Experts have called for the scaling up of investments in the service sector to not only achieve the government’s targets of making Rwanda a service-based economy, but also help in reducing trade deficit.
This came up yesterday, during the ongoing dialogue between experts in the service industry and policymakers from the region at the Service Investment Forum (SIF).
Propelling service sector
The two-day forum attracted more than 600 investors, policy makers and business leaders from Angola, Djibouti, Zanzibar, Mauritius, Kenya, Uganda, South Africa, Nigeria, Spain, and America.
Francois Kanimba, the minister for trade and industry, said export revenue from the service sector must be propelled from the current $400 million to $2.5 billion annually by 2018.
This will help narrow the country’s trade deficit currently widened by 14.9 per cent during the first eight months of 2014.
“We have a lot of expectations from the service sector because we believe that a growing services sector will be crucial in achieving our economic goals given our geographical size. We have set very ambitious targets that must enable the sector to increase its contribution in terms of export revenue,” the minister said.
Apart from the tourism sector, we have not seen a lot coming from the service exports, we must therefore begin to think on how to address this challenge, Kanimba told investors.
The government is creating a free economy where every person must be free to do business, including those in the service industry, Kanimba added.
Building a world class information and communication technology infrastructure will continue to play a key role in terms of supporting the sustainability of the sector, he added.
Availing tax incentives, and implementing the reforms proposed under the new investment code while emphasising flexibility and predictability will not only attract investments in the service industry, but also increase the industry’s contribution to the export revenue, said David Primack, the executive director of the International Lawyers and Economists against Poverty.
Konde Bugingo, chief executive of Rwanda Development Bank (commercial), said Rwanda needs to archive cost-effective business models that would try and bridge the gap between policy formulation and implementation along the value chain.
There is still a gap between policy formulation and how people on the ground understand that policy, he said, adding that operators should open their businesses with eyes beyond the Rwandan borders.
“The government must figure out how the private sector can be lured into trading services across the country’s borders which can be done through investment policies, education to the private sector,” Bugingo advised.
The service industry currently contributes 48 per cent to Rwanda’s GDP, 75 per cent and 47 per cent to global and African economies, respectively.
According to Francis Gatare, the chief executive of Rwanda Development Board, the service sector is not only growing but also providing a platform for entrepreneurs to explore and exploit the business opportunities within the sector.
“The service sector gives Rwanda an opportunity to leapfrog and achieve the economic success that has been achieved elsewhere across the globe. It will also allow the country to participate in global space competitively,” Gatare said.
Being able to continue to unblock some of those challenges, will increase our competitiveness on the global service industry, he added.