The cabinet this week approved the establishment of a special purpose vehicle (SPV) to accelerate the implementation of the Kigali Innovation City, a project aimed at driving economic growth through digital transformation.
The setting up of the special purpose vehicle means the Government will set up an independent entity to drive the implementation of the Kigali Innovation City, which currently is under the Rwanda Development Board (RDB).
But why exactly does Rwanda need this independent entity?
According to government officials, the decision to set up a separate entity was taken to fast-track the project.
Paula Ingabire, the Business Development Officer at Rwanda Development Board (RDB), said the proposed entity will seek to attract private investors as the project requires a lot of big investments.
“We have been managing the Kigali Innovation City since 2015, but the stage where we have reached is a time when we need to get investors to invest in the real estate portion of the project,” she explained.
With limited public resources and low level specialised expertise required to run the project, Ingabire said, establishing an independent entity was the right option.
“To get the right person to come onboard to invest we needed to create a special purpose vehicle, and this means giving the mandate to the entity to go out there and look for both equity and investors so that we can get the right funding required to put in place the Kigali Innovation City,” she noted.
The mandate will be to attract real estate developers, technology partners, venture capitalists and other financing players, she said.
The official also pointed out that by looking for financing, they will tap into the expertise investors have that would facilitate building and nurturing the country’s innovation ecosystem.
If the Government manages to secure financing for the real estate, it will relieve tech start-ups some burden as they normally prefer to work in innovation hubs, co-working spaces and incubation centres to reduce the operating costs.
“The real estate portion really is about how you put in place the structure, the actual buildings to attract players. For instance, a company like IBM may come but all they want is space to get started, so what we are doing is to make sure that this infrastructure is in place,” Ingabire noted.
According to her, the entity is expected to come into effect in the next two months.
A flagship project, the Kigali Innovation City was initially estimated to be worth US$1.9 billion and is being set up at the Kigali Special Economic Zone.
The project was conceived back in 2015 with the idea of turning the country into an innovation hub.
Under the project, the Government was targeting to set up centres of academic excellence in ICT, research and development, as well as promote human capital development, all of which would contribute to turning the country into a knowledge-led economy.
It is a model that was inspired by the U.S. Silicon Valley – home to many start-up and global technology companies like Apple, Facebook and Google.
Already, Carnegie Mellon University is completing its Africa campus at Kigali Special Economic Zone and officials had earlier told The New Times that it would be inaugurated in the next few months.
Other centres of excellence like the African Institute for Mathematical Sciences (AIMS), International Centre for Theoretical Physics, and African Leadership University (ALU) are also expected to start construction of their campuses in the same area soon.
As part of the project the Government also launched the Rwanda Innovation Fund to promote local innovators, expected to be the core drivers of the country’s digital economic competitiveness.
Generally, the country would tap into the potential of innovation and technology to promote different areas of the economy, including agriculture, health, education, finance and manufacturing, among others.