Rwandan investors have formed a company to explore business opportunities in the Central African Republic (CAR) as they move to take advantage of the country's tax incentives.
Robert Bafakulera, the Chairman of Rwanda’s Private Sector Federation (PSF), who headed a delegation of 56 Rwandan investors to CAR’s Capital Bangui on April 21 disclosed that the trade mission aimed at looking for potential opportunities in various sectors.
CAR President, Faustin-Archange Touadéra, reportedly promised to support Rwandan investors by providing a raft of tax breaks in what is seen as a bid to restore investor confidence in the country, which currently faces threats of rebel fighters.
Bafakulera disclosed that the investors were on the trip agreed to jointly open a local company in CAR.
The board of the newly formed company, he said, has been selected with initial investment capital of $1 million (about Rwf1 billion).
"We had a great business meeting with His Excellency President Faustin-Archange Touadéra. He promised to facilitate Rwandan entrepreneurs willing to invest in CAR,” Bafakulera wrote on his Twitter handle on April 24.
He told The New Times that a number of Rwandan businesses opened subsidiaries in CAR.
With the country yet to regain its stability, almost all products in CAR are in short supply with high prices, which potentially mean high profit margins.
Bafakulera said that the investors are exploring opportunities in electricity production and distribution, agriculture and agro-processing, mining, logistics, construction, food and beverage as well as real estate development.
Incentives for Rwandan investors
Bafakulera indicated that incentives are tax holidays ranging from three to 10 years, depending on the size of investment.
The tax holiday for every investor in the country – not for Rwandan only – he explained, is three years for 100 million CFA (about $184,000), five years for 100 million to 500 million CFA (about $921,000) and seven years for 500 million CFA and above.
For Rwandan investors, he added, they will be given tax holidays of up to 10-years if they invest in rural areas and three years if they invest in urban areas.
CAR faces a daunting task to disarm and demobilise all armed groups who are still in possession of weapons and are using them against the population or simply to survive because they lack other sources of livelihoods.
When CAR’s Minister of Foreign Affairs Sylvie Baïpo Temon made a working visit to Rwanda on February 8, Rwanda’s Minister of Foreign Affairs, Vincent Biruta said that it is good that Rwanda’s army is keeping security in CAR, but observed that was not enough, underscoring the need to expand cooperation between the two countries.
He said that Rwanda was also committed to supporting the Country carry out development activities to create jobs.
Economy, natural resources, and opportunities
According to USAID's LandLinks, a knowledge-sharing platform focused on land tenure and property rights, roughly one-third of CAR’s total land size of 623,000 square kilometres is considered suitable for farming.
Yet only about 3 per cent is under cultivation.
LandLinks indicates that the 2018 population was 4.9 million, with 61 per cent rural and 39 per cent urban.
In 2018, the country’s gross domestic product was estimated at $2.2 billion with agriculture constituting 31 per cent, services 42 per cent and industry 20 per cent, according.
CAR is rich in mineral resources, including diamonds, copper, gold, graphite, uranium, iron ore, tin, and quartz.
As of 2020, only diamonds and gold were being developed and production was mostly artisanal and small-scale.