CORRECTED – FACTBOX-Key political risks to watch in Rwanda

(Corrects to make clear Rusesabagina’s first name is Paul,
paragraph 16)

By Kezio-Musoke David

KIGALI, Nov 1 (BestGrowthStock) – Rwandan President Paul Kagame, who
won a landslide election in August, continues to turn the screws
on his rivals and dissenters, critics say.

One of Kagame’s leading political opponents, Victoire
Ingabire, is back in detention after the central African nation
said she had been implicated in an investigation into a former
rebel commander facing terrorism charges.

Then Rwanda’s chief prosecutor said the courts would summon
Paul Rusesabagina, who saved 1,200 people from genocide in
events depicted in the Oscar-nominated film “Hotel Rwanda”, over
allegations he helped fund a rebel force.

The reputation of Kagame, a favourite with foreign donors,
has been damaged by reports of repression and charges his army
committed war crimes in Democratic Republic of Congo.

Rwanda threatened to pull its troops from U.N. peacekeeping
missions after a leaked U.N. report said its troops may have
committed genocide in the Democratic Republic of Congo.

Some diplomats see Kagame’s attempt to blackmail the United
Nations as a serious concern, although he has since backed down
ahead of official publication of the draft that says the crimes
could constitute genocide if proven by a competent court.

Here are some of the risk factors:

RWANDA’S POLITICAL SPACE

Kagame’s overwhelming election win in August underlined his
domination of the political arena.

He has been applauded for restoring stability after the 1994
genocide and engineering Rwanda’s rapid economic recovery and
its bold vision to become a middle-income country by 2020.

But critics accuse him of being authoritarian and of
trampling on media and political freedoms.

Donors praise Kagame’s strong leadership and push to attract
investment. But nepotism remains an issue and there are concerns
that resentment among the opposition, elements of the political
elite and parts of the population could foster political
instability and harm long-term investment prospects.

What to watch:

— Trial of Ingabire. She was denied bail after a court said
state security could be threatened if she were freed. No date
has been set for her trial. Ingabire denies the charges and says
her detention is politically motivated.

— A court summons for American lawyer Peter Erlinder.
Erlinder was arrested in May on charges of genocide denial after
he flew in to represent Ingabire. He was released on bail a
month later on health grounds.

Chief Prosecutor Martin Ngoga said he could summon Erlinder
in early November. Erlinder’s case has caused friction between
Rwanda and the Tanzania-based International Criminal Tribunal
for Rwanda where Erlinder is defending genocide suspects.

— The arrest of Paul Rusesabagina. Hotel Rwanda was a
blockbuster hit and his detention would likely generate more
media interest than any crackdown on Kagame’s other critics.

— Kagame’s overtures to donors. Some analysts say he must
repair his image after cracking down on dissenters before the
Aug. 9 poll and prove he is not just another African strongman
with a slick international public relations machine.

They say he must convince investors he remains committed to
his promise to democratise Rwanda. Investment doubled to $1.6
billion in 2009, a year after the country was named top global
business reformer by the World Bank.

— Outcome of French inquiry into shooting down of former
President Juvenal Habyarimana’s plane in 1994. Any repeat of the
2006 claim by a French judge that Kagame’s forces were to blame
could harm diplomatic relations with France.

RIFTS

Diplomats and sources close to the government say rifts
within the Tutsi elite, including those in exile, risk
undermining the nation’s stability.

The Ministry of Defence said senior party and army officials
in exile are not a threat. However, observers say there is a
risk Kagame’s erstwhile allies, who are sounding increasingly
belligerent, could coalesce into a serious opposition force, or
form a rebellion of their own.

A group of exiled former allies warned Rwanda could descend
into conflict unless Kagame shares more power with the majority
ethnic Hutu.

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.

Diplomatic sources say the arrest of Congolese Tutsi rebel
Laurent Nkunda has also fuelled tensions within the ruling
elite. A U.N. panel reported in 2008 that the RPF had supported
Nkunda’s rebel war in eastern Congo.

What to watch:

— Signs of deepening rifts within the military. General
Faustin Nyamwasa, Kagame’s former chief-of-staff turned
arch-critic, fled to South Africa in February where he was shot
in the stomach in June.

Diplomatic fallout over the attack prompted South Africa to
recall its envoy to Kigali.

— The fate of Nkunda. Nkunda’s arrest heralded a new era in
relations between Rwanda and Congo. For years the two accused
each other of backing the other’s rebel factions.

But what happens to Nkunda could still influence relations.
Congo wants him extradited for war crimes but analysts say
Rwanda would be reluctant to let him go, fearful of what he
might say about Kagame’s administration.

REGIONAL STABILITY

Rwanda depends on its neighbours for the safe passage of its
goods. Its petrol, diesel and heavy oil must be transported by
truck from Kenya and Tanzania. U.N. sources say the alignment of
various militias, including Nkunda’s CNDP and Hutu rebels, in
eastern Congo is unlikely to pose any short-term threat.

What to watch:

— Conflict in eastern Congo. Rights groups fear too hasty a
withdrawal of U.N. peacekeepers would trigger more violence.

— Any violence around Uganda’s elections in early 2011
could also isolate Rwanda by disrupting transport links.

— Kenya endorsed a new draft constitution in an Aug. 4
referendum. East Africa’s largest economy will hold a
presidential election in August 2012. While the peaceful
referendum has boosted hopes the poll will also be calm, the
stakes will be higher in two years time.

— Analysts fear a new rebellion could be brewing in
neighbouring Burundi. Renewed turmoil in the Great Lakes region
could in turn risk threatening Rwanda.

HEALTHY ECONOMY

Rwanda’s economy expanded by 9.4 percent in the second
quarter of 2010 compared to a year earlier, its fastest
quarterly acceleration since the first three months of 2009,
driven by 15 percent growth in services.

The government has focused on restructuring the tea and
coffee industries and the financial system, while investing in
energy, transport and telecommunications infrastructure.

The two listed equities on Rwanda’s fledgling
over-the-counter market are the cross-listed Kenya Commercial
Bank (KCB.NR: ) and Nation Media Group (NMG.NR: ).

Securities listed on the capital market include three
Treasury bonds issued this year and one corporate bond issued by
Commercial Bank of Rwanda in 2008. The August 2-year issue for
2.5 billion Rwandan francs ($4.5 million) was comfortably
oversubscribed.

What to watch:

— More government bonds and new listings. The central bank
expects to issue quarterly bonds to fund energy and
infrastructure projects and ease dependence on donors, who fund
about 40 percent of the budget. However, the regulator says this
would not significantly boost liquidity as volumes are small.

— CMAC expects more Kenyan companies — including Equity
Bank (EQTY.NR: ), KenolKobil (KENO.NR: ) and TPS Serena (TPS.NR: ) –
to cross-list in the coming months. This will boost
capitalisation of a market where domestic options are limited.

— The government plans to sell 30 percent of brewer
BRALIRWA. This had been expected either side of the election.

— The sale of the government’s 10 percent stake in telecoms
firm MTN has been slated for 2011, the regulator CMAC says.
(Editing by Richard Lough and Noah Barkin)

CORRECTED – FACTBOX-Key political risks to watch in Rwanda