Rwanda: The RPF builds a formidable business group

Within days of seizing power in 1994, the victorious Rwandan Patriotic Front (RPF) was taking charge of everything from the supply of plastic chairs and beer to bars, the harvest of coffee, to the financing of government. It lent $9m from war reserves to resuscitate the state.

Even suits worn by the first ministers to take office were purchased with RPF funds, says James Musoni, the local government minister who used to run the movement’s business affairs.

It is a legacy that lives on. Having been so pre-eminent when rebuilding the state from scratch, the RPF has retained a dominant position in many walks of life.

The movement’s investment arm, Crystal Ventures, controls assets worth more than $500m inside the country, according to insiders.

The group owns a construction and road-building company, granite and tile factories, a furniture company, a chain of upmarket coffee shops (in Kigali, Boston, London, Washington and New York), a real estate developer and an agro-processing venture, Inyange. It also retains a stake in MTN, the leading mobile phone operator.

This makes it perhaps the largest quasi-private business venture in the country, and with 7,000 staff, the second-largest employer after the state. It also puts the ruling party in an enviable position when it comes to financing politics. Relative to the size of the country, the RPF is one of the best endowed political movements in the world. In the subregion, only Ethiopia’s ruling EPRDF, under Meles Zenawi, the recently deceased prime minister, has built a more formidable business empire.

Professor Nshuti Manasseh, chairman of the board of Crystal Ventures, says half the RF1.5bn ($2.4m) cost of RPF campaigning in 2010 elections was met by donations from party members, the other half from company coffers. “We came in when contributions fell short,” he says. “From the beginning, we said we should have our own resources so that we are not indebted either to business people who want favours or foreign people like Gaddafi,” says Mr Musoni, referring to the late Libyan leader’s penchant for using cash for influence among his African peers.

The RPF’s money originally came from the contributions of members of the ethnic Tutsi diaspora. Parts of the community were driven out of the country by pogroms in 1959. They lived in enforced exile in neighbouring Uganda and further afield until returning following the 1994 victory of Paul Kagame’s guerilla army.

By necessity, at first, the RPF pioneered new business. Initially, according to Mr Musoni, this involved trading, financing small enterprises, and taking charge of the coffee crop that had been left to rot. But with time, the movement’s investment arm became more strategic.

In 1995, it launched Inyange, an agro-processing venture that has grown into one of Rwanda’s largest companies producing bottled water, milk and fruit juices. In 1998 it persuaded South Africa’s MTN to provide mobile phone services in what looked then like a marginal market. The RPF fronted much of the capital required. Crystal Ventures has since sold down its 49 per cent stake twice, earning $110m, according to Prof Manasseh.

It was a shrewd investment. Less so, perhaps, was what happened to the proceeds. The group bought two executive jets, which it then leased to – among others – President Kagame, from a base in South Africa.

Nor has that been the only controversy involving RPF-linked businesses who were accused by UN experts of plundering mineral resources during neighbouring Congo’s wars. Another frequent charge is that they have crowded out other investors, and enjoyed favoured status when it comes to government contracts.

Crystal Ventures’ Intersec, for example is the only private security outfit authorised to carry arms. “Where there is lucrative business they control it. Things are not as open as you think,” says a prominent business person in Kigali.

Prof Manasseh however, rejects the charge. “Our objective is not to monopolise. The interest of the party was to run businesses if there were no other investors,” he says.

Crystal Ventures is now considering selling Inyange (Kenya’s Brookside, owned by the Kenyatta family is interested). It intends to sell out its “Bourbon” coffee shops for franchise, and is debating whether to offload its 20 per cent stake in the Rwandan Investment Group, a $70m venture capital fund. Mr Musoni says, the party also plans to list several interests on the Kigali stock exchange.

All this would leave Crystal Ventures flush with cash for new investments

By William Wallis

Financial Times