EDPRS: Industry sector fairs well

BY GODFREY NTAGUNGIRA The Government of Rwanda considers the manufacturing sector as a major engine for sustainable growth and development. In long-run, the main source of job creation in the country will develop from the primary to the secondary and tertiary sectors. The current leadership has done well and stands out compared to other African countries in areas of trade.  The country is working to improve the business and investment climate. Rwanda is involved in an active and constructive trade as a means to accelerate economic growth and reduce poverty. Rwanda’s economic reforms since the 1994 are impressive and have won the attention of foreign investors.

BY GODFREY NTAGUNGIRA

The Government of Rwanda considers the manufacturing sector as a major engine for sustainable growth and development. In long-run, the main source of job creation in the country will develop from the primary to the secondary and tertiary sectors.

The current leadership has done well and stands out compared to other African countries in areas of trade.  The country is working to improve the business and investment climate.

Rwanda is involved in an active and constructive trade as a means to accelerate economic growth and reduce poverty.

Rwanda’s economic reforms since the 1994 are impressive and have won the attention of foreign investors.

The government’s Vision 2020 aims at having a dynamic, diversified, integrated and competitive economy led by the private sector raising income to 900 dollar by 2020 and reducing proportion of the population in poverty from 60 percent to 32 percent.

The government through the Ministry of Trade and Commerce is committed to ensure improved private/public cooperation and improve productive capacities with view to foster sustainable industrial development.

It’s worthy noting that within the EDPRS period, the government has put emphasis on improving road infrastructure coupled with expected increased electricity supplies from methane gas project and hydro power to uplift the expansion of industrial sector.

This will be possible with the development of human resource entrepreneurship and a private sector based on strong business class and entrepreneurs full of creative spirit and able to make an agricultural transformation into a productive and high value, market oriented economy.

To prepare for this transition, efforts have been taken to enhance the production of competitiveness and high value manufacturing goods for sale in local, regional and international markets.

Industrialization makes a varied and valuable contribution to the alleviation of poverty and raises productivity, creates employment, reduces exposure risk, enhances the income-generating assets of the poor and helps to diversify exports.

For Rwanda’s case, International trade is key companion of industrialization just as trade is the source of industrial growth.

The New country’s Industrial Policy focuses on the following strategic objectives. The government will enhance the performance of the existing manufacturing sector, including textiles and food processing by promoting labour productivity and product quality.

It will induce companies and start-up SMEs to move up the value chain into higher value added activities that use domestically produced inputs, such as leather goods production.

The Government is placing major efforts on trade capacity building to enhance productivity and quality for exports and meeting import competition in the domestic market. This is essential for Rwandan companies to seize new opportunities in the COMESA and EAC trading associations.

MINICOM mission is to provide policy, strategy and regulatory framework conducive to the creation and development of companies, businesses and cooperatives societies that can compete nationally and globally to ensure a level playing ground.

Government will strongly promote the development of new product lines. Many possibilities have already been identified in agro-processing and mining. It will also promote higher value-added activity in rural areas such as sericulture, tea, coffee washing and handicrafts for the tourist industry.

The country’s economic development and the attainment of the goals set out in the EDPRS and Vision2020 rely to a large extent on industrial development. To clearly understand the structural changes required for Rwandan industry sector to move towards higher productivity activities and to identify priority sectors and future industrial opportunities requires a technical understanding of the industrial sector and a solid basis on which to design and inform industrial policy.
 
Among the major investment priority areas in Rwanda include.

• Energy production
• ICT
• Tourism
• Agriculture and agro-processing industries
• Manufacturing industries
• Mining
• Research
• Infrastructure-building materials production industry
 
In the EDPRS framework the ministry has targets to forge Rwanda as a better place for doing business and among the strategies enshrined in the ministry’s policy action is the establishment of commercial registration agency.
 
The agency was established and its activities are on track with appointed board of governors.

In the process five liaisons offices in Huye, Rusizi, Muhanga, Musanze and Rwamagana are currently operational.
 
Currently reports has it that trade certificates are currently being issued.

• 562 - individual business registration were issued
• 496 - Companies’ incorporation
• 138 - Secured transactions
 
The industrial master plan has been finalized and validated at national level November last year 2008. Again the ministry has developed and finalized export diversification strategy that has been developed and finalized awaiting validation by the board of RDB.
 
Among the intended priorities include to develop a competitive business environment, develop a positive image of Rwanda as a business location, increase private sector investment in Rwanda and grow exports of value added Rwandan products and the creation of effective and motivated terms.
 
The share of public investment fell steadily between 1997 and 2003 before rising in 2004 and 2005. The rising share of private investment from the late 1990s was a result of the government’s policies of extensive privatization and economic liberalization.
 
The fiscal performance has improved over the last five years, with revenue collection growing to around 13% of GDP in 2006.

The domestic fiscal deficit has widened from around 2% of GDP in 2001 to 6% in 2006.  Priority expenditure, which allocates resources to pro-poor needs,8 has increased over the past five years.
 
Rwanda has also benefited from both the Heavily Indebted Poor Country (HIPC) and Multilateral Debt Relief (MDR) initiatives resulting in a sustainable debt position, in which the net present value of debt to export ratio is less than 60%.
 
Rwanda has experienced strong trade performance with exports growing at an average of 12.5 % per year since 2001.

Rwanda ’s exports reached an estimated US$152 million in 2006, more than twice the receipts generated in 2002. Coffee, tourism and tea have fuelled this growth, accounting for 60% of the 2005 export numbers.
 
Besides private Sector mobilisation, an important driver of export growth has been the restructuring of front agencies (OCIR-Café, OCIR, The ORTPN), RIEPA (Rwanda Investment and Export Promotion Agency) and BRD.
 
While this performance is short of desired targets, it provides evidence that Rwanda can generate growth when informed choices and timely action are made on specific export industries.
 
Due to the high capital requirements for Rwanda’s development, however, import growth has been out stripping that for exports with an average increase of 15 % over the past five years.
 
Therefore, Rwanda has experienced a widening of the trade deficit as a percentage of GDP from 8 % in 2001 to 12 % in 2006. Rwandan economic growth and development depends on the diversification of its export product base in addition to the continuation of strong growth in exports.
 
Rwanda authority data digital exchange RADEX system has been installed and this allows the sharing of custom information among its neighboring countries like Uganda and Kenya.

Radex is a uniform software platform that allows for the exchange of information on cross border trade, to minimize tax revenue loss and reduce time taken to clear transit cargo at the border.
 
The implementation of RADEX is fully operational between Rwanda and Uganda Gatuna border as the second step for doing it as other borders will follow. This is expected ease the customs clearance and declarations done easily.
 
A sigh of relief has gone through the business community, now that specialized commercial courts have finally been set up. Over the years, the business community has often complained about the lack of specialized laws, and especially courts that would help them settle business disputes.

In the past, commercial cases were heard by ordinary courts which, given the heavy case-load these courts were facing, often caused long delays
 
Four commercial courts have been established and currently operational.

Among them include:

• Commercial high court
• Commercial court of Nyarugenge
• Commercial court of Musanze            
• Commercial court Huye
 
Other good things which are still in the pipeline include draft bill on companies which was adopted by the cabinet and transmitted to parliament.
 
Business registration and insolvency draft bill on contracts was finished and validation awaiting cabinet approval.
 
Tourism sector flourishing

Rwanda’s tourism sector has rich and beautiful attractions. Among these are national parks, forests, various flora and fauna, and the famous Silverback Gorillas.

Rwanda has a good climate and vegetation. This is where Rwanda derives its names- land of a thousand hills, country of eternal springs. All these good features bear enormous opportunities that are not yet fully exploited.
 
Although a non-traditional export sector for Rwanda, tourism has the potential to contribute significantly to the country’s export base.

Tourism receipts have exceeded expectations since the development of the National Tourism Strategy and subsequent approval by Cabinet.
 
From a negligible base of a less than US$5 million in 2002, tourism receipts hit US$33 million in 2006 and exceeded this figure in 2007.

Not only are there more international visitors coming to Rwanda, but spend per day is also increasing, indicating a positive shift in Rwanda’s base of advantage from basic to advanced factors such as service and a full destination experience.

The Rwanda tourism sector recorded a massive 54 percent growth in 2008, generating about $214 million, $17 million more than what was raised in 2007, reports from the Rwanda Office for Tourism and National Parks (ORTPN) reveals.

The increased revenues are mainly attributed to the high turn-up of tourists from 826,374 in 2007, hitting the 1 million mark in 2008, an estimated 30 percent increase.

Among other prominent priorities in the EDPRS framework is the review and development of tourism master plan which is currently under preparation and all activities are on right truck.

Reports from the Ministry Commerce and Trade shows number of tourists coming to Rwanda is estimated to increase by up to 1.14 million by the end of this year.

In the EDPRS framework the sub- sector is expected to continue growing in 2009 to remain as the country’s leading foreign exchange earner.

ORTPN is among the seven government institutions that were merged to form the RDB which is supposed to officially start its activities early this year.

Officials say that investments in the industry especially the increase in the number of hotels around the country from 148 hotels with 2,391 rooms in 2007 to 163 hotels with 3,552 in 2008 have bolstered the sector. 

Also investments in accommodation improvements in different tourist destinations in the country especially in Kigali , Kinigi, Akagera and the recently launched Nyungwe National Park have heavily contributed to the growth of sector.

Plans are underway to diversify the sector next year to explore different tourist destinations the country has to offer. Some of the new tourist projects include canopy walkways in Nyungwe and a cruise boat on Lake Kivu among others.

Nyungwe forest, gazetted to become a national park boasts of 13 primate species, 275 bird species (of which 25 are endemic to the mountainous Central African region), 250 tree species, and 148 varieties of orchids.

Nyungwe is one of the region’s most distinctive natural attractions and is fast becoming Rwanda ’s leading tourist destination.

The forest park home to the rare Colobus Monkey got a $5 million grant from the United States which will also have a first class hotel by the end of this year scheduled to be constructed by Dubai World, a Dubai based Hotel Consortium.

ORTPN intends to invest the money back in the economy to benefit the Rwandan community as part of the Social Corporate responsibility.

Rwanda Tourism industry has tremendously grown since 1994 and it was recently voted among the “Top 10 Countries to Visit in 2009” by Lonely Planet, one of the worlds leading travel guides.

Rwanda , renowned for ‘Kwita Izina’, an annual gorillas naming ceremony which attracts tourists from all over the globe underlines the success of Rwanda tourism and environmental conservation.

Apart from generating 343,000 jobs in 2008, a 26 percent increase from 2007, revenue collected from tourism industry also benefited local communities through a Revenue Sharing Scheme which grants 5 percent of its revenues towards supporting community projects to improve their welfare.

Rwanda’s up-and-coming ideal destination that will be featured in 2009 is Nyungwe National Park. Investments in the park include a state of the art eco-lodge and a mid-range lodge; a unique, interactive interpretation center; a canopy walk allowing visitors to experience the park from a new vantage point; and a new boat on Lake Kivu to facilitate the primate product that links Volcanoes National Park with Nyungwe National Park.

Nyungwe boasts 13 primate species, 275 bird species (of which 25 are endemic to the mountainous Central African region), 250 tree species, and 148 varieties of orchids.

Nyungwe is one of the region’s most distinctive natural attractions and a great asset to Rwanda ’s tourism portfolio.

Tourism sector success story is attributed to the development of hospitality sector as of today Rwanda has experienced a wave in the increase in the number of hotels around the country from 148 hotels with 2,391 rooms in 2007 to 163 hotels with 3,552 in 2008.

Other investments see accommodation improvements in Kigali, Kinigi, Akagera and Nyungwe; tourism products and experiences being developed at Nyungwe National Park and Lake Kivu; and investments in service development and capacity building in conservation through the Kitabi College for Conservation and Environment Management.

Rwanda with her Vision 2020 objective of combating poverty, the country is has embarked on a comprehensive program of privatization and liberalization with a goal to attaining rapid and sustainable economic growth.

The goal is to transform the economy from its 90% dependence on subsistence agriculture into a modern, broadly based economic engine, welcoming to investors, creating employment and new opportunities.

Recently, substantial private investments have been made in tourism and developing new industries such as cut flowers for export and fish farming.

The full ranges of Rwanda’s resources have yet to be realized. Commercial fishing in Lake Kivu is in its infancy; there are vast opportunities in the emerging tourism industry.

The government, through the Rwanda Investment Promotion Agency is ready to work hand-in-hand with investors in the realization of its targets embedded in Vision2020 and drive the economy forward to a better future.

Ends

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