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To the warm heart of Africa: OPIC investment mission to Malawi and Rwanda

May 05, 2014

By Benjamin Hunt – Special Assistant to the OPIC President

About 7,000 miles east of Washington, D.C., sit the Republic of Malawi and the Republic of Rwanda, two countries part of an African sub-region known as the “Heart of Africa.” Despite being officially acknowledged within the geo-political borders of East or Central Africa, Rwanda and Malawi prefer the warmer colloquial regional title for themselves. It is easy to see this pride: Rwanda Air’s motto is “To the Heart of Africa” and Malawi is commonly and affectionately nicknamed “The Warm Heart of Africa.”

During the last week of February 2014, I joined a small OPIC delegation, led by President and CEO Elizabeth L. Littlefield, on an investment mission to this region to further solidify our support there. With Africa possessing many of the world’s low-income countries, it’s a region with growing focus for us. OPIC’s projects in Sub-Saharan Africa now account for nearly a quarter of our global portfolio, up from six percent a decade ago. In 2013 OPIC committed $640 million to projects in Sub-Saharan Africa, representing a five-fold increase over our commitments in 2007. OPIC now has its first regional employee stationed in Africa, in Johannesburg, and our innovative U.S.-Africa Clean Energy Finance Initiative (ACEF) program is taking flight.

President Obama’s Power Africa Initiative has directed focus and is leveraging resources in new ways to address the 600 million Sub-Saharan Africans (70 percent of the population) without power. Since the announcement of the initiative last June, OPIC has taken a lead role by pledging $1.5 billion to African power projects by 2018.

OPIC Delegation and Lilongwe Embassy team and Elizabeth Littlefield

An OPIC investment mission fundamentally serves to boost investment into the host country; we arrive to investigate, analyze, recommend policy reform, and promote awareness of OPIC services.

Our team set out to visit Malawi and Rwanda, two aspiring nations in the Heart of Africa that have ambitious plans to advance their economies and boost the quality of life for their people. Through the help of the U.S. embassies, we held roundtable meetings with investors across all sectors to hear their insight into the investment climate. We met with Ministers to understand their long-term plans for investment and the investment policy landscape, as well as meeting with the Head of State to discuss growth strategies and emphasize the support of the U.S. Government.

In Lilongwe, Malawi’s political capital, U.S. Ambassador Jeanine Jackson introduced the top U.S. Government team on mission from USAID, USTDA, MCC, and the economic team from the Embassy. Over the next two days, we were privileged to meet next with Malawi’s President Joyce Banda, talk to investors across various sectors, as well as attend a Ministerial roundtable led by the CEO of Malawi’s new nexus for business and investment, the Malawi Investment and Trade Centre (MITC).

Malawian Landscape and Peter Ballinger

What struck me about Malawi was its modest development and the feeling that the economy has much room to modernize. In the capitol in Lilongwe, I noticed only two buildings that rose above the trees to be seen from a distance. It’s clear that the country relies heavily on the agricultural sector and has a very young business and financial sector. Agriculture makes up about a third of GDP and 90 percent of export revenues in Malawi. Maize and tobacco are the two largest agricultural commodities, with tobacco accounting for about 50 percent of the exports.

For the past five years donors have provided about 40 percent of government revenue; revenue that is often quickly put to use as agriculture and other subsidies. Foreign Direct Investment (FDI) pales in comparison to other countries in the region. Power access is unreliable and the energy grid does not extend far throughout the country. One investor we met operates a business in the north of the country and every day must bring in 23 truckloads of diesel 1,700 km from Dar es Salaam in Tanzania to get the off-grid power he needs to keep his lights on. This power can often run at 40 cents a KW/hr or more for these investors, a stiflingly-high rate. To address this, MCC’s $351 million Compact in Malawi is now laying the groundwork for improved power transmission and a re-tooled energy sector.

OPIC team visiting site of potential hotel project and Elizabeth Littlefield at round table meeting with Malawi officials

In Rwanda, we saw a very different landscape. Rwanda has already made many tough reforms and has been paid off with solid FDI numbers – roughly $160 million annually in recent years – new private power producers coming in and adding to the grid, and many investors in the agriculture sector. As a first-time visitor to Kigali, I was keenly aware of how clean and tidy the city was, almost a symbolic representation of how Rwanda wants to project itself outwardly. It is a clean, modern place with a growing economy and it wants you to know it is open for business, it is ready for investment.

(For more on OPIC’s projects in Rwanda, visit President Littlefield’s recent blog post on Rwanda.)

In our government meetings there, we met with the leaders of Rwanda’s own one-stop-shop for business and investment, the Rwanda Development Board (RDB). The RDB sits at the very top of one of Kigali’s many hilltops and serves as a beacon for all things business. In our Ministerial roundtable we met with a group of Ministers and officials with big plans for energy, transportation, water, and agriculture growth in Rwanda. President Littlefield was not shy about mentioning to those present that she felt they were “one of the most impressive groups of leaders of a government that I have ever met with.” I also felt deeply their infectious optimism for their country; an optimism best encapsulated by Minister of Finance Claver Gatete: “Rwanda is not ‘land-locked,’ we are ‘land-linked.’”

Elizabeth Littlefield meets with Hon and OPIC delegation and kigali embassy team meet with President Kagame.

This trip was one of many firsts for me – first time to Africa, first business trip with OPIC, first flight on a recently-founded Malawian airline – I came to further understand that the international landscape for FDI dollars is competitive and investors will go where they can make a decent return while facing the least uncertainty; as I have heard said in this business, “uncertainty is an investor’s worst enemy.”

This trip was also an opportunity to meet and touch the projects that would not exist if it were not for OPIC support. Meeting those Rwandans and Malawians positively touched by our projects was an experience that I will always keep in mind back home as we push for sustainable economic development.

Rwandans waving goodbye to OPIC


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