Rwanda plans to borrow $1 billion from the international market next year to finance key infrastructure after private investors got cold feet.

In an interview during the US-Africa Leaders’ Summit in Washington, President Paul Kagame said the money would be used for construction of a new airport and power plants.

The government has been forced to consider borrowing after foreign investors backed out of funding key projects to sustain economic growth.

“We are working at it now, we believe by the end of the year we will decide where the money will be invested and how much will be allocated,” Claver Gatete, Rwanda’s Finance Minister told The EastAfrican.

Mr Gatete said the new airport was among the strategic projects that would provide an efficient infrastructure underpinning the growth of various economic sectors.

The $600 million Bugesera International Airport had initially been scheduled for completion in 2016 but construction is yet to begin. However, expropriation of land where the airport will be located is ongoing.

The new airport will be constructed in the Bugesera district 25km southeast of the capital Kigali.

With an initial peak hour capacity of 450 passengers, the airport is expected to handle more than three million passengers per year in 2030.

Initially, in 2011, the government had advertised a 25 year concession contract to design, build, finance and maintain the airport under a public private partnership.

Three firms were short listed including the China State Construction Engineering Corporation (CSCEC). Negotiations with the firm stalled after the government balked at the Chinese firm’s quotation.

“We are still talking to private investors,” Mr Gatete said. PricewaterhouseCoopers is the transaction adviser for the project.

Bugesera would help decongest Kigali International Airport (KIA) which is operating beyond its capacity of 300,000 passengers a year. The airport handled about 534,000 passengers last year up from 460,000 passengers in 2012, 356,000 in 2011 and 305,000 passengers in 2010.

The Rwanda Civil Aviation Authority is upgrading KIA to international standards at an estimated cost of $17 million. The upgrade will increase its capacity to 1.5 million passengers annually. The expansion is set to be completed before the end of this year.

Regional and international airlines like KLM, Turkish Airlines and Qatar Airways use the airport in addition to the national carrier RwandAir. However, the expansion is expected to address the constraints only in the short term.

“The expansion will triple the capacity, but there are limitations,” John Mirenge, the national carrier’s chief executive officer, said.

Mr Mirenge said that with Kigali’s goal to become a regional conference and tourism hub, passengers, many of them in transit, would require spacious lounges and holding areas.

RwandAir has introduced new destinations to West Africa, South Africa and Dubai in addition to increasing flights to traditional destinations. It is expected to add new destinations, including Angola’s capital Luanda and Cameroon’s capital Yaounde, in the next few months.