Business round up

Rwanda, German firms to boost savings The Association of Microfinance Institutions in Rwanda (AMIR) and the Savings Banks Foundation for International Cooperation of German are partnering to boost savings. The three year savings mobilization campaign that will kick off in 2011, seeks to raise the level of financial education skills that has been observed among all segments of the Rwandan population which has slowed down savings and private investment. “We want to promote a savings culture in Rwanda especially among the young population and that is why we are working with the ministry of education to take the campaign to schools,” said Faustin Zihiga the Chairman of AMIR. In the government’s economic development and poverty eradication strategy, a goal was set to achieve a gross national savings of 18 per cent of Gross Domestic Product to attain a Gross National Investment (GNI) of 30 per cent of GDP. The partnership between AMIR and SBFIC emphasizes that in order to achieve the target savings, all stakeholders should come together and devise measures of inculcating a savings culture among Rwandans. The savings mobilization campaign, comes at the right time with the recent survey indicating that 1 out of 5 Rwandans has access to formal banking services, 21 per cent of the adult population access formal banking services while 52 percent are totally excluded. Rwanda less restrictive on foreign investment-WB The Nakumatt store at Union Trade Center which has benefited from Rwanda’s investment climate (File Photo) A World Bank report has rated Rwanda as one of the countries with least restrictive and obsolete laws to Foreign Direct Investment (FDI). According to a report recently compiled by the World Bank; dubbed “Investing across borders 2010”, Rwanda is one of the few countries in the world alongside Canada and Georgia where it takes less than a week to establish a subsidiary of a foreign company. This is the first World Bank Group report to offer objective data on laws and regulations affecting foreign direct investment that can be compared across 87 countries. The report says clear and effective laws and regulations are vital for ensuring best results for host economies, their citizens, and investors. “Foreign direct investment is critical for countries’ development, especially in times of economic crisis. It brings new and more committed capital, introduces new technologies and management styles, helps create jobs, and stimulates competition to bring down local prices and improve people’s access to goods and services,” saidJanamitra Devan, Vice President of Financial and Private Sector Development, World Bank Group in a release issued recently. The report says Angola and Haiti excessive red tape means it can take half a year to establish a subsidiary of a foreign company. Leasing industrial land in Nicaragua and Sierra Leone typically requires half a year as opposed to less than two weeks in Armenia, Republic of Korea, and Sudan. In Pakistan, Philippines, and Sri Lanka it can take up to two years to enforce an arbitration award. The report finds that countries that do well on the Investing Across Borders indicators also tend to attract more foreign direct investment relative to the size of their economies and population. Gov’t to construct fuel storage facility Oil prices have staggered between $75 (Rwf44, 047) and $80 (Rwf46, 984) per barrel for about a year leading to fluctuation in local pump prices. This according to officials caused the country to experience its first ever highest fuel price tag. As a result, the government is set to construct a huge storage facility so as to have control of the local pump prices just in case of international prices hike like early this week. According to the Permanent Secretary in the Ministry of Trade and Industry, Emmanuel Hategeka, government is working-out a strategy where petroleum products will be purchased in bulk. “We don’t decide the trend of international oil prices, so we depend on the international trend-but the government’s intension is to always stabilise the price so as not to destabilise the market,” Hategeka said. At the beginning of the month, fuel prices for premium super fell from Rwf940 to Rwf925 per litre while diesel fell from Rwf940 to Rwf917, which was attributed to the continued drop in oil prices on the international market.However, less than two weeks down the road, oil prices on the international market are rising again. BNR maintains key repo rate at 7 per cent The National Bank of Rwanda’s (BNR) monetary policy committee has decided to maintain its policy interest rate for the third quarter of the year at 7 percent due to a current macroeconomic environment. The key repo rate is a rate at which the Central Bank lends to commercial banks and the higher the rate the more it is likely to reduce the liquidity in the banking system. “The decision is based on the current macroeconomic environment characterized by a low but increasing inflation,” said Francois Kanimba the governor of the central bank. In the second quarter of the year, the national bank which is the regulator of the banking system in the country revised down the rate by 2.5 percent from 9 percent to 7.5 percent. Official statistics puts inflation rate by end of June at 5.03 percent from 2.05 percent in March on an annual basis. Kanimba also stressed that the central bank expects an improvement in the credit conditions as the cost of funds remains stable and the banking liquidity sufficient. “Indeed this decision is of great benefit to the banking system, private sector and the economy as a whole,” said Kanimba. With the global economy recovering, Rwandan economy for the last six months has been growing impressively especially in services, construction as well as exports growing by 25 percent compared to last year same time. The BNR official said that although the monetary policy objective remains to maintain price stability, this level of the policy rate gives a positive signal to banks to continue supporting the lending activities to the economy. Ends