Donnah Rubagumya
Africa-Press – Rwanda. In my previous opinion piece, “Africa, when will you listen to me?”, I urged Africa to harness future revenue streams through innovative financial engineering and tools like Safekeeping Receipts (SKRs), Standby Letters of Credit (SBLCs), and Special Purpose Vehicles (SPVs), moving beyond aid and loans that come with strings attached to them. Rwanda’s Nyabarongo II Multipurpose Dam, under construction between Kamonyi, Gakenye and Rulindo districts in Southern and Northern provinces, is a prime candidate to ignite this revolution.
The dam, a $214 million project funded by a China Exim Bank loan and built by Sinohydro under a build, own, operate, and transfer (BOOT) model, will transform Rwanda by 2027. Its 43.5 MW hydropower plant will add 11.5% to Rwanda’s 224 MW grid capacity, irrigate 20,000 hectares, control flooding, and supply water to Kigali, Kamonyi and Bugesera.
The 67-km artificial lake across eight districts will drive tourism through water sports, hotels, and fishing, while enabling maritime transport and real estate. These cash flows from electricity, tourism, hospitality or real estate and agriculture, could yield $400–600 million in net present value over 20 years.
To maximize the economic potential of Nyabarongo II Multipurpose Dam’s 67-km artificial lake, Rwanda could extend expropriation beyond the 50-meter environmental buffer zone to secure additional land for high-end real estate development. This expanded land acquisition, encompassing prime lakeside areas across eight districts, integrated into the SPV’s masterplan, designed to create a vibrant economic hub with resorts, residential complexes, and commercial spaces modelled on global waterfront successes would boost future projected revenues making the project more attractive.
Under BOOT, I bet the Chinese is interested in the quantifiable part of the project, electricity that is to be supplied to the national grid. Yet, Rwanda needs more. Expanded expropriation for 3,400 households ($60–100 million) and high-end lakeside real estate ($500–800 million) require additional financing.
By collateralizing the project’s revenues from hydropower, tourism, real estate and agriculture, Rwanda could secure $500-700 million for expropriation and high-end real estate along its 67-km artificial lake, setting a precedent for Africa’s financial awakening. What if Nyabarongo II became the spark that redefines how the continent funds its future?
To begin, Rwanda can structure these cash flows into a Safekeeping Receipt (SKR), certifying them as reserved assets. Hydropower sales, estimated at $5–10 million annually based on regional tariffs ($0.15–0.20/kWh), could generate $100–200 million over 20 years.
Tourism, could yield $30–50 million yearly from lake-based activities, food and beverages and accommodation. Real estate could generate over $3000 million, while irrigated agriculture could add $5–8 million annually. With a net present value of $500–700 million at a 5% discount rate, these revenues, validated by independent audits, as I emphasized, form a robust SKR. This scroll of trust signals to investors that Rwanda’s future is bankable, not a beggar’s plea.
Next, Rwanda’s commercial banks, in partnership with firms like MAEC Capital in London, can use the SKR to issue a Standby Letter of Credit (SBLC), guaranteeing payment if revenues falter. This tool, a “shield of trust” under global financial rules, can secure the $700 million needed for expanded expropriation and real estate development. The current Rwf70 billion (~$60 million) for resettling 3,400 households may increase, and developing high-end resorts, residential complexes, and commercial hubs along the lake, modelled on projects like Cape Town’s V&A Waterfront, could require $350–400 million. An SBLC assures investors, from private equity to alternative development financiers, that their capital is safe, addressing the risk aversion I noted in global markets. Transparent projections, backed by Parliamentary Acts as I advocated, would legally bind Rwanda to honour this guarantee, fostering confidence.
To ensure discipline, Rwanda can establish a Special Purpose Vehicle (SPV), a bankruptcy-proof fortress to manage Nyabarongo II’s revenues.
The SPV would collect cash flows from energy, tourism, and agriculture, allocating funds transparently: $60–100 million for fair resettlement with modern settlements, $350–400 million for real estate to transform the lake into an economic hub, and the rest for maintenance and community development. This structure, as I argued, protects against “greedy hands or political storms,” shielding revenues from corruption or mismanagement. By partnering with experts like MAEC Capital, Rwanda can design the SPV to meet international standards, making Nyabarongo II a beacon of the transparency I called for, unlike the opaque loans that have bruised African sovereignty.
This approach positions Nyabarongo II as a model for Africa’s financial awakening.
Unlike commodity-tied loans that collapse with market swings, the dam’s diversified revenues, energy, tourism, hospitality, transport, real estate, agriculture, reduce risk, aligning with my critique of old methods. By leveraging future cash flows, Rwanda can negotiate with global markets “as a giant, not a ghost,” securing fairer terms. The project’s local impact, employing 700–1,000 Rwandans and using local materials, echoes my vision of African-led progress, while its environmental measures—bamboo planting, a 50-meter buffer zone—reflect the discipline I urged for. Rwanda’s gorilla trekking permits, which I highlighted as a bankable asset, find a parallel in the lake’s tourism potential, reinforcing the country’s innovative spirit.
Yet, challenges loom.
Rwanda’s central bank must navigate global standards like Basel III, perhaps revising IFRS for African realities as I suggested, to ensure the SPV’s viability.
Nyabarongo II can light the path I envisioned for Africa. By collateralizing its revenues, Rwanda can secure $700 million to complete expropriation and build a vibrant lakeside economy, proving that Africa’s wealth lies in its future flows, not just its minerals. As I pleaded, Africa must awaken or fade. Nyabarongo II, like quite a lot of Africa’s untapped wealth, is a spark of what’s possible.
Let Rwanda rise, showing the continent how to wield its pen and write its own saga.
Source: The New Times
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