Rwanda to host continental export development fund
A new fund that was created by the African Export-Import Bank (Afreximbank) last year, the Fund for Export Development in Africa (FEDA), will have its permanent headquarters in Rwanda.
This follows the signing of three agreements between Rwanda and Afreximbank on Sunday, November 22 in Egypt, which paves way for the establishment of FEDA headquarters in Kigali.
FEDA, An equity investment fund and a subsidiary of Afreximbank, seeks to fund African businesses to promote intra-African trade, and facilitate foreign direct investment flows into Africa’s trade and export sectors.
Alfred Kalisa, Rwanda’s ambassador to Egypt signed the Establishment Agreement, a Headquarters Agreement, and a Memorandum of Understanding on behalf of Rwanda with Afreximbank’s President, Professor Benedict Oramah.
“Rwanda is glad to host FEDA as we work together to achieve the dreams of the African Continental Free Trade Area (AfCFTA) on the continent,” Ambassador Kalisa noted.
Under the agreements signed, Rwanda committed to offer certain benefits to FEDA including offering free rental to the Fund for the next two years, officials said.
The Establishment Agreement is a sort of multilateral treaty that each member state will sign, while the Headquarters Agreement is a bilateral agreement that enables FEDA to have its offices in Rwanda.
The MoU, on the other hand, is an agreement that sets out specific commitments by the government of Rwanda towards FEDA, including provision of free rent and land.
Ambassador Kalisa indicated that the country will work to ensure that FEDA is successful in driving and achieving its mandate, which is essentially to provide seed capital to companies in agri-business, manufacturing, consumer and retail, and financial services.
Other sectors that stand to benefit from the scheme include businesses in technology, travel and tourism, transport and logistics, as well as industrial parks operating across Africa.
“The signing of FEDA Establishment Agreements is a huge milestone towards achieving Afreximbank’s strategic objectives in promoting intra-African trade and export development,” Oramah said.
The President highlighted that it was critical for the continent to fast track and attract funding that is important to the development of trade infrastructure between African countries.
Focus on SMEs
The Fund will invest across all market segments but will have its greatest focus on small and medium-sized enterprises, according to the Bank’s officials in Cairo, Egypt.
It will also invest in mature companies and start-up businesses where there is a gap in the marketplace and where investments have a high level of value addition and development impact in Africa.
According to Afreximbank, the long-term objective is to provide equity capital and related support to operators in Africa’s tradable and support sectors, with emphasis on activities that support intra-African trade and value-added exports.
The Fund, initially targeted at $500 million, is expected to grow to over $1 billion within the next few years, they say. Afreximbank has already committed $350 million towards the fund.
According to Professor Oramah, the agreements are a result of a conversation that kicked off eight weeks ago between the government of Rwanda and Afreximbank officials.
The location of FEDA in Kigali, he argued, will attract other major financial institutions in the capital and enable Rwanda to realize its vision of becoming a financial hub in the region.
Rwanda seeks to position itself as an International Financial Centre, and the government established the Rwanda Finance Limited this year to advance that agenda.
“Establishment of FEDA in Kigali will enhance the profile of Rwanda as an International Financial Centre, increase potential of attracting equity capital funds,” the firm’s chief executive Nick Barigye said on Twitter.
Rwanda was selected by the board of directors of FEDA to host its headquarters due to its flexible visa on arrival regime, the conducive business environment, and low cost of doing business.