Rwanda could soon see a rise in investments from Japan, largely in the tech and agribusiness industries, officials have said.
This follows a virtual meeting organised by the Embassy of Japan on Wednesday, March 17 to discuss shared business opportunities between the two countries.
The meeting presided over by Imai Masahiro, the Ambassador of Japan to Rwanda, was attended by other high-ranking officials including Clare Akamanzi, the CEO Rwanda Development Board (RDB), Geraldine Mukeshimana, Minister of Agriculture and Animal Resources, among others.
According to Amb. Imai, this webinar aimed at showing Japan’s engagement in Africa as an investing country and Rwanda’s potential field for further attracting investments from Japan as well as at presenting Rwanda as a promising investment destination.
Why Japan?
Hirano Kastumi, Executive Senior Research Fellow at Institute of Developing Economies, Japan External Trade Organization (IDE-JETRO), keynote speaker, pointed out in his keynote speech, that Japan became the highest Foreign Direct Investment (FDI) provider in 2018 and 2019 in the world.
He emphasized that Japan can still increase its FDI, saying that the proportion of FDI to its GDP, 30% is lower than the average of other developed country, 40%. Japanese private companies should hence actively seek investment opportunities in Africa, he said.
According to Sugano Masafumi, Japan’s Chief Representative of the Ministry of Economy, Trade and Industry in Africa, Japanese firms are actively investing in start-up companies.
"Japanese companies see actually money in Africa. They see the African startup market as a potential area and also as a gap that state-owned huge investment doesn’t cover. Therefore, there is still room for Japanese venture capitals.”
He also explained diversification of Japan-Africa relations introducing that certain Japanese companies are run by African executives and there are growing numbers of African community in Japan. This makes Japan and Africa closer, he said.
Public private sector partnership
Otani Toshikazu, Chief Executive for Africa at ITOCHU Corporation, highlighted the usefulness of the public private sector partnership (PPP) during his presentation on a successful investment case of his company in Sierra Leone. "There were many challenges to overcome to launch the investment project and these are sometimes unpredictable and uncontrollable”, he said, "PPP with different institutions from the Government of Japan and UN families enabled his company to manage different risks”.
Hayahida Shuichi and Diagne Cheikh, from the Multilateral Investment Guarantee Agency (MIGA), underpinned this idea presenting that its insurance product can strengthen investors’ trust on hosting country, which is essential element for the promotion of the investment. They showed the availability of MIGA’s insurance products in Rwanda giving the examples of Kigali Balk Water Supply Project and Off-grid Solar Projects.
"It is easy to encourage investors but we also have to think about how to protect the investment and how to make the investment more profitable. To give this realistic perspective, I invited these panelists,” said Amb. Imai.
Japan-Rwanda robust cooperation
Akamanzi commended the Embassy’s efforts for promoting interactive opportunities for businesses in Rwanda and Japan.
Rwanda and Japan, she said, co-operate on a range of opportunities that are mutually beneficial for both countries.
"In fact, from a business angle, we have attracted a number of investments from Japan and we believe that through organisations, such as the ones participating in this webinar, we can do more between our countries.”
She added, "The value of investments registered directly by Japanese companies is just under US$ 20 million from 30 different companies.”
"Many of these companies are driving innovation and bringing new ways of doing business in Rwanda.”
Akamanzi reiterated the country’s vision of building an economy that is dynamic, innovative and private sector-led.
"This approach enables an economy that is competitive in international markets and supports strong domestic linkages for job creation and sustained economic growth.”
Potential field for investment: Agribusiness, ICT, Start-up
Hirano explained, in his keynote speech, that agribusiness is Rwanda’s comparative advantage thanks to its fertile land. He also emphasized that Rwanda can take the maximum advantage of its landlocked location for enjoying the benefits of African Continental Free Trade Area (AfCFTA) in food trading. Japan-Rwanda potential area for further investment is thus agribusiness, according to him.
Akamanzi said "Agriculture remains a very important sector for the livelihood of our people and has massive investment opportunities. The sector contributes nearly 24% of our GDP and employs over half of the active population.”
Mukeshimana showed Rwanda’s readiness to work with private investors in Agriculture introducing Rwanda’s projects on Gabiro Agribusiness Hub, Kigali Wholesale Market and Gako Meat Company. She reiterated Rwanda’s intention to not only develop its agriculture sector but also create returns on investment for the private sector.
In response to Japanese companies’ interest in ICT, Akamanzi presented Rwandan engagements in this field.
The Kigali Innovation City is, she said, a major project that Rwanda initiated to drive its ambitions of becoming a knowledge-based economy. The project currently features a complete eco-system of innovation and knowledge consisting of world-class learning institutions like Carnegie Mellon University that set up its Africa campus within Kigali Innovation City.
In a bid to attract more investors, Akamanzi said that the Kigali Innovation City project has a component of a Rwanda Innovation Fund, a privately managed US$100 million fund for the development of world-class technologies with the private sector invited to join in.
In terms of start-up companies, in which, according to Hirano and Sugano, Japanese venture capitals and huge companies are intereseted, Rwanda’s proof of concept country policy might be an answer. Akamanzi introduced a successful case of Zipline’s drone transport test project that was conducted in Rwanda and is now expanding to Ghana.
Rwanda’s strong determination for investment promotion
"Today, as you might be aware, Rwanda has had decades of investing in a very attractive business environment,” Akamanzi said.
"We have come from being the 150th to top 50 easiest places to do business in the world and rank the 2nd best in Africa after Mauritius. I believe this is testament of the work Rwanda does in continuing to make the country an attractive place to do business.”
"I wish to reiterate the shared values of our countries. Rwanda and Japan share a deep commitment to excellence – and I believe these are the values that have served our working relationship in the past and will continue to do so in the future” Akamanzi said.