Master Steel, one of the largest manufacturing companies in Rwanda, has entered into a landmark transaction agreement with Investec, which acted as co-mandated lead arranger in a facility worth US$25m. The funds raised will be used to enhance Master Steel’s financial capacity to import more raw materials to satisfy the current market need – both locally and regionally.
Rwanda’s manufacturing output for 2022 was $1.32B, a 29.94% increase from 2021 and considering the ambitious plans for industrial and social development, this is likely to increase.
Rwanda is often regarded as one of Africa’s economic and development success stories – an achievement underpinned by several factors, including political stability for almost two decades and a range of economic and structural reforms, including a strong emphasis on public sector investment. Furthermore, despitethe global challenges of high inflation and the knock-on effects of the war in Ukraine, the country has rebounded strongly since Covid-19 growing by 8.2% in 2022. According to the World Bank, Rwanda is also now aspiring to middle-income country status by 2035 and high-income country status by 2050.
Despite this, the country is still highly dependent on public sector investment, which has meant high fiscal deficits and public sector debt (estimated at 71% of GDP).
“To achieve these ambitious goals, Rwanda will have to tackle many challenges, including reducing poverty even further and encouraging greater private sector and international investment,” says Nonkululeko Dlamini, a consultant in structured finance solutions at Investec Bank, and a member of Investec’s African Structured Debt Solutions team. “We believe that Rwanda’s business-friendly environment will ensure that the country remains an attractive destination for foreign investment, as it further diversifies its economy and develops trade in the region. Over the medium term, Rwanda is also likely to remain amongst the economic outperformers in sub-Saharan Africa and we are encouraged by Master Steel’s building capacity now and for future growth.”
“In addition to growing its domestic market, Master Steel aims to contribute to trade with key neighbouring countries,” says Teddy Ndayambaje, General Manager of Master Steel. “Increasing the export sales in neighbouring countries is one of our key strategies to increasing sales, in hard currency, while reducing any challenges related to foreign currencies while importing raw materials.”
Master Steel is just one example of the fruits of Investment facilitation in Rwanda that can help it grow its gross fixed capital formation (GFCF). “This is Investec’s first corporate deal in Rwanda, and we are proud to have been able to support one of Rwanda’s largest manufacturers in its growth by arranging this facility alongside Etihad Cap Africa and I&M Bank Rwanda. This deal aligns with our strategy of exploring new markets in Africa while partnering with trusted partners on the ground,” concludes Rowan King, Head of Business Development and Origination in Africa at Investec.