President Paul Kagame has said that there was no doubt that funds to invest in development among governments were increasingly scarce but there is a way out by working closely with the private sector.
Kagame was speaking at a session on maximizing finance for development at the World Bank headquarters in Washington DC.
He added that the private and public sector can need each other to achieve prosperity.
“The prosperity that we are looking for in all countries cannot come from public or private separately. There has to be coming together where the public side might do what they are capable of doing and the private coming in to do the best they can and when we are together we are able to maximize on finance for development,” he said.
Citing Rwanda’s experience in mobilizing funds for development, he said that in post-genocide Rwanda, both sectors had significantly low capacities with the private sector being lower.
This meant that government had to find ways to fill gaps and to bring in capacity by working with multi-lateral institutions such as the World Bank group.
Among the lessons that the country has drawn from the process is the need to create predictability by putting in place a conducive environment through aspects such as regulatory environment.
“Lessons that we have drawn from all this is that markets left on their own will not solve our problems. In fact we can do things in partnership with government doing as much as we can to deal with some of the failures that are present in the market place…… The regulatory has had to be created so that there is predictability in the process of doing business. We have benefited from the World Bank to create an environment where it is easy to do business in our country,” Kagame added.
This also involved working to change perceptions by some investors about the country as well as turning some of the shortcomings such as the size of the market into advantages.
This led to government with the support of multi-lateral partners to work at ensuring that the investment environment and conditions were attractive.
“There are difficulties, for example investors out there who want to put their money wherever they want to put it will look at a situation like ours, as a small market. They would rather go to the markets they think they will invest in and get their returns. On our side, we have to prepare the ground and convince people that beyond being a small market, this is a country and people that are worth paying attention to and in our case we work round the clock to make sure that the perception does not become a reality,” he said.
Some of the direct actions taken include easing the business registration processes through the Rwanda Development Board, easing tax declaration and remuneration process and providing post investment services to address investors’ concerns.
The most recent release of the World Bank Doing business report ranked Rwanda 2nd in Africa after Mauritius and first in the EAC region.
The annual report focuses on ten main areas that affect business namely, the ease of starting a business, obtaining construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency.
The Global Competitiveness report 2017/18, published by the World Economic Forum (WEF) ranked Rwanda second in Africa with the authors’ noting that it was largely due to efficient markets and a stable political position.
In other instances, Kagame said that the government has invested jointly with the private sector to provide goods and services which has eventually made the sectors vibrant and attracted competition.
Among the sectors that have had such intervention is the local telecom and hospitality sectors.
To remain relevant and attractive to investors, Kagame explained that the country has had to have a zero tolerance on corruption policy to ensure that gains over the years are not threatened.
“Corruption does a lot of damage to almost everything we want to achieve in our countries for our people. Rwanda’s uniqueness is that it is a small economy constrained in many ways, there are certain things that we cannot afford to do or deal with,” he explained.
“If we allowed corruption to thrive in our country investors may go to a bigger economy with bigger corruption and we lose out. So we had to create that uniqueness for ourselves to make ourselves attractive so investors choose,” Kagame added.
Kagame was speaking alongside finance and business experts including; World Bank President Dr. Jim Yong Kim, Renu Sud Karnad Managing Director, of India’s Housing Development Finance Corporation (HDFC) and Bill Winters Chief Executive Officer, Standard Chartered.