Investors seeking to set up factories in the Special Economic Zones will now find it easier to access land under a new policy as it curbs unnecessary rises of land prices, the Ministry of Trade and Industry has said.
The new policy, announced last week, allows investors to acquire long-term lease and be engaged in negotiating prices for plots of land.
The Minister for Trade and Industry, Vincent Munyeshyaka, explained that the agreement will be informed by the expenses on infrastructures set up on the plot of land in question so that no one suffers loss, but also make sure that there is no hike in prices of the plot – which has previously been experienced in some cases, discoursing investors from building factories in designed industrial zones.
The old policy came into place in 2010 which facilitated the Ministry of Trade and Industry to set up industrial parks across the country.
There are eight industrial parks in districts which add toaround the country besides the Kigali Special Economic Zone. The parks include Bugesera, Musanze, Nyabihu, Rwamagana, Muhanga, Nyagatare, Rusizi, and Huye.
Comparing prices at Kigali Special Economic Zone [KSEZ], and Bugesera [Industrial Park], the minister said that a square metre of a plot of land is at $10 in Bugesera, while it costs higher in Kigali.
“You realise that prices change basing on negotiations, and infrastructures that were constructed [on the plot of land]. We, therefore, want to discourage speculation in land,” he said.
Cécile Nkomeje, the Managing Director of PharmaLab, a company producing medical plastic tubes and containers, told The New Times that prices of land [per square meter] at Kigali Special Economic Zone have more than doubled from Rwf20,000 (about $25) in 2014 – when she bought her plot on which she set up her business – to Rwf43,000 (about $53) currently.
She pointed out that when the cost of land rises it discourages investors.
Under the new policy prices for a plot of land will depend on negotiations between government and investors, and this is expected to prevent sharp price increase.
“If government intervenes it will help investors because land is expensive,” Nkomeje said.
Brian Ngarambe, CEO and Founder of Bonus Industries Ltd, a company specialised in making eco-friendly packaging materials in Kicukiro and Rwamagana, said that it is a good idea for investors and government to agree on land prices.
But he expressed concerns that land prices in Kigali Special Economic Zone are likely to be much higher than in other parts of the country because of the infrastructures and business opportunities available there.
Treating investors equally
Under the old policy, each investor’s case was treated depending on where they wanted to set up their factory, and they agreed on how the government could help through incentives.
“We have an investment code determining how we treat investors and such laws determine their due incentives; we realised the need for reforms to treat all investors (both local and foreign) equally,” said the minister.
With the latest reform, a special organ will be set up at the Rwanda Development Board (RDB), which the minister said will help the government follow up and establish regulations and laws governing the development of industrial parks, and Special Economic Zones.
The same organ will help investors in negotiating land prices.
Land to be accessed on lease
Under the old policy provisions, developed in 2010, Munyeshyaka said, foreign investors were only allowed to rent land, while local investors could buy it for full ownership.
With the new reform, the minister said, the government will be leasing land on a long-term basis, which cannot exceed 99 years.
“Because of limited land we agreed that all investors will be renting land, [because] it belongs to the government,” he pointed out.
Kigali Special Economic Zone
According to Rwanda Development Board (RDB), Kigali Special Economic Zone consists of two phases, with phase I covering 98 hectares of land hosting 97 plots. It is serviced with key infrastructure, including roads, electricity, water and firefighting systems, sewage system and fiber optic cables to ease operations of investors.
Phase II has 178 hectares of land, with 67 plots.
Munyeshyaka said that about 95 per cent of the Kigali Special Economic Zone is occupied by factories in such areas as agro-processing, construction and textile industry.
Industrial parks outside Kigali are still under development, according to the minister.
For instance, he said, Huye has five factories, including one making animal feeds for livestock, such as chicken and pork. Bugesera has an e-waste dismantling facility.
Munyeshyaka said that the development of industrial parks should be done gradually.
“We are getting many people who want to set up factories in industrial parks, which requires us to speed up the programme,” he said.