KIGALI, Aug 2 (Reuters) - Insecurity and political repression are on the rise in Rwanda ahead of August’s presidential election, which incumbent Paul Kagame is widely expected to win, rights groups say.
The international community has praised Rwanda for its rapid recovery after the genocide of 16 years ago, its stability and its bold vision to become a middle-income country by 2020.
But while the World Bank voted Rwanda the most improved business reformer globally, rifts within the ruling elite and regional insecurity threaten the investment climate.
Here are some of the risk factors:
Kagame has been applauded for establishing stability and rebuilding the country after the genocide of 1994. He plans to transform the country into an IT hub and middle income nation.
But his critics accuse him of being authoritarian and of stamping on press freedoms and argue that social cohesion and development have come at the expense of free speech. Rights groups say there has been a crackdown on critical media and increasingly vocal opposition parties.
Donors praise Kagame’s strong leadership and desire to bring in foreign investment, although nepotism remains an issue. There are concerns, however, that resentment among the opposition, elements of the political elite and parts of the population could foster political instability.
Rights groups say the shooting of a dissident Rwandan general in South Africa, the killing of a critical journalist and the arrest of two presidential aspirants in recent months show a growing intolerance of dissent in Kigali.
Rwanda denies being linked to either shooting and says the arrested politicians had violated anti-genocide legislation aimed at avoiding a repeat of the 1994 genocide.
The body of a leading member of a yet to be registered political party was found last month near his abandoned car.
What to watch:
-- The muzzling of private media critical of Kagame. In April, two newspapers were suspended for insulting the head of state and inciting unrest. The government says the ban, which runs until after the election, was not politically motivated. Media watchdogs called it a veiled attempt at censorship.
Jean Leonard Ragambage, an editor at the banned Umuvugizi newspaper, was gunned down on June 24 in Kigali. His exiled editor blames the government, but Kigali denies involvement.
-- Registration of opposition parties. The parties admit there is little chance of winning the election. Rights groups accuse the government of intimidating opposition parties, harassing their leaders and impeding their registration.
-- The trial of Victoire Ingabire, leader of the unregistered United Democratic Forces party, who awaits trial on charges of crimes linked to genocide.
Ingabire has called for an election boycott because she and some would-be candidates have been barred from standing.
Police have also arrested another presidential hopeful, Bernard Ntaganda, on suspicion of attempted murder. He had intended to defend Ingabire.
-- Rwanda arrested and then freed U.S. lawyer Peter Erlinder after charging him with genocide denial and threatening state security.
Diplomats and sources close to the government say rifts within the ruling Rwanda Patriotic Front (RPF) risk undermining the nation’s stability.
Regional analysts say parts of the banking, tea plantation, coffee, tobacco and mineral exporting businesses are now in the hands of people close to Kagame and the RPF elite. The Rwanda Development Board denied any government assets had been sold off to the RPF elite.
Kagame’s war on graft, which has led to Rwanda being ranked the least corrupt nation in east Africa, has seen former political associates locked up.
The arrest of two senior army officers in April, following a dramatic reshuffle of the military hierarchy, underscored the tensions and erosion of trust at the top. Analysts say the generals’ detention -- one for abuse of office, the other for immoral conduct -- is part of a crackdown on critics of Kagame’s centralisation of party financing and political power.
Diplomatic sources say the arrest of Congolese Tutsi rebel Laurent Nkunda has also fuelled tensions within the ruling elite. A U.N. panel of experts reported in 2008 that the RPF had supported Nkunda’s rebel war in eastern Congo.
What to watch:
-- Rwandans will vote in an Aug. 9 presidential election which Kagame is widely expected to win.
Security has been tightened in Kigali and diplomats forecast a largely peaceful ballot.
-- Rwanda’s arrest of Nkunda last year heralded a new era in relations between Rwanda and DR Congo. For years the two accused each other of backing the other’s rebel factions. What happens to Nkunda could still influence how much relations thaw. Congo wants him extradited for war crimes but analysts say Rwanda would be reluctant to let him go, fearful of what Nkunda might divulge about his relationship with Kagame’s administration.
-- Further grenade attacks. One person was killed and dozens wounded in Kigali in May in the latest of a series of mysterious attacks. Kagame’s administration has linked them to a former army chief in exile who has denied involvement. More attacks could deter tourists. Tourism is now the country’s largest source of foreign exchange, generating $175 million in 2009.
-- Faustin Kayumba Nyamwasa, an exiled Rwandan general was shot in South Africa on June 19 in what his wife called a Rwandan-backed assassination attempt. Nyamwasa fled to South Africa this year after falling out with Kagame. Rwanda said the accusation was preposterous.
Rwanda depends on its neighbours for the safe passage of its goods. All of its petrol, diesel and heavy oil must be transported by from Kenya and Tanzania.
What to watch:
-- Kenya votes first on a new constitution on Aug. 4 and then in a presidential election in December 2012. Also any violence around Uganda’s 2011 elections could isolate Rwanda.
-- Conflict in eastern Congo. Rights groups fear too hasty a withdrawal of U.N. peacekeepers would trigger more violence.
Established in 2008, Rwanda’s Over The Counter (OTC) stock market lists three Treasury bonds and a 10-year Commercial Bank of Rwanda bond. The only listed equity is the cross-listing of Kenya Commercial Bank. Its shares have seen a total turnover of $24,000 since cross-listing in June last year. Bond market turnover has been around $1.13 million since Jan. 31 2008. The Capital Market Advisory Committee says uptake has been weak because government paper is being bought mostly by institutional investors who are holding on until maturity.
What to watch:
-- More government bonds and new listings. The central bank will issue quarterly bonds to fund energy and infrastructure projects and also help ease dependence on donor funding, which currently comprises around 40 percent of the budget.
However, the regulator says this would not significantly increase liquidity because small volumes are being talked about.
-- Regulator CMAC expects four Kenyan companies -- including Equity Bank, KenolKobil, TPS Serena -- will cross-list by the end of 2010 as part of a drive into new markets. This will boost the capitalisation of a market where domestic options are limited.
-- The government plans to sell 30 percent of brewer BRALIRWA. This could be either side of the Aug. 9 election.
CMAC says the IPO reflects the government’s confidence in the strength of the domestic economy. Officials predict double digit growth in two years, up from around 5.5 percent in 2009.
-- The sale of the government’s 10 percent stake in telecoms firm MTN has been slated for 2011, CMAC says.
-- For now, Rwanda has no plans for a Eurobond. Last year, ratings agency Fitch gave Rwanda’s long-term foreign and local currency Issuer Default Ratings at B- with a positive outlook and a country ceiling also at ‘B-'. (Editing by David Clarke and Giles Elgood)