JULY 24, 2108 ― Rwanda is banking on its political stability, good governance and well-functioning institutions to attract new investments into the country.
The East Africa state is on an aggressive global charm-offensive to lure new investors, while enticing existing financiers to re-invest in the landlocked country which has proven to be an upcoming strong economic power house in the region.
The country which is this year celebrating 24-years since the dreaded “1994 Genocide” has taken back the reigns to redefine itself as the preferred investment and tourism destination in the continent.
With an annual average Gross Domestic Product (GDP) growth of eight per cent, the 12.1 million populated country is riding on its success to implement incentives which have made it among the top in Africa in the ease of doing business.
Rwanda was ranked the most competitive place to do business in the East Africa region and second in Africa by the World Economic Forum’s 2017-18 Global Competitiveness report.
It was also ranked second after Mauritius in the World Bank Ease of Doing Business Index released late last year and the top destination in East Africa.
According to pundits, efficient markets and stable political position are among the top key pillars that have boosted the country’s competiveness.
The country is boasting as being among the few in the continent where investors can register their business within the shortest time possible, with a strong legal-regulatory environment that is committed to foreign ownership rights and economic freedom for investors.
“You can register your business within six hours,” Rwandese High Commissioner to Kenya James Kimonyo told journalists in Nairobi.
“We are open for investors and one thing I can assure you is that return on investment is very high. The government has ensured the environment for investment is very conducive,” Kimonyo added.
READ:Rwanda lures more Kenyan investments into the hinterland
Incentives
With a new investment law, Rwanda has put in place an array of incentives for investors putting their money in key priority sectors, as it seeks to deepen Foreign Direct Investments (FDIs). These are fiscal and non-fiscal incentives.
They include zero corporate income tax for companies planning to relocate headquarters to Rwanda and 15 per cent preferential corporate income tax for strategic sectors such as energy, transport, affordable housing, ICT and financial services.
The country is also offering an accelerated depreciation of 50 per cent for key priority sectors that is tourism, construction, manufacturing and agro-processing.
Investors who meet government requirements are exempted from capital gains tax while allowed repatriation of capital and assets.
It also has a seven-year corporate income tax holiday for large projects in strategic sectors of energy, exports, tourism, health, manufacturing and ICT.
Non-fiscal incentives include quick business and investment online registration, assistance with tax-related services and exemptions, assistance to access utilities (water and electricity) and obtaining visas and work permits.
Investors can also access information at a One Stop Centre created by the government and are assured of aftercare services to fast track project implementation.
Investment opportunities
Sectors fronted for investment include manufacturing, Tourism, ICT, Agriculture, Energy, Mining and Real Estate and Construction.
Others are Financial Services, Health Services, Infrastructure and Education.
Manufacturing
Though the country’s manufacturing sector is still small, it has been recording year-on-year growth at an annual rate of seven per cent (7%).
Rwanda targets to increase industrial contribution to GDP to 26 per cent by 2020.
“Several policies and strategies such as the National Industry Policy and the National Export Strategy have been developed to accelerate industrial and export growth,” the Rwanda Development Board notes.
It targets to increase the value of exports to US$1.5 billion by 2020 and increase the number of jobs to 1.5 million by 2024.
To boost local domestic and foreign supply of manufactured goods, the government has put in place a Special Economic Zone and industrial parks in Bugesera, Huye, Nyabihu, Rusizi, Rwamagana and Musanze, which come with developed infrastructure and streamlined business regulations to facilitate fast moving investors.
Opportunities in the country’s manufacturing sector include in the textile, apparel and leather sector, wood and wood products, float glass manufacturing and packaging.
It enjoys a number of trade incentives including duty-free quota-free market access for goods entering the European Union Market and the US through the American Growth and Opportunity Act (AGOA). Rwanda also enjoys an array of bilateral investment and tax treaties.
Tourism
Rwanda has opened its doors for international hotel brands as it continues to beckon tourists home.
Tourism remains the largest source of foreign exchange earnings for the country. The sector generated $404 million in 2016.
The country is carving out its niche as a regional and international conferences hub with its new world-class conventional centre. It is also riding on its visa-at-gate policy for all Africans and the East Africa single tourist visa, which have made it convenient to visit.
The rapid growth of RwandaAir and other regional and international airlines’ operations to the capital-Kigali have connected the country to the globe.
The country is offering investment opportunities in hotels, golf resorts and other amenities that come with the investments.
Rwanda has placed itself in the spotlight with a marketing deal with English Premier League Club-Arsenal, which will see the club market the country as a tourist destination in a campaign dubbed “Visit Rwanda”.
ICT
In ICT, the government has invested heavily in developing relevant infrastructure to enable service delivery.
The country has over 5000 kilometres of Fibre optic broadband laid across the country, connecting all 30 districts with nine regional links to neighboring countries.
It has opportunities in tech innovation, Information Technology and Smart Cities solutions among other areas.
Agriculture
The agriculture sector offers investors an opportunity to invest in food processing, value addition, mechanization, distribution and cold chain, large scale poultry farming, floriculture, beef farming targeting export market, milk and milk products processing and irrigation for production of high value crops.
Energy
In the energy sector, opportunities are mainly in power generation with solar being a key focus for the government.
The President Paul Kagame led government places high importance on Solar Home Systems market, driven by the private sector to provide electricity to about 1.2 million households.
Rwanda enjoys a growing off-grid standalone systems market with about 24 companies supplying Solar Home Systems through government programmes and independently.
The country exempts small isolated grids (50kW and below) from licenses.
Mining
The sector is the second largest export in the Rwandan economy. In 2016, government data shows the sector generated US$166.5 million, employing over 30,000 people.
Rwanda’s main mineral exports are ores processed to extract tin, tantalum and tungsten. It also has some gold and gemstones.
“Exploration works to indentify and delineate more mineral deposits are underway and Rwanda possesses a mining law with supporting Ministerial orders and has a mining policy in place,” RDB notes.
Investment opportunities include in industrial mining, value addition, partnerships (with local mining companies) and trade in mineral substances.
Real Estate
Investment in the sector has grown from US$100 million to over US$600 million in the last 15 years, driven by population growth, a growing middle class, increased diaspora investment in the property market and government investment in infrastructure.
The country has vast opportunities in the real estate sector spanning from large commercial property, office space to residential properties.
Rwanda has a high demand for affordable housing to match the needs of the growing middle class in the country.
Opportunities are available in development of warehousing facilities, commercial complexes, office buildings and shopping malls.
This also necessitates the production of construction material offering a further investment opportunity.
Kenya Commercial Bank (KCB Group) is among the biggest investors in Rwanda’s real estate sector with a portfolio of about US$115 million.
The lender is currently developing four key projects namely: Vision City-the largest real estate project in the country, Century Park, The Residence and Izuba City which is being developed in partnership with Rwandese developers.
“Investing in Rwanda, you are assured and guaranteed of returns,” says Beatrice Chege, Head of Mortgages –KCB Rwanda.
Financial Services
Rwanda has recorded growth in its financial sector with institutions such as banks, micro-finance, savings and credit cooperatives, insurance companies and pension funds thriving.
The country’s commodity exchange and capital market is also growing fast.
The banking sector continues to dominate the financial system with 66.9 per cent followed by pension, insurance and microfinance at 17.1 per cent, 9.7 per cent and 6.3 per cent respectively.
At least six commodities are traded on the exchange.
Investment opportunities include agricultural financing and Small and Medium Enterprises (SME) financing.
Health
The health sector offers opportunities in manufacturing of health products and equipment, provision of advanced health care services and investment in medical schools.
Infrastructure
Rwanda has been keen to expand its infrastructure mainly road, rail and air transport.
The country is keen to play its part in the development of the Dar-es-Salaam-Isaka-Kigali railway project, which will connect Kigali (Rwanda) from Isaka to the Tanzanian port of Dar es Salaam.
The project is estimated to cost US$5 billion once completed.
President Paul Kagame’s government has also expressed commitment in the development of the Mombasa-Nairobi-Kampala-South Sudan-Kigali standard Gauge Railway.
Kenya has already implemented the Mombasa-Nairobi stretch (currently operational) and works on Nairobi towards Western Kenya are underway.
This week, Kenya’s President Uhuru Kenyatta said SGR Phase 2A from Nairobi to Narok is now 57 per cent complete.
The project, which is part of East Africa’s Northern Corridor Integration, is expected to reach the Kenya-Uganda border with Uganda taking the mantle to connect to its neighbours.
Rwanda has fronted investment opportunities in the Mombasa-Kampala-Kigali railway line in her country. The value of the Rwandan section of the project is US$1.5 billion.
It is also open to continued investments in its road transport system both roads and supporting infrastructure mainly in the public transport sector.
Education
In the education sector, the country is offering investment opportunities in Technical and Vocational Education and Training (TVET), ICT in education and Higher Education and Research.
Kenya is among the top investors in Rwanda with a consolidated investment of more than US$500 million.
“Kenya as a top Foreign Direct Investor in Rwanda shows Rwanda’s trust in Kenya as a neighbor,” Kenya’s Foreign Affairs Principal Secretary, Ambassador Macharia Kamau, said at a recent event, further noting that the country has been attracting FDI’s from companies that would have rather invested in Kenya.
This, however he said was good for regional growth, with Rwanda’s growth creating an export market for Kenya.
Rwanda is hence a force to reckon in the region as an investment destination and with the current trends, the country which is a member of the East Africa Community (EAC), Common Market for Eastern and Southern Africa (COMESA) and Economic Community of Great lakes countries (CEPEGL) is arguably destined for greater heights.
