Rwanda Development Board (RDB) says that an investment target of over $500 million is expected to be registered this year in order to deliver on the promises of the transformation agenda.
In this interview RDB Chief Operating Officer Clare Akamanzi shares with Fred Oluoch-Ojiwah of The NewTimes on how this year’s investment landscape in Rwanda is likely to unfold.
What are we likely to see within the investment landscape in 2011 basing on results of 2010-For instance what are the sectors likely to attract investments this year?
There is expected to be a growth in investments across key economic sectors in 2011 compared with 2010. These are Agribusiness, Energy, Construction and Real Estate, pharmaceutical, education, ICT, General Manufacturing as well as Tourism and Conservation.
This is based on the increased interest we have seen being generated from the Far East after President Paul Kagame’s visit to India and subsequent visits by Prime Minister Bernard Makuza and other Government officials to Thailand, India, China and Malaysia.
These high level initiatives as well as other planned initiatives will deliver the growth in investment Rwanda seeks. We are already discussing several possible projects some of which we are confident will be closed this year. We will announce these as they close.
In addition, there are also ongoing pipeline projects which will have significant progress in 2011. These include the Marriott hotel in Kiyovu and the convention centre which should attain major advancement in 2011.
There is also Hilton which we expect to start this year and the anticipated expansion of CIMERWA to almost 5 times its current capacity and the Steelrwa project in Rwamagana, both of which should facilitate the ever expanding real estate sector in the country.
Also the fact that the global economy is in recovery and that Rwanda provides an ideal investment destination for investors seeking opportunities in emerging economies makes RDB confident that we will see a surge in investments in Rwanda starting in 2011.
There seems to be a strategic shift to scouting for FDI’s from the west to the east by RDB. Going forward- what are we likely to see this year in this regard? We are being informed that big things are expected from the east if not already happening.
This shift is due to the new realities of the global economy. The Far East ,especially China and India, are fast becoming some of the largest contributors of global FDI flows.
Rwanda is seeking to not only mobilize investment but also promote exports of our products into these markets. The Far East has the liquidity needed to finance investments outside their countries and their companies are also very keen on finding opportunities.
We are simply matching their needs for investment opportunity with our need for investment. We show them opportunities and, in return, they invest.
However, this doesn’t mean that we will not engage investors in the western market. Not at all. And this should be clear. We will continue to engage them too as we have always done.
What this means is that given the opportunities in Asia, we are now spending more time and resources in this part of the world than we have done before. And it is already beginning to pay.
To obtain an investment certificate from RDB how much is needed for both local and foreign investors? To obtain an investment certificate both foreign and local investors pay a fee of US$500 only.
However, there is a condition – this investment certificate makes an investor eligible for a wide array of incentives and facilitation that make doing business in Rwanda more competitive. For this, a foreign investor has to have an investment of at least US$250,000 while a local investor (including members of COMESA) should invest at least US$100,000.
How does RDB ensure that local investments complement FDIs?
We believe Rwandans have the entrepreneurial drive to make things happen. We host sector conferences within the country.
As RDB, we also facilitate local investors by taking them with us abroad on investment tours and do our part in linking them with foreign investors and foreign markets. On the regulatory part, we are constantly working to make Rwanda the simplest, most profitable place to do business for local and foreign investors.
Furthermore, we have capacity building programmes for SMEs and manufacturing industries here. These aim at training entrepreneurs in areas such as business plan writing, accounting, marketing among others. The beneficiaries of these are mainly local investors.
Local investment has grown significantly, from $28 million in 2005 to $ 593 million in 2009, from representing only 6% of total investment in 2005 to 52% in 2009. Local investors are joining in the effort and realizing that the reforms we are doing are meant to work for them.
How has the investment scenario played out in the last 2 years of RDB’s existence? Which areas have been favoured by investors in the last 2 years?
Investments have grown with some interesting windfall investments coming in the Energy, ICT and Finance sectors. As mentioned above, local investment has also grown significantly.
Sectors that continue to be favoured by investors are mainly Agriculture and agro-processing, tourism, Construction and Real Estate, Energy and Mining.
We have seen investment interest sustained in Rwanda despite the global economic downturn whose effects we mainly saw in 2010.
We expect 2011 to rebound as Rwanda remains very competitive in terms of doing business, while, at the same time, the global economy is recovering.
All I can assure you is to watch 2011, we shall have very interesting results to show Rwandans.
Let us talk about sector specific investments, to quote John Gara, your boss. I think that this is a new approach by RDB.
The general idea behind a targeted investment promotion approach is that you allocate your resources more around sectors that will have the most important impact. It deviates from our previous strategy of getting people interested in all sectors together and making a case for investing in Rwanda.
Now the word is out and the facts speak for themselves – Rwanda is one of the best places to do business in Sub-Saharan Africa.
This new strategy has been tried out, so it is not totally new. We hosted the construction and real estate round-table and the horticulture/tea conferences as solid examples.
What are we likely to see within energy, tourism, education etc this year in terms of RDB making its planning especially when we are talking about such an approach?
We now have a number of key projects we are selling to investors and planning sector specific conferences and road trips like the successful ones we have had to India where ICT, Healthcare and other sectors were a key focus.
With Rwanda aiming to produce 1000MW of energy from its current output of 85MW, the energy sector is surely one in which we will be using a targeted approach to attract investors.
Our strategy doesn’t only focus on targeting sector specific investments but also targeting specific investors all over the world whom we approach specifically. President Paul Kagame has led in doing this as he visits and pitches to different investors all over the world. It is indeed a very focused strategy.
While investors are impressed by Rwanda’s rankings in doing business and other wide ranging reforms, regional media reports, however, say that investors, once on the ground, face up to some equally daunting challenges. One of such challenges is lack of qualified local staff.
While a lot of progress has been recorded in Rwanda, we, by no means, suggest that there are no challenges. But we don’t becry challenges, we plan solutions for them. This has been the very reason why Rwanda has been successful in the past and will continue to be.
On the issue of human capacity development. This is a joint private sector – government responsibility.
On our part we have made sure that it’s not unnecessarily costly to train employees by availing several training facilities like KIST, SFB and WDA, among others. We also have a scholarship fund that has enabled many students fulfill their dreams by studying inside and outside Rwanda. There are thousands of Rwandans that have benefited from this.
Also, this is why the training costs are deductible from taxes. By training employees, there is a fiscal incentive in terms of reduced taxes as a deductible expense.
We also make it easy for foreigners to come and work in Rwanda. The regulations are favourable to foreigners and, when they come to Rwanda, they enjoy a peaceful, clean and organized life, which we hope inspires towards our vision and the opportunities it gives them.
There are also issues to do with very high electricity tariffs as a cost of doing business in Rwanda. This can scare a potential investor.
On the issue of energy, this is a work in progress as Rwanda diversifies its energy sources which is currently under way with the Methane Gas, peat and other renewable sources, it is expected that capacity will increase and prices will fall.
We have the target to increase energy from 85 MW to 1000MW by 2017. The strategy to get there has been defined and we are working hard towards its achievement. Many investors are interested and are discussing what they too see as real opportunities in the energy sector.
In the meantime, this should not deter investors for we have people in high energy consuming businesses such as brick making, steel production and cement production who are finding it profitable to do business in Rwanda. We are pleased to discuss specific cases and jointly find solutions to their energy needs.