 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.
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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. |
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