Feb 12 2009

Rwanda: the other side of midnight

Category: Uncategorized<ADMINNICENAME> @ 4:36 PM

Libya’s Qadaffi is not only wooing sub-Saharan Africans with diplomatic and cultural initiatives. He is quietly spending billions of dollars buying assets in the region, placing a big bet on the last uncharted frontier in global capitalism. To understand what Qadaffi hopes to gain, we look at one of Libya’s newest investments, Rwandatel, which is the largest Internet provider and second-largest cell-phone provider in this post-genocidal central African country. Qadaffi’s African investment company paid $80 million for Rwandatel in 2007 and hopes to use Rwanda as a platform to take advantage of the sub-Saharan mobile-phone market, considered the fastest-growing in the world.

The Libyans have long been players in Africa’s unorthodox business scene, but now the stakes are higher and the Libyans – flush with oil money and emboldened by a period of relative prosperity in much of Africa – are positioned to turn what once seemed like a costly political strategy – wooing African governments through friendly investments in prestige projects such as hotels and infrastructure – into a profitable growth-oriented portfolio. Mobile-phone operations in Africa are the world’s most profitable on a percentage basis.

There is a back story to the Libyan saga. Rwandatel was previously owned by a reclusive American tycoon, Greg Wyler, who invested in Rwanda a few years ago in a act of misguided altruism. Wyler’s problems in Rwanda were chronicled by the WSJ in a page one story about two years ago and I described how Wyler’s Rwanda operation was resurrected as part of a profile on American investor in Rwanda, published in Business 2.0 in the summer of 2007. About a month later (and a few days after a glowing story appeared in the Sunday Non Rwandatel and Wyler), the Rwandan government issued an ultimatum to Wyler: sell out immediately or risk having Rwandatel seized by the government’s battle-tested troops.
After three days of “negotiations,” Wyler – who had pissed off and disrespected the Rwandans for years by failing to make good on promises and behaving like a moron generally — sold out for about $12 million. The Rwandan government then turned around and sold the company to the Libyans for $80 million.

What Libyan capital and Rwanda’s telco market will yield remains to be seen.

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