Agaciro Development Fund (AgDF) last week celebrated its 10-year journey, marked by steady growth. From an emergency fund created out of public contributions to a multi-billion sovereign wealth fund, AgDF has positioned itself as a major player in Rwanda’s socioeconomic journey.

Today, the fund holds shares in 29 companies across different sectors, from manufacturing and ICT to agri-processing and finance, creating thousands of jobs.

Despite the impact of the Covid-19 pandemic, the fund remains resilient thanks to prudent investment decisions and a focus on financial stability. It has now set its sights on achieving $1billion in stock value over the next 10 years.

But how will it get there?

Agaciro Development Fund’s chief executive, Gilbert Nyatanyi, reflects on the 10-year journey and the work that lies ahead.

Excerpts

Q: Agaciro Development Fund is marking 10 years this year. In a nutshell, how has the journey been so far?

It has been quite a steady and growing journey, of course with some challenges. If I take you back in time, the Agaciro Development Fund as a sovereign fund is quite different from other sovereign funds. We don’t have any income from natural resources like gold, diamond, gas, and others, as other sovereign wealth funds do.

Our main source of income used to be voluntary contributions from the private and public sectors, as well as the Diaspora community and friends of Rwanda. By April 2020, we were averaging $300,000 per month. However, this source of income was phased out, and we were requested to find alternative sources, which coincided with the outbreak of Covid-19.

Despite these challenges, we managed to consolidate and stay on track throughout the journey. Starting in 2018, we became shareholders in 29 different companies. This presented a challenge because when the fund was initially set up, it wasn’t intended to be a holding company.

But, as we speak, we are functioning as a holding company with 29 subsidiary companies. One of the main challenges here was figuring out how to harmonise this portfolio, supervise and monitor these companies, and maximise the value of our shareholding in them.

Nevertheless, 10 years later, we have achieved quite satisfactory results and have accumulated significant assets under management. So, yes, the journey has been challenging, but, on the other hand, very satisfying. The only challenge we face now is to sustain the progress we have since made.

Q: Have you ever reconsidered rebranding to Rwanda Sovereign Wealth Fund?

It is important that we have the Rwanda Sovereign Wealth Fund as part of our name, but the main brand is Agaciro Development Fund. This name truly reflects the purpose of the fund, which is centred on the idea that self-reliance is crucial for Rwandans. When the fund was first established, the context demanded a strong symbol and one of the main symbols chosen was the name Agaciro, which embodies dignity, self-reliance, and self-worth. Without these three values, there is no vision. Therefore, Agaciro serves as the premise of everything that we do.

As a side note, when I engage in discussions with colleagues from other countries, they are always curious about the origins of this name, which leads to fascinating conversations. Some countries have names like the Belgian Federal and Participation Company, Island Strategic Fund, BPI France, or Ghana Infrastructure Fund. However, for Rwanda, it’s the Agaciro Development Fund. Only after we delve into the meaning behind our name do people inquire about the financial aspects and our assets under management.

Thus, it is essential to uphold the Agaciro concept and its associated name.

Q: To what extent does the fund contribute towards Rwanda’s development?

When the fund was set up, it had a threefold mandate; first, to serve as a buffer in case of economic shocks; second, to contribute to the socio-economic development of the country; and third, to save for future generations.

Currently, our focus is on contributing to the socio-economic development of the country. We achieve this by identifying the sectors in which to invest and after assessing their impact on the country’s economy. If you examine our portfolio, you will notice that we are involved in various sectors. We adopt a sector-agnostic approach and invest in agriculture, financial services, ICT, renewable energy, and more.

Q: How do you make your investment decisions?

If we consider the current situation and the time when the fund was established, 10 years ago, the circumstances are completely different. As mentioned earlier, contributions have been phased out, and we are now shareholders in 29 companies. Therefore, it is crucial for us to reposition ourselves. During this period, apart from investments in terms of deposits, treasury bonds, or what we refer to as fixed income, we are focusing on developing our strategic plan. The purpose of this plan is to assess if we still have the appropriate structure and approach.

It will also guide us in determining our positioning for the next five to ten years and how we can achieve our goals within that timeframe. Additionally, this evaluation will help us decide if we should invest in specific key sectors or continue with a general investment approach across the entire economy.

Currently, if you were to ask me about our key sectors, I would say that we are sector agnostic like I have already stated. However, this may change in the future.

Q: How do you engage with your stakeholders, including local and foreign partners, the government, and the private sector?

The government is, of course, the sole shareholder of the Agaciro Development Fund, which implies that there is indeed an interaction and flow of information both upwards and downwards. Additionally, we report to the government on a quarterly basis.

As for our international partners, we take pride in being a member of the International Forum of Sovereign Wealth Funds. This forum includes most sovereign wealth funds around the world and operates with stringent rules regarding transparency, independence, and accountability.

Regarding the private sector, we often collaborate or co-invest with certain companies. We engage in continuous interaction to explore market possibilities and identify areas where we can add value or support these companies, financially or as a guarantor.

Q: On the global landscape, the world was badly hit by the pandemic a few years back. How was the fund affected?

I was incredibly fortunate when I assumed the role of CEO. I found a highly competent team already in place, and the former CEO, along with the other team members, had laid a solid foundation. One significant aspect of this foundation was prudence. The investments were wisely made, ensuring sufficient liquidity through term deposits and treasury bonds.

Although there was a slight reduction in interest on these investments, it remained quite satisfactory in maintaining our financial standing. Furthermore, we refrained from making any high-risk investments. Consequently, when reviewing the financial results over the years, there was a minor dip (as a result of Covid-19), but, overall, the fund remained relatively stable.

Therefore, despite the challenges posed by Covid-19, I cannot complain about the outcomes. Naturally, without the pandemic, we would have achieved even better results, but the performance has genuinely been gratifying.

Q: What’s the total value of the Agaciro Development Fund currently?

Today, as we speak, we’re at $284 million and we would like to close the year 2023 at $300 million and then take that as a baseline to grow to at least $1 billion in 10 years.

Q: How do you ensure accountability and transparency in your investment decisions?

We have an external auditor who reports to the Auditor General. Additionally, we publish our financials on a quarterly basis on our website, which we also share with the government through the Ministry of Finance and Economic Planning, which also publishes them. If you visit our website, you will find our annual report and financials.

Furthermore, Agaciro Development Fund is a Rwandan people’s fund, which means that anyone who has contributed can contact us or visit our office to request accountability. We are available to answer questions such as what we have done, what actions we have taken, and what has occurred. Our doors are always open for inquiries, suggestions, proposals, and even complaints, if any.

Q: Beyond the audits, how do you assess the impact of the fund on the lives of Rwandans?

We are currently focusing on several important aspects in the field of investment funds management. First, there are 2-3 key areas that everyone is discussing extensively. These include the concept of impact, the integration of ESG (Environmental, Social, and Governance) factors, and the challenges and opportunities brought by the digital era.

Given the significant differences in the landscape between 2012 and 2023, it is crucial for us to explicitly address these factors in our strategic plan. We seek to determine and understand the impact we are making. How can we effectively measure this impact? Additionally, we need to establish our green agenda and define our ESG policies. It is essential to adapt to the digital era, rather than relying solely on hard copies and disregarding emerging technologies such as Artificial Intelligence. This aspect is one of our main focus areas, and its incorporation will be clearly outlined in our strategic plan.

Q: Artificial Intelligence is revolutionising how businesses are run, do you have any plans of integrating it in how you do business?

Yes, we have it on the table. We are trying to go paperless as a starting point and, from that, we embrace digitalisation; of course, we need help from external parties, but, for us, it’s clear we need to embrace this and we have already started.

Q: How do you work with the Rwandan communities abroad?

The Diaspora played a significant role when the fund was being launched. However, when contributions were phased out, the Diaspora was left with only the option of remittances coming through normal channels. We are now contemplating on how we can involve them further.

I am aware of numerous initiatives focusing on how members of the Diaspora can contribute to socio-economic development and boost the economies of their home countries. As the fund, we are also considering our own contributions. We’re contemplating how to engage them differently from what happened in the past because, this time, we are looking to offer returns. If you contribute, we intend to demonstrate what you will receive in return. This is an aspect we are currently exploring.

Q: Your portfolio is quite broad, how do you choose which companies to invest in?

In 2018, the government sought to strengthen and expand the fund, leading to the transfer of some shareholding in different companies to the Agaciro Development Fund. As a result, the majority of our companies were inherited from the government, while a few were investments made by the fund itself. One of them is Rwanda Fertilizer Company, in which both the government and the fund have high expectations. However, it is part of our strategic plan to evaluate our portfolio and determine which companies to retain, which ones to sell, and which ones to open up to strategic or other investors. We carefully consider our investment focus when making decisions.

Q: Business can go bad depending on circumstances obtaining at a particular time, what would happen if one of your portfolio companies ran bankrupt?

Well, up until now, that has not happened and we continue to be vigilant to avoid such issues. One of the things we do is to extend assistance in terms of corporate governance, managing the board of directors, and ensuring sound financial practices in companies where we hold a stake. In some cases, we have even provided financial support by acting as a guarantor or assigning a representative from the Agaciro Development Fund to closely monitor the company’s operations and ensure satisfactory performance.

Also, prior to making any investment decisions, we undertake a comprehensive assessment process. This involves our investment department thoroughly evaluating the opportunity and once they’re convinced, then a proposal is presented to management. Once the management is also convinced, the issue is then referred to the board investment committee. Only when the committee is convinced does the proposal move forward to the board for final approval.

This rigorous process is designed to minimise chances of making a poor investment decision. We are acutely aware that we’re entrusted with managing the funds of Rwandans, so we do not make impulsive decisions.

Indeed, while a bad investment is not entirely beyond the realms of possibility, each of our investment ideas is subjected to a meticulous process that reflects our responsibility in managing people’s money. In brief, we do not simply wake up one day and decide to invest without due diligence.

Q: Do you have international partners?

Yes; for example, with the Rwanda Fertilizer Company, we are partnering with OCP Group, which is a Moroccan company and a global leader in fertiliser; the other is Africa Improved Foods where we have partnered with Royal DSM to make fortified blended food. Precisely, what we are trying to do is move from comfort zone. We’re trying to move to a more calculated risk where we try to bring in international partners to see what we can develop together.

Q: Have there been enquiries on the possibility of resuming voluntary contributions towards the fund?

I wouldn’t characterise such enquiries as very common, but yes from time to time you see people asking whether we still accept contributions. Even when we inform them that the process has been phased out, some continue to express a strong desire to contribute.

It’s important to note that we still maintain bank accounts (which people used to make voluntary contributions), allowing members of the public to make voluntary contributions as they please. But it is critical that people understand that these contributions are not subject to any future requests for a percentage of the amount contributed. Therefore, the status quo remains the same as it was in April 2020.

However, if we come across an alternative, creative, or innovative solution, we will not hesitate to propose it.

Q: How do you envisage Agaciro Development Fund’s future?

Our priority is to dive deep into our 29 portfolios, map them, decide which ones are good investments or cash cows, identify those with potential, and determine whether to keep or sell them. For the ones that don’t align with our objectives, we plan to sell them immediately. This is an urgent and concrete task we are currently working on.

The second priority is reviewing the legal structure of the Agaciro Development Fund. As you are aware, since its launch, the fund has received a positive response, necessitating the establishment of a formal structure. Now, after 10 years, we are assessing whether this legal structure is still the most suitable. We are actively working on this aspect as well.

Furthermore, we are developing our overall strategy, with a view to assess our current position, in 2023, determine our goals for 2025 and beyond, and strategise how to reach them. We are collaborating with various stakeholders, including government entities, private stakeholders, and the board. By the end of August, we hope to unveil our new strategy, providing a clear direction and laying out the path to achieving our strategic objectives. Although we have some initial ideas, they are still in the early stages of development.

Q: As you mark the 10th anniversary, what message do you have for Rwandans?

I have a few points to highlight, but the first is, of course, a message of gratitude. Without the people of Rwanda, it would not have been possible. The driving force behind our success remains H.E. President Paul Kagame. He made the call to Rwandans, and their response was hugely positive. Thanks to their contributions, we were able to grow.

Initially, the contributions amounted to about $50 million (Rwf57, 837,222,100), and to date, the total assets under management stand at $299 million. However, we still aspire to further growth, because we are ambitious.

Secondly, managing resources in a prudent manner is crucial. Sometimes people ask what happened to their money. Well, the money is still there and continues to generate more funds. This will continue, allowing us to accumulate more funds.

Thirdly, Agaciro holds immense significance. It is not just a casual term; rather, it represents a very important concept. As I mentioned before, without Agaciro, there is no vision or path forward. Therefore, let us always keep the concept of Agaciro in mind and build upon it. Its influence extends beyond the borders of Rwanda.

Q: Anything more to add?

I must add that it is a privilege to be entrusted with the responsibility of managing people’s money. It takes trust. I am truly humbled to have been given the trust to manage the funds of Rwandans. As stated earlier, I am ambitious and fully committed to upholding the meaning of the name Agaciro, and I look forward to discussing our new strategy soon. Thank you very much!