The Kigali government gradual withdrawal from the economy is to accelerate this year with the privatisation of the national carrier RwandAir and Bank of Kigali, followed by a string of IPOs.

The process aims to create a free and competitive environment in which the private sector can drive the country’s economic growth.

The process began in 1997, with 94 state-owned companies earmarked to go through the privatisation process to ensure the entry of innovative investors following the 1994 genocide.

According to a privatisation report, as of 2009, some 56 companies had already been privatised and seven liquidated while 19 companies were to be privatised in 2010.

The privatisation process is aligned to the country’s Vision 2020 programme — a development strategy that aimed to transform Rwanda into a middle-income country by 2020 with the private sector as the engine of growth, job creation and industrialisation.

According to the IMF, Rwanda’s economy can expand by 8.5 per cent this year, above its projection of 7 per cent growth.

However, this would require additional investment of between $200 million and $300 million or about 4-8 per cent of GDP annually over the medium term.

John Rwangombwa, finance minister told The EastAfrican last week that in a bid to fast-track private investment for economic growth, the government is increasingly bowing out of business.

“Privatisation is an easy way of bringing in investors but we also believe private investors run these businesses much better than government,” he said.

For instance, Kigali plans to privatise the national carrier RwandAir.

According to Mr Rwangombwa, the government is also using the privatisation process to support the development of the country’s budding stockmarket, the Rwanda Stock Exchange, launched at the beginning of this year.

Rwanda held its first initial public offering in November 2010 when the state sold 25 per cent of Bralirwa SA, a unit of Heineken NV, the world’s third-biggest brewer.

Currently Bralirwa is the only local listing on the RSE, along with two cross-listed companies, KCB and the Nation Media Group.

The government intends to stimulate both domestic and international investment in the RSE by issuing more IPOs.

In the next four years, it plans to sell off shares in at least five companies through the RSE.

The list includes MTN Rwanda, a sister company of South Africa’s MTN Group Ltd, insurance company Sonarwa, Commercial Bank of Rwanda (BCR), Fina Bank and the Cimerwa cement factory.

In July this year, the government will be selling its 25 per cent stake in the Bank of Kigali, the country’s market lender by assets.