Ten years ago, Agaciro Development Fund (AgDF) was established, first as a solidarity fund with the goal of making the country increasingly independent of foreign aid and at the same time giving Rwandans back their dignity.

Agaciro is a Kinyarwanda word, loosely translated to mean dignity or self-worth.

As a concept, Agaciro is firmly rooted in Rwanda’s pre-colonial history. When the Fund was first established, the use of Agaciro appealed to national goals of self-reliance, emphasising the importance of solidarity in the face of external threats.

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The Fund was birthed from voluntary contributions from Rwandan citizens living in Rwanda, those living abroad, private companies as well as friends of Rwanda.

Ten years later, the fund has increased its portfolio and positioned itself as a major player in the economy through a wide-range of strategic investments.

In 2016, the AgDF was also admitted to the UK-based International Forum of Sovereign Wealth Funds (IFSWF), which paved way for its metamorphosis into a sovereign wealth fund.

At the end of 2013, AgDF had quickly amassed Rwf20.5 billion, increasing to Rwf24.9 billion in 2014 and Rwf29.2 billion by the end of 2015.

By May 2023, the Fund’s assets amounted to $299 million with the goal of reaching the $1 billion mark by 2030 The Agaciro Development Fund boasts investments across 29 companies in critical sectors including; agro-processing, finance, manufacturing and ICT.

As far as investment decisions are concerned, the AgDF’s guiding principle is to carefully blend theory and practice to systematically allocate funds between different classes in a way that ensures sustainability and achievement of the Fund’s financial goals.

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Sovereign funds and emerging economies

Thierry Kalisa, a senior economist based in Kigali, argues that the main objective was to cushion the country against external shocks, save for future generations and help accelerate socio-economic development.

"More generally,” he says, "as the name suggests, Agaciro seeks to support Rwanda in its effort to achieve self-reliance.”

Kalisa is of the view that the role of a sovereign fund such as Agaciro in an economy like Rwanda is important because of two major reasons.

"First, the Fund has invested in the local economy with a current portfolio of 29 companies, mostly local, contributing to the development of the private sector. The Fund aims at making a significant economic impact, contributing to Rwandan socio-economic goals, aligned with NST1 (National Strategy of Transformation) and Vision 2050.”

The second, he says, "by carefully choosing its investments, the AgDF also aims for financial returns to preserve the contributions of Rwandans, and grow the Fund to continue building the country’s resilience to external shocks.”

Just after its creation in 2013, Kalisa adds, a mechanism was established for Rwandan citizens, including members of the Diaspora and friends of Rwanda, to contribute voluntarily to the Fund.

"Therefore, for the case of Rwanda, the Diaspora had an important role, through its contribution, in establishing the Fund from the very beginning,” he observes.

Voluntary contributions would be terminated in 2020 as the Fund had grown to a level where it was in position to sustain itself.

For Lina Higiro, the chief executive of NCBA Bank Rwanda, sovereign wealth funds are invaluable instruments for fostering the growth and prosperity of emerging economies.

Such funds, she says, have demonstrated their tremendous potential to drive sustainable development and empower nations on their path to economic self-reliance.

"The Agaciro (Development) Fund stands as a remarkable testament to Rwanda’s determination to secure its future and uplift its citizens,” Higiro said.

"By effectively harnessing the nation’s resources and managing them prudently, the Fund has played a pivotal role in promoting socio-economic transformation, financing critical infrastructure projects, and enhancing the overall well-being of the Rwandan people.”

In the case of Rwanda, Higiro adds, the Fund has become an embodiment of national unity and collective determination to overcome historical challenges.

"It has bolstered our economy, supported inclusive growth, and instilled a sense of pride and ownership among citizens. The Fund’s success demonstrates that sovereign wealth funds can serve as catalysts for economic transformation in any emerging economy willing to embrace a visionary and strategic approach.”

For banks, she says, sovereign wealth funds support liquidity which ensures financial resilience, and increased credit into the economy for individuals and companies alike.

Accountability and sustainability

But, while sovereign wealth funds can help generate long-term economic benefits, several important conditions must be fulfilled in order to produce the intended results, according to Gerard Rurangwa, an economist based in Kigali.

With a population of slightly above 13 million people, Rurangwa says that Rwanda has made important economic and structural reforms ensuring sustained steady growth for over a decade until the outbreak of the Covid-19 pandemic. He cites the establishment of Agaciro Development Fund as one of the major decisions in that effort.

"Agaciro Development Fund is a professional and prudent institutional investor with a long-term perspective. This enables it to seek out sustainable real returns and ride out short-term economic and financial market fluctuations,” he added.

For Rurangwa, the national budget 2022-2023 showed how the Fund was contributing to the development of the country and its sustainability compared to the previous 10 years, when more than half of the government expenditure was funded by an external resource.

Rurangwa highlights the importance of clear accountability procedures at the different levels of the Fund’s governance, and to the public, citing the need to prevent misuse of public resources and to consolidate public support for the Fund.

"It is very important that this is being taken care of as it holds the key to the sustainability of the Agaciro Development Fund and the achievement of its goals.”