The Rwanda Development Board (RDB) was born in uncertain times; the end of last year saw a tremendous shock to the global monetary system. The method of lateral integration seemed perfectly suited to these changing times, several arms of government were combined to provide synergies and streamline processes.
At the core of RDB was the Rwanda Investment and Export Promotion Agency (RIEPA). This organisation was ostensibly a “parachute” organisation to facilitate a soft landing for foreign investors, its focus shifted also towards local investors but it was not equipped to fully deliver what investors needed.
It was therefore integrated with equally some powerful government agencies. This year saw the organisation exceed its target despite the global economic downturn, but it still sees more need for improvement.
After integrating sideways, they seek to focus more on developing Small and Medium Enterprises (SMEs).
“This year was different to any we faced before. We faced a lot of key challenges because of the global crisis. Globally, investment was down and a lot of potential investors were having trouble mobilising capital. Investors were very cautious so it was hard to get capital.”
Clare Akamanzi, RDB’s Deputy CEO in charge of Business Operations and Services said.
There was a global panic as the banks that normally fund investment were going out of business and needed bailouts. Investors in Africa often expect higher yields from their investment than they do in the Western world.
Africa and the emerging economies presented less of a risk than the developed world but still suffered lower investment.
“The top reformer award sent out a good message to investors and helped us generate more investor confidence. This provided an impetus for change and made us bring forward a number of reforms.” Akamanzi said.
The top reformer award was an illustration of how separate arms can work together to provide integrated services from registration, to tax, to planning and all the way simplifying the process. Reform is a constant process and RDB foresees more changes in 2010.
“The reforms we aim for this year is to streamline the land procurement and registration process. We also want to help with things like planning permission for strategic projects. We also seek to help speed up electronic services and transactions for customers.” She explained.
Some Rwandans think that RDB is a red carpet for foreign investors but local investment is now surpassing Foreign Direct Investment (FDI) in scope if not total value. This is a good indicator that foreign exchange is being retained and local investor confidence becomes the bedrock of the economy.
A number of big foreign players stepped in, and they helped boost the overall investment by 40 percent even though 8 percent fewer projects were registered. Contour Global came in with a hefty $325 million. Their Kivu methane project requires such a heavy investment with prospects to rise in five years.
Tigo was another big investor with some $128m but it also triggered investment by MTN and Rwandatel to boost the telecom industry.
Construction remains the biggest generator of jobs but manufacturing remains low. Rwanda’s manufacturing and service sectors are hampered by not having complimentary industries they can out-source to. This is now RDB’s toughest challenge.
A stockbroker once said: “There are two ways to get money, you can wait for it to fall from the sky or you can dig for it.”
We now need to start again from the bottom with SME’s that can also connect laterally. A hotel in Rwanda often has to do its own laundry, uniforms, linens and so forth. They lack dry-cleaning companies that can so it at 30 percent of the cost.
“We have a Small to medium-sized enterprise department that we aim to expand. We provide services such as help with writing reports and providing support services to business.”
Ironically, while RDB is revising its estimates for 2010 they are setting targets they have already exceeded. In choosing to register only projects of $50,000 or more they are getting a limited view of the total market.
“We assist all equally people but that threshold is there for tax reasons because the government has to forego some revenue and that is the limit.” Akamanzi says.
In including these smaller enterprises one gets a more rounded view of our development because it doesn’t matter how many mega-investors come in we need vibrant SME’s.
“Our focus this year will be on following up old investments, converting previous interest to solid investments, expanding what investments we have here. On the service side we will continue to make it easier to do business in Rwanda by removing any remaining obstacles.” She says.
The promised to focus more on SME’s is crucial in connecting the global corporate world to the ground in Rwanda. Reforms meant to boost foreign investment have improved local investment and vice versa.
The whole of RDB should be an SME department, we need to get back to basics and develop auxiliary services for core industries to connect to.
The integration of RDB into the wider economy has got to be bottom-up and not top-down. It is perfectly suited to conduct psychometric research into the needs of local investors and release monthly data on all economic indicators.
This shift in focus will bear fruit in years to come as we set higher quantitative and qualitative targets.