19th August 2004.
Rwanda in crucial privatisation phase

By Emmanuel N. Mugarura

“We have disposed off about 50 percent of what we are supposed to sell but the stage we have reached is the most crucial in the privatisation process,” Mr Bonaventure Niyibizi told The Weekly Observer during an interview in Kigali.

Niyibizi is the chairman of the Rwandan Privatisation Secretariat, the organ mandated by the Ministry of Finance and Economic Planning to dispose off government owned enterprises.

In 1996, the Rwanda Government decided to sell off all companies they deemed unutilised to the private sector or to give them out to better managers on concession or management contracts.

rwa3a: SATISFIED: The Director of the Privatisation Secretariat of Rwanda, Mr. Bonavature Niyibizi.

“We are trying to be as transparent as possible, as we reach the most sensitive enterprises that affect people’s welfare directly,” Niyibizi said.

First went the timber industries and other enterprises where government had shares. The privatisation process has now spread to major utilities and service providers such as electricity, telecommunication and banking.

“It’s not a matter of just selling off companies. We go slowly but make sure that the company is going to the right hands,” Niyibizi said.

The Rwanda Cabinet identifies a company to be privatised and notifies the secretariat, which then advertises for buyers in both the electronic and print media.

Bids are received and opened through an open process which involves all bidders. “All the interested parties are involved from the beginning to the end of the process. We don’t mind whether it’s a foreign or local investor as long as they meet our minimum requirements,” Niyibizi said.

This was in apparent response to complaints that many Rwandan companies have been bought by foreign investors. Niyibizi’s position is shared by Dr. Donald Kaberuka, the minister of Finance and Economic Planning. He too does not really mind who gets to buy the enterprises as long as the minimum requirements are met.

“I don’t mind if the foreigners are taking everything, if they are giving us value for money. They have not even taken 25 percent of what we have sold. I wish they could take everything,” Kaberuka told journalists as he announced the new owners of two former state-owned commercial banks.

“Our aim is satisfaction to all the interested parties; local or foreign,” said Niyibizi. Niyibizi added that in terms of opportunities, the best is yet to come.

Rwandatel, a state-owned telecommunications company is about to go; there are also six tea companies that are about to be sold as well as several hotels and banks.

“Basically, we are in the best and most crucial time of the privatisation process,” he said. Niyibizi explained that enterprises such as banks, electricity and other services need to be sold to the right persons to avoid the privatisation process backfiring. This is because such enterprises are relevant and so critical to so many people’s lives. After all, the whole idea of privatisation is to improve service delivery, management and profitability of former public enterprises.

The Rwanda Government has occasionally had to inject money into a collapsing company to make it more attractive to the private sector.

The National Bank of Rwanda [NBR] had to intervene and recapitalise the just sold Commercial Bank of Rwanda. The Government also injected money into the former Meridien Izuba Hotel to turn it into the magnificent Kivu Sun Hotel that will now be sold at an opportune time.

At the same time, privatisation does not mean that government is completely out of business. The privatisation secretariat still has the mandate to monitor the companies and evaluate their performance according to the plans they submitted at bidding time.

“We want better services and better performance of the enterprises. We want a serious roll out programme and a committed management plan.”

Niyibizi said that once the enterprises are sold and they start making profit, they make an even bigger contribution through taxes.

“The government has better things to invest in; the police, army, hospitals and schools, but not business,” Niyibizi said.
The government, he explained, is not effective doing business but comes in where there is a need or when the private sector cannot do the needful.

Niyibizi said the Government is needed as a partner in the development process. “We need each other. Partnership is crucial and once it is effective, the country will go to the highest levels of development,” he said.

Rwanda’s privatisation process is at different stages, depending on the enterprises involved. Niyibizi said that the government can sell off, liquidate or hire private managers. Concessions, upgrade and sell out are the other options available to the government.

GOING: Rwandatel’s display shop in Kigali. The telecommunications company will soon be on sale.

According to the official, the government’s decision to privatise and liberalise would enhance and strengthen the private-public sector partnership.

“There has been a decree… the government has been trying to enhance this partnership and we think it is the best way to go,” Niyibizi said.

In the case of enterprises where it is keeping minority shareholding, Niyibizi said the Government would just sit on the board of directors without taking any direct role in the day-to-day management.

This is meant to give the investors the freedom to run their companies they way they wish. Rwanda is in the process of setting up a Securities Exchange so that shares can be traded in a more organised way.

Next on the list for sale are four tea companies, printing companies, shares in various pharmaceutical companies and other enterprises where government still has an interest. Evaluation of these and many other companies is ongoing and once complete, the bidding process will start.

Niyibizi is upbeat that the privatisation secretariat got the best bargains for the people of Rwanda. “There are some cases where I am satisfied with the outcome. There are also those cases where maybe more could have been realised, but in general we have been successful,” Niyibizi said.

He cited the sale of the pyrethrum business as one of the key interventions the secretariat made. The sale resulted in better prices for the farmers and the quality of the product also improved greatly.

He said the Government is about to reap from the many new jobs created for the population as the privatised companies roll out and start making other investments across the country.

In addition, because of privatisation, employees have improved on efficiency. Workers understood that they would lose their jobs if they failed to improve on their work.

“Many employees went back to school for further studies and others realised the need to improve their work so that they can be retained if the companies are sold,” Niyibizi said.

Yet he knows there are some people opposed to privatisation and all it stands for. The secretariat’s response is to educate the population through the mass media and other campaigns so the citizens embrace and appreciate the process as something designed to improve the economy and create more opportunities for all Rwandans.

“We take a lot of time to talk to the media, members of parliament, civil society and stakeholders that privatisation is the way to go. Some agree, others have remained critical, but that’s what it is,” Niyibizi said.

When the privatisation process is complete, perhaps by 2006, the secretariat will remain to monitor and integrate the country into a fully-fledged private-public sector partnership accountable to all Rwandans.