Rwanda’s sovereign wealth fund outlook

Rwanda’s sovereign wealth fund, Agaciro Development Fund, has recently made headlines with its announcement of an $8 million investment into the capital stock of the Eastern and Southern African Trade and Development Bank. In a recent interview with CNBC Africa’s Julius Bizimungu, the Fund’s CEO Gilbert Nyatanyi shed light on the fund's investment strategies and outlook for the future. The Agaciro Development Fund, established as an income-collecting fund, initially focused on low-risk investments such as treasury bonds and term deposits. However, Nyatanyi revealed that the Fund is looking to diversify into other asset classes to enhance its portfolio. Although uncertainties loom over the global economy with rising inflationary pressures, the timing of the investment in the TDB was deemed opportune due to the institution's solid reputation and past returns on equity. Nyatanyi emphasized the importance of reviewing the fund's strategy to align its investments with long-term goals, hinting at a potential shift in asset allocation. Currently, the fund's assets under management stand at $273 million, with a significant portion allocated to equity investments (74%) and fixed income assets (24%). The Fund's investment portfolio includes holdings in over 30 companies, with a focus on sectors such as finance, agriculture, and information technology. Despite the average return on equity being relatively low at 3.3%, Nyatanyi outlined a plan to increase this figure to a target of 5-15% by strategizing on portfolio optimization and value maximization. The CEO also addressed the challenges posed by the phasing out of contributions, highlighting the impact on the fund's financial stability. While government injections remain an option for sustainability, Nyatanyi emphasized a shift towards diversifying asset classes and exploring opportunities in real estate, private equity, and venture capital. With ambitious aspirations to grow the fund's asset value to $1 billion, Nyatanyi set a target for achieving this milestone by 2030, underscoring the Fund's commitment to prudent investments and strategic growth.