Proper leadership and implementation of a regulatory framework will determine the extent to which the Kigali Special Economic (KSEZ) will impact Rwandans and the economy in general, according to a top World Bank official.
The KSEZ, that is presently being put up in Gasabo District, aims at boosting and diversifying economic activity, create jobs and increase investments in the country.
Special Economic Zone is an area identified with economic laws that are more liberal than a country’s typical economic regulations, different activities and acts as an umbrella to help the country’s economic growth.
“These projects are risky while others have failed but some are successful and creating positive impact in the communities like the Special Economic Zone of the peoples Republic of China,” said Sumit Manchanda, a Senior Operations Officer in charge of Global Special Economic Zones in the World Bank Group.
He said such zones require high end infrastructure, regulatory framework and conducive environment to do business.
KSEZ will accommodates export and processing, industrial plants and ICT park driven by demand on the market.
It is a partnership between government, Rwanda Development Bank (BRD), Rwanda Social Security Board (RSSB), insurance firm- SONARWA, Prime Holdings, MAGERWA and Bond Trading.
According to Manchanda, the World Bank group is facilitating the process of putting up requisite laws and regulatory framework, as well as sharing international experience to allow government to own the policy.
“Leadership and helping investors matter; because investors care less about taxes. Hopefully, by sharing experiences, SEZ will make the country compete regionally or use it as a gateway to many African countries,” he said in an interview last week.
The KSEZ is also expected to boost Rwanda’s export sector.
The World Bank group is working with RDB to develop policies; standards based on international best practices to help and enable government implement the legal framework.
“We came in as government advisors in 2009, providing a high level guidance because a country is able to enjoy the benefits of economic zones if it’s well designed and implemented.”
A policy towards the establishment of SEZs in the country was formulated and approved by the Cabinet in December 2009 and consequently, the law regulating them was enacted in January 2011 and three ministerial orders approved in December 2011.
The project was initially called the Kigali Free Trade Zone but was renamed the Kigali Special Economic Zone after experts said it was not flexible to allow the diversity of economic activities.
“The change was commendable because it gives it the broad concept of economic growth,” Manchanda said.
According to him, the objectives of traditional concept of SEZs include promotion of Foreign Direct Investments (FDI) with 70-80 per cent policies related to export requirement and FDI, duty-free area and tax incentives.
“And when it comes to adopting laws, I must say Rwanda is the fastest,” he said.
He pledged the World Bank’s support in building capacity, communicating and creating awareness on the benefits of investments in the SEZ.
Currently, 47 local and regional firms have already booked 60 percent of the land area in the zone.
The project will be implemented in three phases, with the first two phases covering a surface area of 277 hectares with the third phase occupying approximately 134 hectares.
Information from the task force in charge of the implementing the KSEZ says that 96 per cent of phase one has been completed with infrastructure like tarmac roads, water and electricity rolled out in all designated plots and a waste water treatment plan all in their final stages of implementation.
Some of the successful SEZs include United Arab Emirates, Jordan, Egypt, Turkey, Kenya, Bangladesh and India.