USAID unveils five-year funding for Rwanda’s agricultural SMES
The US Agency for International Development has launched a $44 million fund to allow farmers in Rwanda to obtain capital for agricultural production. The funds will be made available under a five-year project aimed at increasing loans and investments to small and medium businesses in the agricultural sector and is estimated to create 30,000 jobs. According to the Eastern Africa Crop Monitor Bulletin, intra-eac trade declined in the second quarter (April-june), due to increased supplies of staple grains from Rwanda, Tanzania, Uganda and Burundi. According to the bulletin, improved output in countries that harvested within the second quarter led to reduced demand for imports. For crops such as beans, the output was affected by wet conditions and supplies in the third quarter (July-september) is expected to be tight.
Private investors implementing Ethiopia’s largest geothermal power project have applied for a risk guarantee from the World Bank, citing political uncertainty in that country.
The application by Tulu Moye Geothermal Operations (TMGO) Plc, who are building a $2 billion plant, comes at a time when the new administration of Prime Minister Abiy Ahmed is implementing reforms that have been credited for raising investor confidence even as it deals with political and security challenges.
TMGO submitted an application to the Multilateral Investment Guarantee Agency (MIGA) for a risk cover of up to 15 years for its $58 million investment in the first phase of the project. It is seeking a $52 million risk guarantee for the project against unforeseen eventualities such as breach of contract, expropriation, war and civil disturbances.
MIGA, a member of the World Bank Group, offers political risk insurance and credit enhancement guarantees that help investors protect investments against political and non-commercial risks in developing countries.
TMGO is owned by Meridiam, a leading global infrastructure fund manager, and Reykjavik Geothermal, a specialised developer with a long-standing presence in Ethiopia.
The pursuit of political risk insurance for the Tulu Moye project is an indication of the jitters that often engulf private investors not only in Ethiopia but across most African countries. Although investors are flocking to Ethiopia, one of the fastest growing economies in the world, Prime Minister Abiy is working to restore stability and renewed optimism through widespread reforms, but investors remain cautious.
“Ethiopia’s economic situation remains difficult and the fast pace of the recent reforms risks opposition,” said Jan-pieter Laleman, risk analyst at Credendo, one of Europe’s largest credit insurance firms.
While the Tulu Moye project, which is to be implemented in eight years, is expected to have a total installed capacity of 520MW, the application to MIGA is for Phase I, which will have a capacity of 50MW and is expected to cost $250 million.
MIGA said in a disclosure statement that its board will meet on November 1 to make a decision on the application.
In East Africa, MIGA has also guaranteed the Bujagali hydropower project in Uganda with a gross total exposure of $125 million. The cover is for a period of up to 20 years against the risk of breach of contract.
It is also involved in the new Bugesera International Airport in Rwanda, where it is offering a guarantee of $150 million against the risks of transfer restriction and inconvertibility, expropriation, breach of contract, and war and civil disturbance for a period of up to 15 years.
Geothermal wells at Olkaria in Kenya, the only country in the region generating electricity from geothermal sources.