2. A vibrant and growing economy
3. A political stable environment
4. A good mixture of business and leisure
5. An open and competitive market
6. A good and growing Information Technology
7. Kigali Free Trade Zone
8. Good investments opportunities
9. A beautiful culture
10. Part of the East African Community (E.A.C.)
Zero tolerance for corruption
The East African Common Market Protocol came into effect on 1st July, 2010 amid high enthusiasm and expectation among the citizens of the East African Community’s member states. The protocol is expected to boost trade across the five East African countries of Kenya, Uganda, Tanzania, Rwanda and Burundi by promoting the free movement of goods, services and capital. The East African Community has recorded notable strides in promoting trade among the member states. Intra-trade volumes rose by 87% in Uganda, 91% in Kenya and 65% in Tanzania between 2004 and 2008, heralding a bright future for the citizens of the bloc.
Individually, the member countries have formulated ambitious economic and social development blueprints. In Kenya the Vision 2030 seeks to convert the country into a middle income country within the next two decades. Rwanda’s Vision 2020, Vision 2025 for Tanzania and Uganda’s Poverty Eradication Plan seek to achieve similar goals. The countries have already made initial steps towards these goals especially in infrastructural development.
Central in these ambitious development plans is the promotion of good governance; a lack of which is likely to hold back the attainment of the plans. Resources earmarked for requisite extensive infrastructural development may end up in private hands through corruption. The much needed foreign investments may not be forthcoming or sustained unless good governance is actualised. It is noteworthy that Tanzania, Kenya, Rwanda and Uganda are at different stages of joining the league of oil producing countries. This calls for a transparent governance environment if the region is to avoid resource curse previously faced by other African countries.
The East African Bribery Index is a governance tool developed to measure bribery levels in the private and public sectors in the region. The index registers the firsthand experiences of the residents of the region with regard to service delivery and corruption. It seeks to establish the extent of bribery by seeking information on where the respondents were asked to pay bribes, if they acceded to bribery demands and the amount of bribe paid. Although the index is a tool to measure petty bribery, it is a general indicator for other forms of corruption in a particular country.
The index clearly shows that apart from Rwanda where incidents of bribery were found to be negligible, corruption is still an impediment to public service delivery in the region. Key governance and enforcement institutions such as the judiciary, the police and local authorities featured prominently in the index. Service institutions in the water, electricity, education and health sectors also dominated the top ranks of bribery-prone institutions in the region, compromising accessibility to and the quality of services offered.
It is imperative that institutions in the region scrutinise their service delivery mechanisms with a view to root out channels through which majority of the citizens are locked out of basic services thus promoting inequality and poverty. Transparency International-Kenya hopes that a deeper comparative study will be conducted in Rwanda to establish practices that have led to a negligible level of corruption.
The region will only firmly entrench itself on the path to economic and social development after inefficiencies necessitated by corruption are effectively confronted. Whether the 126 million residents of the bloc will fully enjoy the benefits of economic integration depends on how their governments respond to corruption and other governance challenges.
The Rwandan government has undertaken several legal and policy measures aimed at tackling corruption within the public and private sectors. Rwanda has also ratified the United Nations Convention against Corruption (UNCAC) and the African Union Convention on Preventing and Combating Corruption (AUCPCC)
Rwanda established an Ombudsman’s office in 2004 that monitors transparency and compliance to regulation in all governmental sectors. The Ombudsman has been instrumental in enforcing the government’s declaration on zero tolerance against corruption. It regularly exposes cases of fraud, malpractice and corruption at the top, middle and bottom levels of the public sector. This is evident through the stern action taken against a number of senior government officials implicated in corruption. In 2009, the Finance Director at the Presidency was suspended from office and sentenced to four years in prison following corruption allegations. He was further fined more than one billion Rwandan Francs (USD 1.72 million). A former top civil servant in the infrastructure ministry was given a similar fine and a total of seven years in jail for involvement in corruption-related offences in government contracts. Elected officials have not been spared either, with over 20 of the 30 District Mayors in Rwanda removed from office for alleged mismanagement. The Ombudsman’s office is also responsible for reviewing the revenue declarations submitted by top government officials including the president.
THE EAST AFRICAN BRIBERY INDEX No. COUNTRY CORRUPTION PREVALENCE
1. Burundi 36.7%
2. Uganda 33.0%
3. Kenya 31.9%
4. Tanzania 28.6%
5. Rwanda 6.6%
Table 1: Country ranking of corruption prevalence
Good and growing Information Technology
ICT is central to Rwanda’s Vision for 2020, and ICT in education is one of the core pillars of the country’s National Information and Communications Infrastructure Policy and Plan, adopted in 2000. Tremendous progress has been made since then and the
country continues to receive plaudits and support from its development partners.
The pace of development of a national ICT infrastructure is remarkable as is the progress within the education system on disseminating computers and providing connectivity and teacher training. Moreover, there is a nationwide effort to provide universal access to both infrastructure and the Internet in order to facilitate ICT4D in the broadest sense. The National University of Rwanda (NUR) and the Kigali Institute of Science and Technology (KIST) are particularly noteworthy in terms of ICT in education – NUR because of its academic excellence in ICT and KIST because of its ICT training mandate and its partnership with the African Virtual University (AVU).
The Government of Rwanda has set a national goal that the country will achieve middle income status by 2020 based on an information-rich, knowledge-based society and economy, achieved by modernizing its key sectors using ICT. This vision, developed through a national consultative process that began in 1998, is the driving force for policy development across government ministries, public institutions, and with the country’s
development partners.
The partners working with the Government of Rwanda in the development of its national ICT policies include the Economic Commission for Africa, USAID, UNDP, and the Carnegie Foundation.
The development of Rwanda’s national ICT policies is leaded by the following organizations:
- The National Information Technology Commission (NITC), chaired by the president and its mission is to lead the process of creating the Rwandan information society and economy in line with the aspirations of the 2020 Vision. It is also responsible forpolicy and program monitoring and evaluation;
- The Rwanda Information Technology Authority (RITA), an autonomous agency under the direct supervision of NITC. It is the main body in charge of actually implementing the ICT policies and all of the associated projects and programs – including human development. It also acts as the secretariat for NITC and has administrative links and working relations with the Office of the President, the Prime Minister’s Office, and the Ministry of Public Works, Transport and Communications (the sponsoring ministry). RITA’s primary role is to enhance public awareness about ICT and, through its National Computing Centre, provide consulting services to the government and to public;
- The Rwanda Development Gateway Group is another facet of the national facilitating structure. This is a group of three “ICT for development” initiatives under the Ministry of Education, Science, Technology and Scientific Research (MINEDUC) being funded by the government, which include the following:
• The Rwanda Development Gateway (RDG), hosted by the National University, which is establishing a national portal to provide one-stop shopping for information on Rwanda and to be the country’s Web interface to the rest of the world
• The Centre for Geographic Information Systems and Remote Sensing, also hosted by the National University
• The Regional ICT Training and Research Center (RITC),13 hosted by KIST, which provides ICT training for government staff, teachers, school leavers, and staff in institutions of higher learning
ICT in Education
ICT in education policy, along with detailed implementation strategies, are defined in each of the NICI plans for action by the Ministry of Education – supported and monitored by the national facilitating agencies described above.
The sub-plan for education in NICI-2010 sets out a number of policy action items and associated planned actions that include time frames, budget estimates, and expected benefits. The planned actions, with leadership assigned to the Ministry of Education (sometimes in collaboration with other agencies), are listed below. Some of these are new, while others relate to planned actions in NICI-2005 that have been updated and
revised. Others have been rolled forward from the NICI-2005 plan into the NICI-2010 plan because implementation is continuing. These policy actions are:
• Train primary and secondary teachers on ICT in education
• Establish a national library network
• Develop new e-learning content
• Implement an educational management system (EMIS)
• Survey educational software appropriate for Rwanda and translate to Kinyarwanda
• Convert existing computer-based training and e-learning content to Kinyarwanda
• Develop programs to promote the acquisition of computer equipment by educational institutions
• Develop a comprehensive policy on computer education in schools
• Develop a national School Net to provide access to the Internet for schools, facilitate sharing of learning resources, facilitate electronic distance education within the school system, and link Rwandan schools with schools internationally
• Develop a national computer curriculum for primary and secondary schools and coordinate its implementation
• Train a critical mass of computer literate teachers
• Develop a national program to speed up the deployment and use of ICTs in higher education institutions (A specific component is the establishment of a Rwandan Academic Research Network that links all institutions and provides a gateway to the Internet.)
• Develop a national electronic distance education and training program that supplements and complements campus-based education at all levels, facilitates lifelong learning, and encourages in-service training in both the public and private sectors
• Develop special ICT-in-education initiatives for academic exchanges and twinning, implementation of the SMART schools concept, and penetration of ICT into rural schools
• Establish a regional information technology training and research institute to serve Rwanda and the sub-region.
• Developing an understanding within the system of the value of technology and the need for investment
• Developing procurement and installation strategies
• Implementing an EMIS
• Developing and managing content and integrating it into the curriculum The Kigali Institute of Education (KIE),14 started in 1999, with funding from the government and numerous donors such as the World Bank, the Swiss Co-operation, DFID, USAID, and UNESCO, has become an important teacher-training institution. KIE’s mission is to train secondary school teachers and faculty in teacher-training colleges and technical schools.
ICT infrastructure in Rwanda
Creating access to ICT infrastructure is at the heart of Vision 2020, and the government is being widely recognized and applauded for the achievements since the promulgation of its ICT policy and plans.
Rwanda’s move towards an ICT and knowledge driven economy is a decision rooted in the practical realities and challenges within Rwanda, but equally it has taken into account recent trends so that Rwanda can position herself to compete in the global economy.
Just as it is clear that growth in the 19th and 20th centuries was driven by networks of railways and highways, growth and development in the 21st century is being defined and driven by digital highways and ICT-led value-added services.
Africa missed both the agricultural and industrial revolutions and in Rwanda is determined to take full advantage of the digital revolution. This revolution is summed up by the fact that it is no longer of utmost importance where you are but rather what you can do – this is of great benefit to traditionally marginalized regions and geographically isolated populations.
Overview of the ICT infrastructure
• Attracted $500M in investment over the last three years by both private and public sector
• The government has invested in building the ICT infrastructure through:
– a 2,500km optic fiber that covers Kigali city and the entire country, with a total of 7 regional links to the neighboring countries
– Kigali City Wireless Broadband
– ICT park set up for investors in pilot phase
• ICT in Rwanda currently encompasses, in varying degrees:
– Wireline telephones
– VoIP
– Dial-up internet, ISDN based internet, broadband internet
– Computer software use and development,
– Computer hardware, assembly, and repair
Major players in telecom
• MTN Rwanda and Rwandatel are the dominant players, offering fixed telephones, mobile telephones, and internet services. TiGO, the 3rd operator, is set to begin operation by end of 2009
• Between the two companies, there are approximately 2M mobile subscribers, representing 20% penetration
• A sizeable private sector is growing around the networking and software development sectors, with Rwandan companies exporting services to Burundi and Eastern DRC
• Rwanda is participating in a $24M World Bank project to connect its national backbone to submarine cable. There are three optic Service Providers Seacom, Teams and Eassy, at the East Coast to link various African countries to the global network.
Current Rwanda ICT Projects
The eRwanda project aims at using ICT to simplify Government procedures, bringing transparency, accountability, allowing greater public access to information and making credible timely information available to all citizens, as well as providing all services in an efficient and cost-effective manner on an online basis.
The Karisimbi project has been set up with a plan to provide high quality in communication navigation surveillance, telecommunications, and FM radio and television coverage in the country. Mt. Karisimbi is a strategic point with a great potential to play a significant role in enhancing broadcasting capabilities. The Karisimbi project has two main projects, broadcasting and Communication Navigation Surveillance/ Air Traffic Controller project.
The ICT Employment Fund: Rwanda needs to have a very competent, highly skilled workforce, including in ICT. While a number of Rwandan institutions train Rwandans in ICT, graduates typically lack the work experience required by employers. Addressing this need, and enhancing young graduates’ employability and work skills, RITA and HIDA have collaborated to develop an ICT Employment Fund (ICTEF).
The National Computing Center (NCC), one of the technical directorates at the Rwanda Information Technology Authority (RITA), was established to assist the Rwandan government operate more efficiently by offering technical support and consultancy services for the successful implementation of the National Information and Communication Infrastructure Plan.
Gasabo 3D is an innovative web based engineering services company. It provides companies around the globe the most cost-effective and efficient way to convert critical two-dimensional (2D) CAD drawings or blueprints into accurate three-dimensional (3D) CAD models.
ICT actors in Rwanda
– Ministry in the President’s Office in Charge of Science and Technology
– Rwanda Information and Technology Authority (RITA)
– Rwanda Investment and Export Promotion Agency (RIEPA)
– Rwanda Utilities Regulatory Authority (RURA)
– Kigali Institute of Science and Technology (KIST)
Sources:
– www.infodev.org
– www.rwandagateway.org
– www.rita.gov.rw
– www.rwandainvest.com
– www.rura.gov.rw
Kigali Free Trade Zone
Two of the three principal land routes from the East African coast into the northern Great Lakes region converge in Kigali (capital of Rwanda), and then goods are dispatched to Eastern part of Congo, and Burundi. It is estimated that 60% of inbound goods going to Congo eastern parts, go through Rwanda.
Although the domestic Rwanda market and adjacent areas of Burundi, Tanzania and Uganda are part of the area that a Kigali Free Zone would serve, at least half of the potential market is in eastern DRC (Democratic Republic of Congo). Close to half of DRC’s total population, or 25 million to 30 million people, live in this part of the country, which has been isolated politically from Kinshasa (Congo capital city) and Western Congo, and which has no surface transport links to the rest of the country apart from very poor roads linking the border areas to Kisangani (Congo’s 2nd biggest city). This area is almost entirely dependent on transport from East Africa through Rwanda to satisfy its import needs.
At the same time, the main roads in Rwanda are of good quality, especially the main road from Kigali to the border crossing at Gisenyi (city at border with Congo). The inadequacies of regional transport networks affect all countries equally. It can be argued that Rwanda’s roads are the most efficient part of the entire region, and that choosing Kigali as the main distribution point for the region would involve far fewer delays and lower costs than if other possible locations in Uganda, Tanzania or Kenya were selected.
The current lack of a central warehousing and re-export facility for the region makes it exceptionally difficult for traders to obtain essential stock in trade. Typically, several small traders will join together to fill a twenty-foot container in Mombasa or Dar es Salaam and will share the cost of transport. Sometimes they will even go further, to Dubai.
But this is difficult, costly and risky for small traders. Since the market spans a wide area in five countries, it is difficult for local traders in each sub-market to generate the volumes of trade that would justify importing in larger quantities and launching a fully-fledged wholesale trade.
Given the fragmentation of the market into many discreet sub-markets, warehousing goods closer to the source, near Mombasa, Dar es Salaam or Nairobi, makes little sense, since traders in each sub-market would struggle to fill a container on their own or even in cooperation.
The main objective of the proposed Kigali FTZ is to create a central distribution point that can serve the smaller local markets in the region. This will facilitate the development of larger wholesaler traders, which in turn should lower the cost of importing and should lead to an expansion in trade. Kigali by of its central location, could be an ideal location for such a facility.
What are the advantages of the Kigali FTZ?
The Kigali FTZ is a free trade zone which is open to distribution and manufacturing company, wanting to take advantage of Rwandan position as a launching pad in to the regional market…
The direct market for the FTZ is the neighbouring countries, total market of around 60 million peoples with a market estimated to 6 billion $ import a year. On top of this direct market there is also the COMESA and East Africa community market which are also open to company based in Rwanda; the COMESA market opens a market of 20 countries, with a population of more than 380 million and a combined GDP of 200 billion, while the EAC market opens a market of 120 million and a combined GDP of 39 billion.
Under the COMESA and EAC free trade zone product originating from Rwanda can be exported quota and tax free to all member countries, this is a considerable market.
Rwanda language advantage: Rwanda is the only country in the region with a population that speaks both English and French on the same level, this is also a big advantage in trade.
Why Kigali?
One of the main advantages of Kigali FTZ is its central location in the region, Kigali is at two hours of Tanzania, two hours of Uganda, Three hours of RD Congo, and three hours of Burundi. Two of the three principal land routes from the East African coast into the Great Lakes region – the Corridor from Mombassa through Uganda and the Corridor from Dar as Salaam through Tanzania and Rwanda – all converge in Kigali.
Rwanda is also a stable peaceful country, it is well ranked by international organisation such as UN and the World bank, Rwanda is a safe country, the political situation is stable and democratic, and the business environment is predictable with minimal corruption and an efficient administration.
Another reason is that Kigali is already an established goods distribution center towards Burundi and Eastern Congo, both markets with a population of more than 32 million, this is a market that has been traditionally served by Rwanda exports.
The road network in Rwanda is the most efficient in the northern great lakes region, all the borders post with neighbouring countries are connected to Kigali by paved roads, in less than 3 hours by road you can reach any of the 4 countries from Kigali FTZ.
Thus from all this points it is obvious that choosing Kigali as the main distribution point for the region would involve far fewer delays and lower costs than any other country in the region. Rwanda has one of the most advanced telecomunication network in the region with fiber optic network available nationwide, and with the only GSM CDMA mobile network in the region. Rwanda has also a rich pool of talented personnel, either be skilled or unskilled. Rwanda national economy is one of the fastest growing in Africa, with an average of 6% for the last 12 years. in the 2002 report on Africa by the world Bank, Rwanda was called one of “African 5 lions”, meaning one of the 5 African economies that have been growing at a speed of at least 6% per annum from 2000.
Kigali FTZ bounded area market facts and figures
Major economic figures related to the Kigali FTZ:
- Total population in the area (5 countries): 130 million;
- Total annual imports: 4 to 6 billion US$;
- Total population to serve: 50 to 60 million peoples;
- Total import in to the direct catchment area per year: 1.6 to 2.4 billion USD;
- Manufactured goods accounts for 75% of the trade in the region;
- Share of products imported in the region trading statistics: 85% comes from outside the region;
- Total export of Dubai to Africa 1.3 billion in 2004;
- In the trade statistics UAE occupies 24% of export to the KFTZ area, which could be a target for Chinese products as UAE does re-export of mostly Chinese and other countries products.
Kigali FTZ Market assessment
Kigali has the potential to become the main transshipment point for goods in a region with an estimated market of 50 to 60 million, this is the direct target market that Kigali FTZ will serve, with a potential annual expenditure of about 2.4 billion US$.
The direct catchments area of the FTZ imports 85% of its traded goods, thus the potential for the Kigali FTZ but also for Export processing business.
Based on the Unilever corporation estimates, some 16% of the region’s GDP, or about $1.3 billion, would be concentrated among the two per cent of the population with per capita GDP of $2000 or more, and a further 11%, or $880 million, would be concentrated among the next four per cent of the population, which has per capita GDP of between $650 and $2000.
The top two per cent of the population constitutes the portion of the population with sufficient purchasing power to buy appliances, TV sets, cars, and other high-priced items, while the next four per cent has enough purchasing power to acquire some of these items as well as to buy larger quantities and a wider range of clothing, footwear, cooking utensils and FMCG (fast moving consumable goods).
Of course, not all goods are immediately sold to final consumers. A high percentage of intermediate goods such as iron and steel, paints and cement go to companies that use these items in production, as does most capital equipment including machinery, electrical equipment, office machines, trucks, buses and even passenger cars.
Market Size and Composition:
Petroleum products, manufactured goods and food account for the bulk of the region’s imports.
The table below shows the breakdown of total imports and major product categories for the five countries in the region. The population of the five countries is about 130 million, and together their annual imports are between $4 billion and $6 billion. With about 40 per cent of the combined population of these five countries, total annual imports in the Kigali catchment area should amount to between $1.6 billion and $2.4 billion.
Total Market $2,775,000,000
Fiscal Incentives offered to Kigali FTZ based Companies:
The Rwandan government encourages foreign investors to invest in Rwanda and in this regard has elaborated a set of extra fiscal incentives for company based in the EPZ these include but are not limited to:
- Tax exemption on all imported goods;
- Pay company income tax of 0%;
- Importation of plant, machinery, equipment, building materials and inputs free of duty and Value Added Tax;
- Exemption from all other taxes normally levied on a business enterprises operating in the country;
- Tax free externalisation of funds;
- Flexible work permits allowance to enable the investor to hire quality expatriate staff;
- Exemption from withholding tax and taxes on dividends;
- The right to purchase locally produced goods and services free of duty and Value Added Tax as inputs in the production process.
It is worth mentioning that in terms of foreign currency exchange regime, Rwanda does not exercise any restriction to foreign investors, the Rwandan currency is fully convertible, and there is no restriction of any kind in outbound remittance.
The Kigali FTZ is a mixed use free zone containing the following designations:
- Industrial Uses: Logistics, warehousing, distribution centers, light and medium manufacturing, processing, re-labeling, and assembly facilities;
- Petroleum: Storage tanks, head office functions, utilities and maintenance necessary for petroleum. Petroleum processing is not permitted
- Commercial: Call centers, showrooms, offices, banking facilities, conference and training centers;
- Administration and Institutional: Customs, administrations, operational and maintenance facilities, religious facilities, day care facilities, parking structures, institutional operations (fire and police stations);
- Utilities: Power stations, water treatment and storage facilities, reservoirs, telecommunication switching and distribution centers, and sewage units;
- Open Spaces: Recreational and landscaping purposes
Targeted Industrial Sectors
- Agro processing
- ICT/ Shared Services
- Cold Storage/ Horticulture
- Textiles/ Apparel
- Petroleum Storage
- Dry Goods Warehousing
- High Value Trading
- Craft
The chairman of the taskforce overseeing the creation of the Kigali Free Trade Zone (KFTZ) in Rwanda has said the Kigali Free Trade Zone will be launched in April 2011. Speaking to Business Times on March 1, 2011, Alex Ruzibukira, head of the Kigali Free Trade Zone initiative at the state-run Rwanda Development Board, said around 90 per cent of the work on the 250-hectare project has been completed. With the necessary infrastructure now in place, investors will be able to commence construction of factories and warehouses.
Sources:
– Rwanda Development Board
– Business Times
Good investment opportunities
The international community including the World Bank has rated Rwanda as one of Africa’s top performers in terms of good governance. Rwanda has gained international repute as one that is serious and committed to economic growth and development.
Economy
Rwanda represents a stable and predictable business environment with robust economic growth and low inflation, a stable currency and a strong commitment to private sector development as well as impeccable peace and security. Rwanda is thus your ideal place for investment.
Overtime, Rwanda has witnessed an enormous and sustained GDP growth rate and investor confidence. The GDP growth rate (2008) was 11% The upward growth of investments in Rwanda is not accidental but rather reflective of the Government’s own commitment to driving the economy through increased investments and exports. Indeed, Rwanda’s development strategic roadmap, “The Vision 2020”, targets a GDP per capita growth from $250 to $900 by 2020. UNDP has assessed these targets as achievable given the Government’s commitment and progress thus far.
The government or Rwanda maintains an investor-friendly attitude by welcoming and facilitating investments, both before and after their establishment. This awareness is reflected in several ways in the investment regime. Imagine registering a business in just 3 Hours!
These efforts have paid off. Rwanda has witnessed an upswing of investments in the past six years. It has made significant gains through actual delivery on investments, having registered 296 projects by December 2006 worth a combined value of US$ 1.3 billion since the year 2000.
Investment in the agricultural and manufacturing sectors remained strong, while investment in upcoming sectors such as energy, information and communication technology (ICT), mining and tourism increased substantially.
In an effort to further improve the economic status in the country, the Rwanda Investment and Export Promotion Agency offers world class service delievery at its One Stop Centre where a cluster of services is offered that eases the investor’s entry into Rwanda’s market; in particular, the centre provides immigration, customs’ exemption, company registration, residency and work permit services to investors in the shortest time limit.
The Agency, as such, facilitates and supports investors, advises, coordinates, encourages partnerships and networks in its strife for a strong private sector driven economy.
Interestingly, Rwanda has become a conference venue destination in the region with less traffic and efficient conference/events management.
Investment Opportunities
Rwanda being a virgin economy has investment opportunities across all sectors. The opportunities abound in all sectors such as:
Energy
Government is working hard to mobilize investments into the exploitation of enormous domestic sources of energy that presently lie unutilized. They include methane gas in Lake Kivu, large untapped hydropower potential through construction of dams on rivers Nyabarongo, Rusumo and Rusizi or investments in alternative energy sources like solar, biomas, and biogas or geothermal.
ICT
The Rwandan ICT4D policy and process as per the ICT-led Socio-economic Development Vision is to transform Rwanda into an information-rich, knowledge-based society and economy by modernizing its key sectors using information and communication technologies. Opportunities for investment are in software and hardware development, broadband fiber optic infrastructure development, call centers as well as back office operations as well as mobile phone assembly and marketing within Rwanda and the region.
Tourism
Rwanda is one of the most naturally beautiful countries in the world. Rich in flora and fauna and a stunning beauty manifest in its scenic rolling hills and breathtaking green savannahs. Rwanda boasts some rare species of animals like the mountain Gorillas as well as rare birds and smaller primates in Nyungwe tropical forest. Investment opportunities exist both in developing tourism infrastructure and positioning the country in the international market place as the new exotic destination on the global circuit. According to the Rwanda Development Board, Rwanda’s budding tourism sector received over a million visitors in 2008 and raised an estimated $214 million, up from $138 million the previous year.
Growth has been bolstered by strong investment in the sector that has become the leading hard currency earner. The tourism industry will continue to flourish with the opening of nine new hotels and lodges across Rwanda. Five of the new hotels are owned by Dubai World. The state-owned investment fund has sunk $230 million into accommodation in Rwanda. Rwanda was voted among the “Top 10 countries to visit in 2009” by the Lonely Planet travel guide. Some of the prominent touristic attractions in the country include the Mountain Gorillas, Giraffes and Zebras.
The Volcanoes National Park in Rwanda is the most famous area in Rwanda, world re knownfor being the home of approximately half of the world’s remaining mountain gorillas. Akagera National park is comprised of lakes, swamps, woodland, Savannah, and open grassland. The lakes draw out herds of elephant and buffalo, while the Savannah typically attracts giraffe and zebra.
Financial Services
The Rwandan financial sector comprises of insurance services and banking (commercial banks, development banks and microfinance institution).
The banking sector has seen tremendous growth over the past 5 years and seen increased participation by multinational banks and foreign equity. The market capitalization of the banking sub sector is US$200 million supporting US$1 billion in assets. There is a Financial Sector Development Program that is aimed at deepening financial services and increasing the reach of financial services to the Rwandan population. 14% of Rwanda’s adult population is banked (518 million persons) which offers investment opportunities for investors keen on reaching untapped markets.
Key players in the banking sector are Access Bank, Banque Commerciale du Rwanda, Banque de Kigali, Banque Populaire du Rwanda, Ecobank, and KCB. Key players in the Insurance sub sector are AAR, COGEAR, CORAR, RAMA, MMI, SONARWA, and SORAS
Minimum capital requirements is currently US$ 8.5million for establishing banking operations and the sector is regulated by the National Bank of Rwanda.
Property Development
The Rwandan context is favorable for property investment, because:
- The current housing supply is insufficient to meet the needs of the growing population;
- The population is 10.4 million and growing at 2.8% per year;
- The urban population is 1.9 million and growing at 4% per year;
- Many houses are built of mud bricks and need to be modernized;
- There is an increasing interest from the 6 million diaspora Rwandans who want to find opportunities to invest in Rwanda. There were remittances of US$ 150 million in 2008
- The infrastructure development to support the anticipated economic growth is critical
- The tourism – now Rwanda’s largest foreign exchange earner – is set to grow but the quantity and quality of accommodation is not enough to meet the demand. In 2008 Rwanda attracted over 985,000 visitors, up from 826,300 in 2007 (an increase of 19%). 3,000 additional rooms are needed by 2012. An upcoming convention Centre in Kigali with capacity for 3,000 people will need supporting accommodation.
RDB/RIEPA Figures from the Rwanda Development Board and the Rwanda Investment and Export Promotion Agency show that:
- In the period 2003 to 2008, the investment in the construction sector grew from USD 100m to USD 351m. That is an 28% increase;
- In the period 2003 to 2008, 142 out of 404 projects were in construction;
- Of the 68 projects operational in 2009 alone, 40 are in the real estate sector;
- Countries represented in the construction area include India, Kenya, Belgium, United Arab Emirates, Ireland, South Korea, China, Israel and United States among others;
- Investment amounts range from as little as USD 200,000 to over USD 20 milion per investor with a few much higher
- Local investments taking a big share;
- Rwanda’s property sector has seen a strong growth spurt over the last few years in both residential and commercial property.
The current opportunities for private developers, construction professionals, project managers, architects, engineers, quantity surveyors, planners, lawyers, marketing agents, financiers, building material suppliers, buyers (owner occupiers and property investors), casual laborers are in:
- The Master plans for Cyangugu, Kibuye and Kigali are in place;
- The need for urban renewal in both residential and commercial areas;
- Kigali city planning has been thorough;
- 780 hectares of land have been designated for a new CBD;
- Substantial land parcels in different parts of Kigali designated for housing development;
- Building codes are now in place;
- Planning emphasis is on environmentally friendly concepts, construction and maintenance;
- Concepts for priority projects have been drawn up;
- Property development should promote social cohesion
The implementation for these projects expect to take the next 10-15 years
Other opportunities – Reliant on imports – are roofing tiles, steel, aluminium, wood, glass, sanitary fittings (eg. tiles), electrical equipment and fittings (eg. cables), pumps, tanks, sewage systems.
Some potential development projects are:
LOCATION (s): GISOZI/KACYIRU/GACULIRO
Twenty (20) Ambassadorial Villas in a 15-acre gated community, each home with a generous plinth area of 500 meters and set on 0.5 acres
LOCATION(s): KIMIHURURA/NYARUTARAMA/REMERA
Fifty (50) spacious homes (200m2) in an exclusive 10-acre gated community. Each home is well finished with large windows, high ceilings, high-standard fittings and world-class security technology.
LOCATION: KAGARAMA
5,477 mixed income homes of 60m2 (2beds), 80m2 (3 beds) and 120m2 (4 beds) set on 39 hectares and divided into 10 discrete phases of 548 units each.
LOCATION: MUHIMA
219 middle income downtown apartments of 60m2, all on a 5-acre parcel in Muhima. This complex may include a blend of retail, recreational and other amenities.
LOCATION: CENTRAL BUSINESS DISTRICT /NYARUGENGE
Modern, Class A office building set on 2.5 acres with a total plinth area of 10,000 square meters on 10 floors, divided into 80 units of 125 square meters (8 on each floor). The bottom three floors would be used for upscale retail space.
Opportunities in investment also lie in:
- Mining
- Food Processing
- Leather Goods Production
- Horticulture.
Most importantly, all these sectors are open to both local and foreign investors without any restriction on account of nationality.
Rwanda’s attractive Investment Incentives regime
The Country’s Investment Code, Customs and Income Tax laws have been revised to provide a plethora of competitive incentives to investors. Rwanda’s incentives regime provides the following benefits to registered investors:
- Free, unfettered repatriation of profits and capital;
- Duty free importation of raw materials and machinery as well as construction materials for those engaged in property development;
- Duty free importation of a personal car, domestic properties and effects for expatriate staff;
- Duty free importation of machinery, equipment and raw materials and other goods for investors in the Free Zone;
- Free one-year work permit and free residence visa for an investor and expatriate employees;
- Citizenship and its attendant benefits for investors who deposit at least US$ 500,000 in any Rwandan commercial bank for a period of not less than 6 months;
- Generous investment allowances (40-50%) on capital goods;
- A reduction in the corporate tax rate of between 2-7% depending on a company’s employment of Rwandans as set out hereunder:
– 2% for 100-200 jobs
– 5% for 201-400 jobs
– 6% for 401-900 jobs
– 7% for more than 900 jobs - Facilitation by the Agency to have access to foreign markets, training, promotion and trade exhibitions;
- Indefinite tax holiday for international headquarter companies registered in Rwanda.
One more boost to Rwanda’s incentives regime is the Free Economic Processing Zone which provides a tax-free environment for export-oriented manufacturing and/or re-export trade driven enterprises. The criteria for accessing the Economic Processing Zone benefits are simple and require that an enterprise;
- Exports at least 80% of its production;
- Exports 10% if manufacturing under bond;
- Engages in export of services.
Sources:
– Rwanda Investment and Export Promotion Agency (RIEPA)
– Rwanda Development Board (RDB)
– Ms. Clare Akamanzi, Deputy CEO, Business Operations and Services (RDB)
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