 BACKGROUND |
Rwanda 's Government of National Unity has
embarked on a programme of comprehensive economic
and social reforms necessitated by the tragic
genocide which befell the country in 1994.
Recognizing that the principle of economic growth
in Africa and elsewhere has been the private sector,
Rwanda felt it should not be left behind and has
put in place an ambitious Privatization Programme
of its state-owned enterprises. This programme
was established by the Law n°2 dated 11/3/96
on Privatisation and Public Investment. The Presidential
Decree n°08/14 dated 3/5/96 put in place the
institutions to implement this programme. In October
1997, the Privatisation Secretariat actually started
its work.
The privatisation law gives Government the power
to liquidate, rent or transfer partly or totally
any public institution or company, or whatever
other State service:
o if the management of the company is considered
non-profitable;
o if the State wants to pull out of a commercial
or industrial operation;
o if the (social) purpose establishing the company,
has been reached.
A total of 72 companies is to be privatized. At
this moment, 23 of them have been sold, 17 are
in the process of being privatized, 25 are currently
being evaluated and for 7 others the evaluation
will start this year.
Privatization in Rwanda, like everywhere else,
carries with it a number of challenges and opportunities.
The way the players in the field respond to these
challenges will determine Rwanda's economic future.
On the other hand, the range of opportunities
for investors runs the gamut from acquiring a
growing business to increasing efficiency through
better management of the acquired enterprise.
A crucial underlying assumption is that privatization
is not an end in itself, but can be an instrument
for making the government more efficient and the
economy more productive when it is part of broader
social reforms.
Ultimately, the success of privatization depends
on developing a fully functioning market economy.
Rwanda will continue its liberal economic policies
and our privatization policy will remain consistent,
predictable and transparent.
| OBJECTIVES |
The objectives of the Secretariat are:
o To establish the Privatisation Programme's Work
Plan and to submit it to the Technical Committee
for adoption;
o To propose strategies for companies to be privatized
and to carry out financial and legal audits;
o To advertise the enterprises for sale and to
receive the bids from potential buyers;
o To evaluate the bids and to submit the evaluation
to the Technical Committee;
o To carry out public education campaigns about
the Privatisation Programme to explain its objectives
and benefits to the general public, as well as
to encourage private sector investment in privatised
enterprises;
o To facilitate post-privatisation monitoring
to ensure that the investors' obligations are
being fulfilled, that the Government's objectives
for each enterprise are achieved, and to provide
assistance to the investors where possible.
| INSTITUTIONAL
FRAMEWORK |
The Rwanda Privatization Programme is managed
in a manner that is designed to produce efficiency;
transparency; and public accountability in the
privatization process. It accomplishes these objectives
by the way it is managed and decisions concerning
privatization of public enterprises are taken.
The Rwanda Privatization Programme institutional
framework is comprised of three organs that manage
the Privatization Programme. These are the following:
o The Cabinet
In order to ensure public accountability and political
oversight over the Privatization Programme, the
Cabinet has the final authority to sell public
enterprises. Sales of assets and shares will,
except in special circumstances, and with prior
Cabinet approval be by way of competitive tender.
o The National Privatization Commission
The National Commission is charged with the oversight
responsibility and political management of the
Programme. In order to effectively discharge its
duties, the Commission must receive all bid evaluation
reports and recommendations of the Technical Committee
and, based on a thorough review of the reports,
the Commission will either give the go-ahead to
sell the enterprise as proposed by the Technical
Committee; approve the Committee's recommendations
subject to certain conditions and requirements
imposed by the Commission; or reject the recommendation
and instruct the Committee to re-advertise the
enterprise in question.
To adapt the Statutes to the new Government structures
it is proposed that the Commission be composed
of the following personalities:
- The Minister of Finance and Economic Planning,
Chairperson;
- The Minister of Commerce, Industry and Tourism;
- The Minister of Justice and Institutional Relations;
- The Cabinet Director of the President's Office;
- The Cabinet Director of the Prime Minister's
Office.
|
o The Technical Privatization Committee
The Committee performs the policy and strategic
management of the Programme, including:
- Adoption of the Annual Work Plan of the Secretariat;
evaluation of the tender bids;
- Negotiations with the bidders in order to obtain
the best offer possible;
- Recommending to the Commission the terms and
conditions of the individual sale transactions;
and ensuring that post-privatization monitoring
is done so that obligations assumed by the buyers
are performed.
The Committee is composed of the following:
- The Secretary General in the Ministry of Finance:
chairperson;
- The Secretary General in the Ministry of Commerce:
member;
- The Secretary General in the Ministry of Justice:
member;
- Economic Affairs Adviser in the President's
Office: member
- Economic Affairs Adviser in the Prime Minister's
Office: member;
- Legal Affairs Adviser of the Minister of Finance:
member;
- The Executive Secretary of the Privatization
and Public Investment Secretariat: member and
rappoteur;
- A representative of the Ministry whose enterprise
is being privatized, if it is not represented.
o The Privatization Secretariat
| PROCEDURES |
The implementation of the Privatization Programme
is carried out in a series of Annual Work Plans
which set out the priority activities for the
year and the enterprises which will be handled
during that time. In executing the annual work
plan, the following activities are carried out
in respect of the enterprises to be privatized:
1. Preparatory phase: financial and juridical
audits
The Privatization Secretariat starts by contacting
the instances concerned, specifically the line
ministry, the employees and management of the
company, the local authorities and any other institution
connected to the company or the field of activity
in question.
Furthermore, a juridical audit is carried out
to determine if the legal status of the company
allows for its privatization, and a financial
audit to examine if its financial situation can
raise the interest of potential investors. If
necessary, the company undergoes a restructuring.
2. The evaluation of the company
The company is evaluated in order to establish
its real value and to ensure the transparency
and the financial responsibility.
3. Preparation of tender
The preparation of the invitation to tender consists
of collecting the necessary information on the
company, in the aim of drawing up its profile,
preparing the terms of reference for the bidders,
the procedures and the qualifications requested
for the tender.
In case of strategic and large enterprises which
will require substantial capital investment and
world-class industry-specific know-how, the process
will require pre-qualification according to precise
criteria, to select eligible bidders.
4. Invitation to tender
The company to be sold is the object of an intense
publicity campaign in the media. The campaign
has to draw up the profile of the company, to
allow potential buyers to carry out an evaluation
before submitting their bids.
The tender documents consist of two main elements:
- Technical offer: The description of the technical
capacities shows the bidder's competence to manage
the company in question. This is completed by
the business plan, which gives details on the
anticipated evolution of the enterprise and allows
verifying if the buyer meets the Government's
objectives.
- Financial offer: The bidder has to specify the
price he offers. Except for specific cases, as
described in the manual of procedures, the offered
price has to be paid entirely at the execution
of the sales contract.
The bidders also have to pay a submission fee
worth 10% of the offered price.
5. Opening and evaluation of tenders
The technical offers are the first to be opened,
immediately after the closing session of the submission
period, as specified in the terms of reference.
The Privatization Secretariat will examine these
offers to make sure that the terms of reference
have been respected. If this is not the case,
the offer is rejected. The evaluation committee
will always verify if the business plan is satisfactory.
Secondly, the financial offers are opened. The
Privatization Secretariat will only open the offers
of bidders whose technical offer meets all the
requirements for submission and whose business
plan is acceptable. This takes place immediately
after the technical offers have been opened.
6. Report of the Evaluation Committee to the
Cabinet of Ministers
The results of the evaluation of the bids and
the recommendations are presented to the Cabinet
of Ministers for a final decision by the Interministerial
Technical Committee.
7. Negotiations with the winning bidder
Negotiations with the winning bidder are held
to specify the clauses to be included in the sales
contract.
The final sales contract is signed by the Minister
of Finance and Economic Planning in the name of
the Government, and by the new owner of the company.
8. Post-Divestiture Monitoring
The post-divestiture monitoring of the company
is necessary to ensure that the business plan,
proposed by the winning bidder, is respected.
This follow-up consists of controlling if specific
tasks are executed as agreed, and if other specified
objectives are met.
|
RWANDA
Back
