BY MANSUR KAKIMBA
The renowned Michael E. Porter, Professor at Harvard Business School yesterday met with Private Sector Federation (PSF), an umbrella organisation for private business leaders in Rwanda.
Porter is a leading authority on competitive strategy and international competitiveness.
The meeting attracted scores of business leaders of big local private companies, drawn from various business sectors and government representatives.
Porter said the strong ties that now exist between Rwanda and USA’s Harvard School of Business should translate into better competitiveness in private sector. He disclosed that Harvard, in partnership with Rwanda government, is working on a case study on how to enhance competitiveness [in Rwanda] for economic development.
He then ticked off what turned into a heated discussion on how to improve Rwanda’s private sector competitiveness; posed questions—What are the key opportunities in the private sector of Rwanda, what are the most pressing challenges that need to be urgently fixed and how can capacities of entrepreneurs in Rwanda be built?
In response, Tribert Rujujiro, a local tycoon, also chairman of Rwanda Investment Group (RIG) said uncompetitiveness of Rwanda’s private sector emanates from uncompetitive financial sector and lack of joint venture spirit among Rwandese.
He however said RIG has worked around the challenge, and has brought together 37 entrepreneurs including parastatals, to invest strategically. He cited key investments like; the ongoing $25million (about Frw13.7 bn) RIG investment in Cemerwa—Rwanda’s biggest producer of cement), proposed $80million (about Frw44bn) RIG investment in 50Megawatt Methane gas, and RIG investment in Sericulture.
Among other key private opportunities raised by participants included; low cost houses for the majority poor (over 60 per cent), proposed private television by Eugene Nyagahene—sole distributor of pay TV (DSTV) services in the country, and RIG investment in water supply from River Nyabarongo.
MTN Rwanda’s Chief Operating Officer, Andrew Rugege, also chairman of Rwanda ICT association noted that underlying the national ICT infrastructure is an opportunity to develop local content.
The pressing challenges raised included; laws and regulations by government that do not match private sector growth, high cost of doing business, high cost of borrowing, poor corporate governance in some institutions.
David Kuwana, the Managing Director of Commercial Bank of Rwanda (BCR) noted that international financial support has rendered financial sector uncompetitive. That, during economic recovery—since 1994, international funding bodies’ aid, especially Non Government Organisation (NGOs) has now translated into projects that compete with financial institutions’ loan services, offering unbelievably low interest rates.
MTN’s Rugege urged government to consider revisiting taxing withholding on everything, for it is disastrous to business. Withholding tax is profit tax paid upfront reconcilable on declaration of actual profit tax. Background to taxing withholding tax on everything relates to taxpayers’ tax evasion habit.
The in-charge of corporate affairs at Bralirwa—the only brewery in the country, Alphonse Byusa decried high transport costs especially for imported raw materials and high cost of energy in the country.
Emmanuel Hategeka, the Secretary General of PSF said there’s an existing platform by the federation for business leaders to channel all their grievances to authorities concerned. He cited business-environmental concerns at prime minister’s office, yet to be addressed. “PSF, in its reforms aims at going beyond advocacy and provide sustainable solutions to its members and entire business community,” Hategeka said.
Porter, in response to a number of business challenges and opportunities advised: “You can never be competitive just by reducing on your weaknesses. And you can never be competitive just by copying best practises, instead you just learn from them.”
He challenged business and government leaders to always have a “strategic respective” approach to whatever they do. That, this requires innovative brains to make use of local resources to produce products unique to Rwanda that are competitive in international markets.
He advised government to encourage the private sector to build strategic clusters to enhance mass production to reap economies of scales.
Rwanda investment and export promotion agency (Riepa) was advised to re-strategise and target special investors to Rwanda. Citing friends of Rwanda (FOR) in all parts the world, Riepa was advised to come up with special packages to lure such investors. “Rwanda needs to go for niche investors,” he advised.
“It is critical that government builds coherent policy strategies at both macro and micro levels to avoid clashes with the private sector,” the Harvard professor advised. In his remarks, David Himbara, the presidential advisor on national policies urged Private sector to follow-up business training opportunities up for grabs by Harvard. Further, Himbara urged the private sector to interlink with high institutes of learning in building practical skills suitable for job market through internships.