the purposes of transforming rural livelihoods.
My take is that a pure entrepreneurial approach is needed here to boost the fortunes of these new companies.
These companies will most definitely need real entrepreneurs and professionals rather than bureaucrats to run them.
Otherwise some of them won’t move beyond the initial stages, especially when the majority are under the guidance of the local mayors.
I think time has come to transfer control and guidance from local authorities to more competent entities- who are driven by the profit motive.
The companies need to make a return on investment. For locals to pool such a huge amount of capital is actually a very laudable move.
However authorities have not only to be vigilant on this new form of capital raised by locals. Above anything else is the need to ensure that sustainability is maintained.
Fred Oluoch-Ojiwah is a journalist with The New Times