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Who owns Crystal Ventures
Published on 28-01-2013 - at 02:07' by Magnus Mazimpaka

Following the 1994 genocide in Rwanda the country was written off in almost everything.

The surviving population was looking up to the new leaders not only for political leadership but also pulling the country out of the abyss it had fallen.

RPF seems not to have disappointed. It used the balance in its war kit to embark on the long journey of reconstructing the country with the creation of Crystal Venture as its development arm Dispatch’s Magnus Mazimpaka talked to the company’s Chairman NshutiMannaseh.

What is the value of Crystal Ventures at this moment?

The worth of a business is not a constant figure. It is based on cash flows, based on sales volumes and based on good will, but the company is worth around U$ 500 million.

There is conflicting knowledge about Crystal Ventures’ ownership and its investment philosophy. Some people relate it to RPF, some relate it to government, while others relate it to members of RPF. Is this Crystal Ventures’ deliberate strategy?

I think that is lack of information, wrong perceptions and prejudices.

Crystal Ventures is an investment arm of the RPF, where the party invests with other shareholders in different ventures. We get no favours from government.

The party simply happens to be a shareholder. Party members had their money and decided to invest that money in ventures that are profitable.

But one has to look at it from a certain perspective. We had a country that had been shattered by the genocide. At that time people didn’t have hope that the country would bounce back.

There were no numbers to attract an investor; and the environment was crazy.

For instance at that point, everyone needed water, milk, juice and so on, and yet nobody would have invested in a venture like Inyange ltd.

We also invested in construction where nobody could invest or did not want to invest. Most of the Rwandese businessmen at the time were speculative and wanted to make quick money.

Nobody would have put money in a construction company.

I mentioned this when I was still the Minister of Commerce and it was not well received. We realized it was not good business and not good for the economy either.

So, RPF decided to invest in areas where nobody could invest, partly because people didn’t have money to invest, but also we did it to give hope to Rwandans that the country would bounce back.

We had to send a signal that there was something happening to other investors.

Can you explain more about that investment philosophy or approach?

We are in business to make money, but we are also mindful of our customers.

We balance the issues of profitability and social responsibility, by investing in profitable areas that can sustain business, and areas where government would want investors, but they are not there.

We invest in such areas knowing we shall make money in the long run.

Let’s set the record clear. Is crystal Ventures RPF’s company or it belongs to RPF members?

Crystal Ventures is for RPF members, much as we share other investments with other shareholders such as Social Security Fund CSSR, private and foreign investors.

The board-elect looks at the interests of RPF as a party, not individuals. No individual has money in Crystal Ventures.

No individual will come and ask for a cheque. In any case, the money that was invested in Crystal Ventures was money left after the war.

You were Minister of Commerce, Finance, held different strategic government posts, including being advisor to the President. Now that you are Chairman of Crystal Ventures, how do you personally not push government in that regard?

No Government policy favours Crystal Ventures because the company is purely private.

If you bring Politics, then you are not in Crystal Ventures. We had money after the war. So we said what do we do with the money?

Can we use it to transform the economy? And, how best can we invest this money, because the party eventually needs money for elections and so on.

Instead of the party going to private businesses to finance its activities, which company will hold the party hostage; RPF chose to run its businesses to generate funds to fund its activities.

Of course that was motivated by the fact that RPF wanted sustainable development.

You want to run business and make sustainable cash flows, then run it purely business. You want to kill it; run it politically.

Why wouldn’t RPF ministers, directors in government institutions and other politicians in decision making positions, make policies that favour Crystal Ventures?

Policies formulated by Government pass through the cabinet, which is not necessarily an RPF Cabinet.

But the majority of the cabinet is RPF?

Policies are debated openly, and I don’t think they debate with Crystal Ventures in mind.

Government policies are designed for the country irrespective of which players are there.

With the money RPF members had at hand, they chose to run its businesses to generate cash flows to monitor its activities.

Honestly, we have lost many bids, of course won some, but we have no favours at all.

For example, we lost bids in road and building construction. Most buildings are done by Roko. Strabag International has won road construction, and Chinese companies have won many bids as well.

We don’t complain to government because we know that the best bidders wins.

Can’t awarding a few contracts to other companies be used as blindfold to the public and protecting RFP from public scrutiny?

Crystal Ventures knows that favors are not good for business. We know you can’t survive on political favors.

If we had favors from government we would be making super profits.

What about theaccusation that while other investors struggle to get capital to invest, RPF picks money from government coffers and gives it to Crystal Ventures?

I have heard those accusations, and that is misinformation. First all, we don’t get instructions from the RPF secretariat, we run business purely on professional basis.

If that was the case, they would tell our bidders; ‘don’t go for the envelopes’ then order the tenderer [government institution]‘ to give it to Crystal Ventures but we haven’t had that scenario.

Does that mean you can’t take favours if they came your way?

Nobody would refuse favours. I wish I would get those favours, but we don’t get them, unfortunately. Secondly, it is not good business because you can’t survive on favors.

We don’t have favours at all from anybody. This is true. You can verify from the audits. Actually now we are fighting with the costs.

Rwanda, is to some extent a difficult terrain; but very profitable. Crystal Ventures seems to have mastered the Rwandan market more than any other investor. Can you share with us your experiences?

There are advantages and disadvantages. The advantage is that, you can make money [in Rwanda] if the investment is right.

Two, because it’s virgin you can reap money in the first few years before other people come in. But also we have a disadvantage that, the investment may not pick up as faster as you would want it.

RPF went into green investments because nobody was willing to invest in. At the time [after the genocide] we needed a local company as a back-up,for example to do construction.

We invested in high-end machines. We took risks upfront to invest to avoid a scenario of a foreign company failing and then leaving, yet we dint have roads.

Or if Inyange was in the hands of a private person, and he says ‘look, I am not producing milk’, then it is our farmers in Nyagatare or elsewhere that would be in a loss.

I think these are strategic investments that we went into for the benefit of the economy.

Of course we make money, but not a lot. Basically, we go where no one wants to go .

These days we get some money from the banks, in the past we used our own money [savings from the war contributions] to invest, but now sometimes we borrow money from the banks to do the various investments.

Is it because the money from RPF has dried up?

The investments have become quite numbered and the cash flows were not balancing because some are just start-ups, we kept sinking in money down the road.

What is the biggest challenge in the market that fellow investors should know about?

The East African integration has brought in a crazy competition. We have milk from Uganda, which is cheap. Imagine milk all the way from Kampala, but is cheaper than Inyange’s.

There must be something wrong in pricing or they are dumping, or there is corruption; they probably don’t pay taxes at the border. How do we have milk from Uganda that is at the same price or even cheaper than ours?

Water from Kenya is cheaper than ours ,not because Kenya has more water than Rwanda, but what goes on between the company and the market.

The manipulation that goes on is that immense. I can tell you it has nothing to do with the cost, but the manipulation.

You can’t tell me you will transport water from Nairobi and compete with us in Kigali. No.

You can’t if you consider the transport, tax, raw materials, etc.

But assume you put off the tax, and you understate the cost, which most of those companies do, there you can compete.

Are you suggesting Rwandan companies are not benefiting from the EAC integration?

The raw materials in those countries are much cheaper and they have economies of scale.

It is common talk here that Rwandan companies are feeling the heat from the East African integration.

We can’t compete. We would if the field was leveled. In Rwanda we pay taxes for everything, which may not necessarily be the case with the companies in those countries.

That makes the prices of our products slightly higher. But how are you going to compete with someone who has ten containers, pays for one and the rest are duty-free? By the way, there you can even import raw materials duty-free. We can’t do it here. We pay taxes for everything.

There is a public outcry that your products and services are overpriced. The President made similar comments at the launch of the East African Granite Factory.

We sell at the price that can make us earn a profit. However, maybe the president was right given that the average people cannot afford to buy some of the products.

Well, let us go back to RPF. How do RPF members benefit from Crystal Ventures, and who exactly benefits?

If the party wants dividends from our operations, we get it, instead of asking private businesses for funding, like it is done in the western world, in which case company X would ask for benefits in return.

We don’t want anybody to hold the party at ransom. It also gives the party the clout to intervene when nobody can.

Who does Crystal Ventures report to?

It depends on the investment. If it is a co-investment, we report to shareholders. If it is a sole investment, we report to RPF for example, presenting financial reports.

Some members who have fallen out with the RPF, like Karegeya and Kayumbasay the RPF elite class is the only beneficiary of the dividends in Crystal Ventures.

Kayumba knows that we have never used any government money, not even a dollar.

Actually it is the RPF that lent the Central Government money, after the war the Central Bank was broke[bankrupt]. People had looted all the local and foreign currencies.

It is the RPF which lent the Central Government US$9m and government has not paid back that money.

You don’t just take money from the Central Bank, the IMF is there to monitor how government is using the money especially if you have a program funded by them.

Why should the public believe your story and not theirs? You have the power, everything at your disposal, besides they know how RPF works, don’t they?

It is even bizarre to argue that RPF members use government money for their own good.

I can assure you that nobody whether a minister or the president can go to the Central Bank to order for the release of money.

Nothing comes from the Central Bank to Crystal Ventures in terms of money, absolutely nothing.

But Kayumba was on the Board of Directors of Crystal Ventures, so he knows what he is talking about, doesn’t he?

Yes, he was and he knows the truth. Money for Crystal Ventures belongs to members of RPF and the party used part of it to fund its activities.

In the previous elections, Crystal Ventures financed 50% of the RPF budget.

And we are also going to finance the RPF Silver Jubilee celebrations to the tune of Rwf 300 million, which is basically the whole budget.

It should have been the other way round for members to contribute.

How much is the president involved in terms of overseeing both the success of Crystal Ventures and the RPF?

The President being the Chairman of RPF makes him the Chairman of Crystal Ventures but not in the sense of operations.

As the Chairman he would want to know how we are doing, but not on the day-to-day basis.

We may report to him at the end of the year. He is not involved at all in the day-to-day running of the business because he doesn’t have that time.

He trusts that the decisions taken by management are for the good of the businesses.

How do you explain that the president, with vested interests in RPF and Crystal Ventures, going to separate the interests of the two from public interests?

The president doesn’t and can never get involved in the policies that favour RPF and it businesses. If anything he can only get involved in policies that favour the whole business community in Rwanda.

He is the Chairman of RPF, but he is the President of the country as well.

If there was a policy that was not in favour of the whole business community in Rwanda we would approach the Private Sector Federation to engage government for the benefit of all businesses in Rwanda.

Tell me about the offshore investments of RPF?

We have invested in stocks onshore and offshore across the world.

Do you intend to have bigger investments in different countries?

Yes, we have that vision but it depends on the cash flows. Right now we need to consolidate our businesses. Quiet a number of our businesses are start-ups.

And you don’t take on another risk before you do away with the current risks of the start-ups. You take on new risks when you know you have a strong background.

Do ordinary Rwandans benefit from Crystal Ventures?

The benefits are immense. We employ 70,000 people directly and when you add on indirect jobs including contracts, it can go up to 10,000.

Investments in Inyange benefits farmers who supply milk because we pay them. Crystal Ventures has constructed feeder roads in rural areas where other companies were not willing to invest.

Crystal Ventures is among the big taxpayers in the country. I think people should be appreciative that it was a brilliant idea to establish Crystal Ventures.

Crystal Ventures will keep on growing as a big holding company, of course subject to consolidating our investments and going to the regional market.

We need to have another Inyange in Uganda and Burundi. We need also to continue investing in the areas where people don’t want to invest in or don’t have money to invest in.

Rwanda Dispatch story

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