As the economy goes past the second quarter of the year, registered investments by Rwanda Development Board(RDB) should provide indicators on the match towards Rwanda’s transformation .
In this exclusive interview RDB Chief Operating Officer(COO) Clare Akamanzi talks to Fred Oluoch-Ojiwah of The New Times on the provisional reports of registered investments and how such reports reflect on Rwanda’s future prospects for transformation
Lets talk about the agric sector. It is said that this sector has not received any notable investment in the last 3 years. Considering that this sector supports more than half of the entire population and that we are less than 10 years away from vision 2020-what magic willbe used to pull off the envisaged transformation?
I have no doubt that Rwanda will achieve its vision 2020 aspirations. I get that confidence when I look at how we have performed in the last 10 years. Further still, the International Monetary Fund (IMF) in close conjunction with World Economic Forum (WEF) named Rwanda as one of the top ten fastest growing economies of the world in its economic outlook report.
We have been growing at an average of 8 percent annually for quite some time. When vision 2020 was kick started, per capita income was at a mere less than $200.
Today we have more than $560 almost three times growth. That kind of growth coupled with investment that we are seeing within private and public domains will catapult our aspirations to fruition in the next 10 years. That said, I am confident that Vision 2020 is going to be achieved.
When one looks at information from sources such as World Bank’s current version of the Economic Outlook for Rwanda, it is very clear what such sources are saying. The report says that agriculture in Rwanda is still held back by numerous challenges.
The report says that the sector is yet to embrace modern forms of technology such as mechanization or irrigation and that the sector depends heavily on mother nature for its production while extension services are yet to reach the masses of farmers.
That picture has been painted bearing the fact that we are less than 10 years from vision 2020.We are talking about 5 million Rwandans still held hostage by such dire situation. The question is what magic is going to be used to arrest such dire situation?
I will first respond by talking about investment in agriculture that should deliver on the promise of transformation. We would definitely like to see more investment in agriculture.
But if you look at investments we have registered in agriculture, we are talking about approx $180 million for the last five years. Where have these investments go into?
One good channel of investments has been in the tea sub-sector. There has been a success story in that sub-sector year after year. Investors appetite for opportunities in the tea sub-sector is such that Rwanda cannot readily match their offers.
For instance Gisovu Tea has been taken over by Indian investors. That is what we are seeing. That same thing applies to coffee.
For instance Rwandex has been taken over by an American investor. Star Bucks has already partnered with local investors in order to add more value to our coffee crop. When one looks at other areas such as rice the story is much the same.
A case being rice production, where an Australian investor is on the ground. We have a number of investors coming in eyeing our rice mills.
We have a Kenyan investor Pembe Flour mills investing in wheat in Byumba. We have the newest of all, Bahkresa Group from Tanzania setting up a grain processing plant in Rwanda.
The question is- where do you want to see new investments given the situation I talked about?
I just wanted to dispel reports that we do not see investments in agriculture as was reported in sections of regional media recently.
I will now briefly dwell on the areas where we need to see more investments. One area is horticulture. We think that despite Rwanda’s favorable conditions it offers, we do not think that the opportunities that abound in horticulture has been taken advantage of as it should be.
Much as we have new investments such as in processing, such as what Inyange Industries is doing, we would like to see investment in growing of the crops in this sub-sector.
That is why last year we organized an investment conference targeting horticulture. Currently we are negotiating with over 20 investors in the sector who are in different stages of closing their investments and we are working closely with them to see investments take root in this sector.
Do you want to say that the reports by such sources as the World Bank does not reflect realities on the ground?
I am talking about the challenges facing the small scale farmers for instance?
No. The recommendations in such reports are currently being pursued by the line ministry. That said, you will see that agriculture has contributed to our overall growth in a significant manner.
The entire sector has experienced 5-6 percent growth that has supported overall growth of above 7 percent . Why is that the case?
The main reason is the government’s interventions that is premised on boosting the capacity of the farmers you are talking about. We are talking about support such as offering seeds, fertilizers and expertise.
That report says that much as government allocations to the sector has been increasing over time overall output has been on a decline.
But before you depend on that report for your analysis of the situation, perhaps it is also worth looking at our economic indicators for agriculture. The sector has done well over the years.
Let us talk about investments for the last quarter.
We are on track as per our targets. For the last three months we have registered investments worth $142 milllion. We have big projects coming up some of which are well known.
For instance Equity bank that was registered in may this year.
What are that the key notable areas of your investment report?
That the three biggest projects are the work of local investors. I am talking about the registration of Rwanda Tourism University campus construction project as a shining example of the work of local investors.
This particular investor starts from rented premises and grows to construct her own campus. We have also seen a Turkish company coming to Rwanda within the construction sector. We have also seen a venture capital fund from Mauritius coming to Rwanda.
Tackling challenges on the ground is part of the work of transformation. This is a key area. What is happening this year in that area?
We have three key challenges. I must say that we take such challenges as opportunities for investors.
One is energy, the other is finance and the last is skills. On Energy we have talked about how we want to see more energy being supplied. We also want to see the cost of power going down.
That is work in progress. We have for instance the Nyabarongo project in place that should supply over 27.5 MW of power by 2013.
We have a target of having in place production of additional 1,000 MW by 2017 that should cover at least 50 percent of the population.
This is a challenge that translates into a great opportunity for investors. That being the case we are currently negotiating with a couple of investors.
For instance we are talking to Orascom the Egyptian conglomerate. The same applies to another giant Indian company on what can be done in that front.
These are great opportunities for such big companies as we are talking about a pressing need for cheap energy needed in the economy. It will be a “win win” for both of us.
How about finance?
The second area is finance. Although we see a big improvement in terms of more banks coming into the country, an indicator of the vibrancy of this particular sector, we want to see more affordable credit being offered to the people.
We have seen one area that has witnessed tremendous improvement. This is the mortgage industry. For instance, we can now see slightly lower interest rates along with longer repayments being offered.
We want to see new products coming up within this sector. A case being Rwanda Development Bank, launching the Business Development Fund which is a giant step forward.
This is an opportunity for small businesses to access financing as they are challenged in accessing conventional funding.
Of course the deepening can be undertaken further. I am glad to see venture capitalists coming to Rwanda.
Talk about skills gap
To give credit where it is due, if you look at the skills output of Rwanda today, on its own, the story is very impressive. In terms of where we are coming from.
So you mean it has something to do with the Rwanda context?
It is a growth story. To appreciate Rwanda, you need to look at the growth. What defines Rwanda is the growth. Yes, we need more skills.
But we also need to look at where we are coming from and then further look at where we want to go. I think that there is an improvement that needs to be acknowledged. I was looking at statistics some time back.
We now have 29 tertiary institutions up from only 1 way back in 17 years ago. We now produce 12,000 graduates annually. We managed to produce 3,000 from 1960s to 1994.So the growth story is clear and impressive.
Is the current growth and current state of the skills situation the kind of status the country wants for its future aspirations? is the satisfaction already achieved basing on what you are saying?
No. That is why we still think that quality of skills needs to be improved. Exposure of skills is needed. A case being that Equity Bank takes some of its fresh employees to Kenya for further training.
Just to interject on what you are saying, that is precisely the job of School of Finance and Banking (SFB). You need to differentiate between training in school and practical training. It is about on the job training.
But I must add that it is not to say that we do not need more specialized skills. We need more scientists; we need more engineers, more surveyors, more investment bankers. We need exposure for the already trained skilled manpower.
How about reforms in doing business this year?
Our target is to keep improving. We are within top 60 in the world. I think that is impressive. We are the fourth easiest country to do business in Africa.
From that we need to move to the category of stronger economies. We recognize that as we move higher, competition gets stiffer. But we are determined to keep on improving. Our target is to be top 30 by 2017.
What are the projections of investments for next quarter?
We have a sector specific approach to investment and for the short to medium term it is energy, agriculture, tourism and mining.
Sources of investments includes new markets. This includes Turkey, India, China and other emerging economies. That is our new system of sourcing investors.