Agaciro Development Fund was first introduced during the 2011 National Dialogue and launched in August 2012 with the aim of accelerating Rwanda’s economic development initiatives.
In an exclusive interview with Minnie Karanja of The New Times, Jack Kayonga, the Chief Executive Officer of Agaciro Development Fund, discussed the successes the Fund has registered since inception and how it has positioned itself to support Rwanda’s development aspirations.
What is the Mission of Agaciro Development Fund?
Our Mission is to maximize the fund’s return over the long term, without undue risk, so as to reduce Rwanda’s debt burden and secure a better Rwanda for future generations.
How would you describe your performance and achievements since the fund started?
Today the fund stands at 37.5 billion Francs and is still growing. We are very pleased with the performance and resilience of the fund in the past 3 years. The strength of our portfolio and the intrinsic operating leverage in the fund really came through with these results.
We grew revenues by 3.6 billion and Profitability grew by 3.7 billion, delivered a record Net Profit of 7.7 billion, which represented a year-on-year growth of 88% from the same period last year.
These results demonstrate that Agaciro Fund is a profitable model that can be built upon and further leveraged.
Looking at our balance sheet, we registered strong growth. Our balance sheet grew by 28% to around Rwf 35.1 billion up from 27.3 billion last year – a strong testament of the trust from our contributors, the business and the brand “Agaciro”.
Overall, the last year has been very positive for the fund and on behalf of the Executive Committee, I can confidently say we have started the new financial year with continued growth. I would like to thank all Agaciro Fund staff for their dedication and focus on vision of the Rwanda leadership.
The fund has previously invested in government paper such as bonds and commercial banks’ term deposits, are there plans to diversify the fund’s investments?
Investment in fixed incomes was a deliberate investment decision, to enable us time to grow our internal capacities and capabilities without carrying a lot of risk and or holding idle capital. Diversification of our portfolio in a prudent commercial basis from fixed income to other investments is our major focus in 2016/2017.
What role is Agaciro Fund playing in stimulating Rwanda’s economic growth?
Agaciro Fund by mandate is structured to stimulate economic growth; we are yet to fully achieve this mandate as we have been focusing on growing the brand and size of the Fund. Unbeknown to most though is that we have invested over Rwf. 30 billion with almost all commercial banks and Micro Finance Banks registered in Rwanda, contributing close to 10% of the funds lent out by banks to their clients; implying we have indirectly contributed to 10% of lending to Rwanda’s Private Sector.
We have also invested over Rwf. 6 billion in Rwanda Treasury Bills and Bonds. These funds have been used by the Rwanda Government to stimulate economic growth, positioning us as a key domestic creditor to government.
Are individuals and companies still giving into the Fund? And what growth do you project given the trend in contributions?
Yes. Several members of our community have continued to contribute to the Fund on a monthly basis; at the risk of leaving out some, special mention goes to the senior leadership of Rwanda, the Rwanda Defense Forces and Rwanda National Police.
We also highly appreciate some members of the private Sector who have rigorously continued contributing and encouraged their staff to contribute.
However, most of our initial contributors, for several reasons, only contributed at the launch of the Fund. We have embarked on country-wide campaigns sensitizing people and understanding how better to mobilize resources. The feedback is very humbling and has resulted in increased contributions. Given the increased need of transparency and accountability, we will be publishing voluntary contributions to the Fund.
The Fund is the Government of Rwanda’s long term savings tool, so in appreciation of this the government resolved that it will be saving a portion of its domestic revenues with the fund, a percentage of privatization proceeds will also be saved with the fund. This was effected from budget year 2015/2016 with a contribution of over 3 billion Francs.
Further still, to encourage Private Sector contributions, the government resolved that all contributions to the Fund up to 1% of turn over by a company will be tax deductible. We highly appreciate this bold initiative in the right direction.
How are the contributions being managed to ensure accountability?
The Fund is managed by a competent management team under the able stewardship of the board with oversight from the Ministry of Finance and Economic Planning. The Central Bank of Rwanda is the custodian of the Fund which is audited by PricewaterhouseCoopers (PwC) and the Auditor General. The Minister of Finance also updates the general public on the performance of the Fund during the annual national dialogue meeting.
What dividends can contributors expect from the fund?
Agaciro Fund is a special vehicle created by the people of Rwanda, friends of Rwanda and the Government of Rwanda to pool assets together and invest them on a long term basis. Contributors to the Fund, invest to secure the Rwanda they want for now and future generations and appreciate that it’s their noble responsibility. This implies that the dividends will be indirect but with a high multiplier effect on our journey to financial autonomy as a country and a people.
In March this year the fund was admitted to the International Forum of Sovereign Wealth Funds (IFSWF). What does this mean for Agaciro Development Fund?
The International Forum of Sovereign Wealth Funds (IFSWF) is a voluntary organization of global sovereign wealth funds committed to working together and strengthening the community through dialogue, research and self-assessment. The IFSWF helps foster good governance practices within the membership by enabling members to share their unique experiences of applying the Santiago Principles (Governance Benchmarks) with each other. By sharing experiences, within the Forum, we will be able to improve and align our governance and accountability structures and practices.
The Forum helps represent the views of its members to the wider financial community. It provides a contact point through which members can collaborate with multilateral finance organizations and, where appropriate, engages with the media on issues of interest to the membership. The IFSWF seeks to help members raise their expected risk-adjusted returns through research and peer assistance on investment practices, asset allocation and financial risk asessment. The Forum works with academic and practitioner experts to help members fulfill their mandate in an increasingly challenging and complex investment environment.
What should the public expect from the Fund this year?
This year we will continue investigating the different potential investment opportunities available to enable us diversify our portfolio and increase the return on investments. We will also focus on evaluating what it costs us to invest and identifying opportunities to improve cost effectiveness especially outside of Rwanda.
Public accountability is important to us and we will endeavor to provide better and effective communication with all stakeholders, while strengthening our internal capacities and capabilities.
What are your closing remarks?
I wish to thank all our stakeholders: Government of Rwanda, Contributors, the board and staff for their continued support to the Fund. We reaffirm our commitment to deliver for the betterment of today and future generations.
Source: The New Times