Can we still bet on district investment companies?

This is an open letter addressed to the Chief Executive Officer (CEO) of Private Sector Federation (PSF) Roger Munyampenda. With all due respect, I will open up my debate by saying that the PSF, while tasked with so many responsibilities, needs to urgently look at the management issues of the numerous district and even provincial investment companies. For some of us in the media, not much has been heard about them ever since they were incorporated some couple of years back. I will first dwell on the idea behind the formation of these companies. I think that I can only mention Rwanda Investment Group (RIG) as the success or even testimony of such an idea. RIG’s intervention at the national level is what all the district investment companies were meant to do at the local levels. Rwanda is well recognized as a very good investment destination in Africa. However, one thing that policy makers and local leaders need to do is to recognize the fact that the district investment companies are not living up to the mandate of their formation and that something needs to be done just by looking at the way RIG has performed in the last few years it has been operational. Another issue is that foreign investors are known to have no quarrel at all with making joint ventures with local investors. It makes more sense to have Rwandans to partake in the very many investment opportunities in Rwanda. While Foreign Direct Investment (FDIs) is recognized as key to actualization of Rwanda’s highly ambitious transformation agenda, FDIs will add even more value to the local economy if such foreign investors would join forces with local investors. Let us talk more precisely about the potential of these very many investment companies which were formed from as far away as the northern flanks of Rwanda in Gicumbi to Eastern low lying areas such as Bugesera. These companies, it appears, are hardly operating. If we had local leaders such as Governors or Mayors including the PSF officers seriously mobilizing and providing the leadership needed to have such groups transformed into fully operational and trading entities, the story would be much different by now. One simple idea was to have, at the very minimum a merger of say 10 district investment companies into smaller but larger business companies operating in the same pace as RIG. If , for instance each of the smaller RIGs would be modelled to have a minimum paid up capital , of say Rwf 500 million, the kind of trickle down and by extension the ripple effect would go a long way in assisting with the transformation of the areas where such funds have been mobilized. With such a huge sum of hard cash pooled together into fewer, but bigger companies, it will be much easier to formulate concrete and by the way bankable investment projects that foreign investors would easily buy into. PSF would then lend a helping hand by polishing up such proposals and providing other critical functions such as crafting the joint venture agreements to ensure that local equity is catered for. Since it is the locals at the grassroots who would be seen to be championing such projects in close cooperation with foreign investors the end result can be a “win win” for every body. With Rwf 500 million seed capital such investments being championed by locals can have a potential to reach even a twenty fold value function for locals after only a few years. Meaning that Rwf 500 million investment would translate within a short while, into some thing well over Rwf 20 Billion especially given the fact that Rwanda is a virgin economy. The foreign investors would bring in the bulk of capital needed plus expertise. The locals would get stable , better and well paying jobs, while the rural areas will be opened up by such investments in the form of having more electricity connections, schools and transfer of knowledge from such bigger and better managed investment projects. Another element would be that the low levels of entrepreneurship currently within rural Rwanda would be given a deserving shot in the arm. Such a picture that I have painted in short, Mr. Munyampenda as CEO of PSF, would be one practical way of taking vision 2020 to the rural areas where such companies have been formed. The author is an editor with The New TimesOjiwah@gmail.com