Sovereign wealth fund under discussion… in Rwanda

August 4, 2010

A number of African nations have established or are having debates about establishing sovereign wealth funds to manage their mainly resource-based wealth.

RWANDA/

It may be surprising however to hear Rwanda — an aid-dependent nation racked by the 1994 genocide — is considering one. Its foreign minister Louise Mushikiwabo says a sovereign fund would help develop its economy and ease dependency on aid.

“We should not rely on someone else’s money. It’s about our own dignity. We’re looking at every policy — economic policy and foreign policy — to make sure Rwanda stands on its feet. Technology is one sector we’re looking at in Rwanda and how to use our own innovation,” Mushikiwabo tells Reuters during her visit to our London office.

The landlocked nation has been also looking at the agricultural sector as well as methane gas, of which the country plans to become an exporter in the future.

Mushikiwabo says one plan under discussion is to create a fund that has a size of $2 per working population (Rwanda’s total population is about 10 million). She adds that Rwanda is in close cooperation with Singapore — which has one of the world’s biggest sovereign wealth funds, sourced from its export windfall revenues – in building human capacity and skills.

So what’s the timeframe? Mushikiwabo says in the next 10 years, given the country’s strategy to become a middle-income country economy by 2020.

“The fund will have to come before 2020,” she says.

Tourism is another industry Rwanda has been looking at but it has suffered a set-back after Dubai’s state-owned conglomerate Dubai World shelved some of its plans to invest in the country after the financial crisis.

However, Dubai World has managed to just open its five-star hotel Nyunge Forest Lodge in the hills of southwest Rwanda.  Its “luxury” room costs US$400 a night (all meals, selected beverages inclusive; until June 2011 the hotel has 2 nights for one offer).

“It’s very nice. It’s nothing like you would expect,” the minister, who has already stayed there,  says.

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[...] are talking about their intention to set up such a fund. For example, I saw last week that Rwanda – a country totally dependent on foreign aid –  announced plans for a new SWF. I acknowledge [...]