Africa Great Lakes Democracy Watch



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Africa Great Lakes Democracy Watch Blog. Our objective is to promote the institutions of democracy,social justice,Human Rights,Peace, Freedom of Expression, and Respect to humanity in Rwanda,Uganda,DR Congo, Burundi,Sudan, Tanzania, Kenya,Ethiopia, and Somalia. We strongly believe that Africa will develop if only our presidents stop being rulers of men and become leaders of citizens. We support Breaking the Silence Campaign for DR Congo since we believe the democracy in Rwanda means peace in DRC. Follow this link to learn more about the origin of the war in both Rwanda and DR Congo:http://www.rwandadocumentsproject.net/gsdl/cgi-bin/library


Sunday, June 6, 2010

Key political risks to watch in Rwanda

Key political risks to watch in Rwanda

By Hereward Holland

KIGALI June 1 (Reuters) - The international community has heaped praise on Rwanda for its rapid socio-economic recovery after the trauma of genocide 16 years ago, its stability and its bold vision to become a middle-income country by 2020.

But while the World Bank may have voted Rwanda the most improved business reformer globally, rifts within the ruling elite and regional insecurity threaten the investment climate.

Here are some of the risk factors:

RULING PARTY RIFT?

Foreign diplomats and sources close to the government say deepening rifts within the ruling Rwanda Patriotic Front (RPF) risk undermining the the nation's stability.

Regional analysts say parts of the banking, tea plantation, coffee, tobacco and mineral exporting businesses are now in the hands of people close to Kagame and the RPF elite.

Political analysts say the divisions are partly connected to the privatisation of government and party assets into the hands of President Paul Kagame and his inner circle.

The Rwanda Development Board denied any government assets had been sold off to the RPF elite.

Meanwhile, Kagame's war on graft has seen former political associates locked up.

The arrest of two senior army officials in April, following a dramatic reshuffle of the military hierarchy, underscored the tensions and erosion of trust at the top. Analysts say the generals' detention -- one for abuse of office, the other for immoral conduct -- is part of a crackdown on critics of Kagame's centralisation of party financing and political power.

Diplomatic sources say the arrest of Congolese Tutsi rebel Laurent Nkunda has also fuelled tensions within the ruling elite. A U.N. panel of experts reported in 2008 that the RPF had supported Nkunda's rebel war in easten Congo.

What to watch:

-- Rwandans will vote in an August 9 presidential poll which Kagame is widely tipped to win [ID:nnLDE64A2J7].

Security has been tightened in Kigali in the last four months with armed patrols in the city at night. Diplomats forecast a largely peaceful ballot which is unlikey to affect Rwanda's investment climate.

-- Rwanda's seizure of Nkunda last year heralded a new era in relations between the tiny central African nation and its giant neighbour. For years the two accused each other of backing the other's rebel factions. What happens to Nkunda could still influence the extent to which relations thaw. Congo wants him extradited for war crimes and treason but analysts say Rwanda would be reluctant to let him go, fearful of what Nkunda might divulge about his relationship with Kagame's administration.

-- Further grenade attacks across the country. One person was killed and dozens wounded in Kigali in May in the latest of a series of mysterious attacks. Kagame's administration has linked them to a former army chief in exile who has denied any involvement. More attacks risk tarnishing Rwanda's stable and secure image and deterring tourists. Tourism has become the country's largest source of foreign exchange earnings, generating $175 million in 2009.

CRACKDOWN ON CRITICS

Kagame has been widely applauded by donor nations for establishing stability and completely rebuilding the country after a genocide in 1994 killed more than 800,000 ethnic Tutsis and moderate Hutus. He has also set out an ambitious roadmap to transform the nation of around 10 million people into an IT hub and middle income nation.

But his critics accuse him of being authoritarian and stamping on press freedoms and argue social cohesion and development have come at the expense of free speech. Rights groups say there has been a crackdown on critical media and increasingly vocal opposition parties.

Donors say Kagame's strong leadership and desire to bring in foreign investment makes for quick decision-making and efficient use of aid, although nepotism remains an issue. There are concerns, however, that brewing resentment among the opposition, elements of the political elite and parts of the population could foster political instability further down the line.

What to watch:

-- The muzzling of private media critical of Kagame. In April, two private local-language newspapers were suspended for insulting the head of state and inciting unrest. The government says the ban, which runs until after August's presidential election, was not politically motivated. Media watchdogs called it a veiled attempt at censorship. [ID:nLDE63D28I]

-- Registration of opposition parties. The parties admit there is little chance of winning the election. Rights groups accuse the government of intimidating opposition parties, harassing their leaders and impeding their registration.

-- The trial of Victoire Ingabire, leader of the unregistered United Democratic Forces party who awaits trial on charges of crimes linked to genocide. [ID:nLDE63L22P]

Ingabire has declared her intention to contest the Aug. 9 ballot but cannot be a candidate until her party is registered. Under the terms of her bail, she cannot leave Kigali without permission.

REGIONAL STABILITY

At the heart of central Africa, Rwanda depends on the stability of its neighbours for the safe passage of its goods along east Africa's main trunk routes. All of its petrol, diesel and heavy oil, which fuels its electricity generators, must be transported by road from the coastal cities of Mombasa in Kenya and Dar es Salaam in Tanzania.

Post election violence in Kenya in 2008 blocked the region's main trade arteries for weeks. The turmoil sent food and fuel prices in Rwanda surging and inflation peaked around 23 percent in December 2008. 2008 Q1 dollar exports to Europe, Rwanda's largest market, dropped by one third against the previous quarter and 15 percent versus the previous year.

What to watch:

-- Kenya votes first on a new constitution in August and then in a presidential poll in December 2012. The new charter is central to political reforms aimed at averting a repeat of the 2008 post-election violence that hurt regional trade. Equally, any violence before or after Uganda's 2011 presidential poll could isolate Rwanda.

-- Conflict in eastern Congo. Human rights groups fear too hasty a withdrawal of the 20,500-strong U.N. peacekeeping force across the border in eastern Congo would trigger more violence in a country struggling to recover from a 1998-2003 war and which is still battling rebels across its territory. [ID:nLDE64E0D1]

-- Burundi election period. Neighbouring Burundi will hold presidential, parliamentary and senate elections in June and July, in a test of the nation's political stability after more than a decade of civil war. Diplomats say any violence surrounding the ballots is unlikely to spill over into Rwanda.

EMERGING CAPITAL MARKET

Established in 2008, Rwanda's Over The Counter (OTC) stock market lists just three Treasury bonds and a 10-year Commercial Bank of Rwanda bond. The only listed equity is the cross-listing of Kenya Commercial Bank (KCB.NR). Its shares have seen a total turnover of around $24,000 since cross-listing in June last year.

Bond market turnover has been around $1.13 million since January 31 2008. The Capital Market Advisory Committee (CMAC) says uptake has been weak because government paper is being bought mostly by institutional investors who are holding on until maturity.

What to watch:

-- Issuance of more government bonds and new listings. The central bank will issue quarterly bonds to fund ambitious energy and infrastructure projects and also help ease the country's dependence on donor funding, which currently comprises around 40 percent of the budget. [ID:nLDE64H12M]

However the regulator says this would not significantly increase liquidy because of the relatively small volumes being talked about.

-- Regulator CMAC expects four Kenyan companies -- including Equity Bank (EQTY.NR), KenolKobil (KENO.NR), TPS Serena (TPSE.NR) -- will cross-list by the end of 2010 as part of a drive by some of Kenya's leading firms, notably the banks, into new markets such as Rwanda and South Sudan. Cross-listings such as Equity, Kenya's largest by accounts, will boost the capitalisation of an embryonic market where domestic options are limited.

-- The government plans to sell a 30 percent stake in brewer BRALIRWA, 25 percent to the public and 5 percent to majority owner Heineken (HEIN.AS). The listing could take place either side of the Aug. 9 poll. [ID:nLDE63816A]

CMAC says the IPO reflects the government's confidence in the strength of the domestic economy. Officials predict double digit growth in two years, up from around 5.5 percent in 2009.

-- The sale of the government's 10 percent stake in telecoms firm MTN has been slated for 2011, CMAC says.

-- For now, Rwanda has no plans for a Eurobond. Last year, ratings agency Fitch gave Rwanda's long-term foreign foreign and local currency Issuer Default Rating a B- rating with a positive outlook and a country ceiling also at 'B-'. (Editing by Richard Lough and Philippa Fletcher)

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