Rwanda’s Investment Strategy (RIS) envisages the increase of total investments from 22 percent in 2005 to 30 percent of Gross Domestic Products (GDP) by 2020.
As we stroll through the new year promotion of investments and trade is one of the key pillars of the country’s roadmap into the realisation of pillars of Vision 2020.
Rwanda’s investment promotion is premised on the need to facilitate the structural transformation of the economy toward industry and services, underpinned by the creation and sustenance of a knowledge based economy.
Creation of the Investment Code
The country has created the investment code. This is the creation or acquisition of new business assets or the expansion, restructuring or rehabilitation of existing business enterprise.
Similarly, Rwanda’s investment promotion involves all activities aimed at encouraging greater infusion of investments to fuel growth as well as enhancing the image of the country as an ideal location for investments.
By its very nature therefore, investment promotion is not sector specific. Instead, its scope is cross-cutting in nature. Promotional policies are designed to provide a framework within which present and future investment strategies and actions will be undertaken in a focused manner if Rwanda is to realize its growth objectives in line with Vision 2020 development expectations.
The policies are directed towards expanding production and value addition in traditional exports; tea, coffee and tourism, diversifying of export base, focusing on high value, innovative products and services, and enhanced institutional competitiveness among others.
It is upon this, that Rwanda’s Investment Strategy (RIS) envisages the increase of total investment from 22 percent in 2005 to 30 percent of GDP by 2020. This envisaged accelerated growth will require significant expansion and deepening of investment as well as export performance.
However by implication, investment promotion comes into play to mobilise more infusion of capital, mainly private, necessary to drive targeted growth levels.
Creation of investment opportunities
For the year 2009 there are opportunities in just about any sector. Rwanda’s investment promotion is undertaken with the vigour of private sector style of operations, the engine for economic development. However, this is supplemented with various forms of incentives for investors seeking a gateway into Rwanda.
In the manufacturing sector, Rwanda has embarked on an 11-year industrial Master Plan that will see the country revamp and rejuvenate the sector to make it more sustainable and development oriented.
The plan running from 2009 to 2020 focuses on how to revamp, develop and sustain the country’s manufacturing sector over a medium and long term period, in line with Vision 2020. In the short term, each district shall identify areas reserved for Industrial activities; seek clearance from the environmental body as regards the targeted industries.
Appropriate facilities will also be provided to enhance the investment environment and attract specific industries to the country.
This sector has been one of the important sources of the country’s growth, expanding by an average of 6.2 percent, with an increase in GDP of 7.3 percent in 2007 from 6.8 percent in 2003.
Based on data collected in a 2008 survey from 44 large industries, there were approximately 46,000 people employed.
There has also been a shift towards higher technology and capital-intensive activities in the manufacturing sector. These are indicated by greater investments in higher technology and capital-intensive projects and a greater proportion of skilled workers employed.
Therefore, manufacturing sector is envisaged to grow its contribution of GDP to 26.5 percent by 2020. However for this to be achieved, the growth rate of the sector will need to increase significantly from the current 7 percent to over 14 percent over the period.
To achieve such growth prospects, various industries have targeted for further invest, with expectations to feed onto the export sectors by boosting their capacities at least 15 percent while enabling the achievement of Vision 2020 targets.
To be developed in line with Rwanda’s Vision 2020, industrial growth requires a full partnership and fair economic participation among all sectors of the Rwandan society.
The fundamental challenge of pursuing industrial growth with equitable distribution includes the need to gain the confidence of and commitment from all development partners.
The Rwandan economy is targeted to grow at 7 percent during the period of 2009-2020. This target is premised on the manufacturing sector gaining significant growth momentum, the services sector becoming a major source of growth, developing the agriculture sector.
It is also premised on the private sector assuming a lead role in generating new investments and the public sector enhancing its delivery system.
As per the Economic Development and Poverty Reduction Strategy (EDPRS), the economy is expected to grow at a higher rate of 8.1 percent by 2012. Subsequently, during the period 2013-2020, the economy is targeted to register an average annual growth of 9 percent.
The industrial sector will continue to remain an important component, with growth rate expectation pegged at 12 percent annually by 2012.
It is also expected that the non-government services sector will assume a major role during the envisaged period, growing to contribute 42 percent to the economy in 2020.
The services sector growth over the past 5 years has averaged 8 percent. In 2003, the sector contributed 43.7 percent to GDP. By 2007, the contribution of the sector had increased to 48.2 percent of GDP.