Rwanda and China last week signed 15 bilateral memorandum of understanding (MoUs) and agreements during China’s President Xi Jinping’s state visit to Rwanda.
The signing ceremony was one of the major highlights of Xi’s two-day visit.
Here is what some of these agreements mean to Rwanda:
Bugesera International Airport road project
The Rwandan government signed a loan agreement to expand the road leading to Bugesera International Airport, which is scheduled for completion by the end of 2019.
Government is borrowing $50 million from Exim Bank of China to finance the construction of the 13.8 km expressway.
While government officials did not reveal the detail of the loan agreement, such as interest rates and payment terms, Exim banks normally charge 1.5 to 2.5 per cent, according to Caleb Rwamuganza, the Permanent Secretary in the Ministry of Finance and Economic Planning.
“We signed MoUs with Exim Bank of China but we haven’t got into all details,” he said.
According to officials at the Rwanda Transport Development Agency (RTDA), the expansion of the road, Sonatube-Gahanga-Akagera Bridge Road, is expected to start within the next six months and the execution period is estimated at around 24 months.
With Rwanda set to host the next Commonwealth Heads of Government Meeting (CHOGM) in 2020, there is a push for early completion of construction activities at Bugesera International Airport to accommodate the highly-anticipated traffic.
RTDA’s Imena Munyampenda told this paper that they want the road to be completed before the airport construction activities.
Infrastructural projects tend to be capital intensive, making it hard for a country to foot the entire cost upfront.
While some experts have cautioned against increased borrowing, Rwamuganza said that Rwanda borrows within its capacity, highlighting that all the country’s debts are manageable.
On behalf of the Rwandan government, the Minister for Trade and Industry, Vincent Munyeshyaka, signed a Memorandum of Understanding on e-commerce cooperation.
This agreement comes a year after Jack Ma, founder of China’s e-commerce giant, Alibaba Group, visited Rwanda, whereby he made investment commitments for African start-ups in e-commerce and other tech businesses.
The Trade Minister said this agreement will promote digital trading even as he did not specify what areas of e-commerce they will collaborate.
Yet, experts believe this particular agreement is a step in the right direction for the development and promotion of Rwanda’s nascent e-commerce industry.
According to Norbert Haguma, an Investment Advisor for Chinese looking to invest in Africa, China got it right with e-commerce infrastructure, which Rwanda can seek to replicate.
“The infrastructure of e-commerce is really needed in order to develop the industry in Rwanda. If you want to buy honey from the Southern Province, or fruits from the Northern Province, it should be possible to do that via e-commerce platforms,” he said.
Haguma also argued that e-commerce is more about technology, which China has mastered for the past few years, and that Rwanda can really benefit from sharing and learning best practices.
“E-commerce implies big data, cloud computing because you cannot ask for every manufacturer to build their own website as nobody will easily find them. That’s why on Alibaba, Taobao, and Tmall you can easily set up shop and sell, making e-commerce a tool to do business,” he noted.
He highlighted that Rwanda can also learn from how China has financed the e-commerce industry.
Rwanda’s e-commerce industry is slowly growing and the industry has started attracting foreign investors like DMM Group owned by Japanese investors.
The group is currently making a strong push within the e-commerce field in the country. They have built the first e-commerce directory, Hehe (hehe.rw).
There are other players like Jumia.
Investment in human resources development
The country is also in the process of setting up strategic partnership with China to promote the human resources development across different sectors.
This will enable the country make progress in developing a critical mass of trained human resources.
It is widely believed that investments in people’s capabilities through a focus on education, nutrition and health as well as productive skills enhancement can increase access to decent work and provide opportunities for sustained progress.
It is not yet clear what areas of collaboration the two countries will take, but China’s human resources industry is diverse.
By the end of 2020, China expects revenue from the human resource industry to reach 2 trillion yuan (about $303.7 billion), according to statistics by the Chinese government.
Haguma, who is also the Secretary of Rwanda-China Alumni Organisation, said that there is currently an increase in the number of Rwandans going to study in China in a number of fields including vocational training.
“But what is lacking is the pursuit of more technology acquisition, and this is something we want to do as an organisation as part of our contribution,” he said.