The pace of local investment into the different sectors of the economy is not sufficient for Rwanda to achieve its ambitious target of turning into a middle income country, an official with the Rwanda Development Board (RDB) has said.
This according to Claire Akamanzi, the Chief of Operations (COO) of RDB could hinder the country’s attainment of a per capita income of $3,500 by the year 2020.
Akamanzi told Business Times recently that while the country recorded a significant increase in value of investment projects by 40.7 percent, from Rwf 458 billion in 2008 to Rwf 644 billion, local investment represent 52.3 percent of that value.
“Rwanda has made tremendous progress but overall investment (local) is still below what we need to achieve our national development goals as set out in our Vision 2020,” Akamanzi said.
Notably, foreign investors continue to take the lion’s share of the big projects.
In 2009 the majority of “big value” investments registered were represented by foreign companies. These include Kivu watt by an American company, Contour Global company to generate electricity from Methane gas in Lake Kivu, Luxemburg’s Millicom in telecommunications, German’s SAG in electrical construction, South Africa’s Rutongo Mines and Tanzania’s Bakhresa grain mill.
The only national companies included Real Contractors, CIMERWA and Kitabi Tea Company.
Of the total 109 investments registered in 2009, 59 projects were local set to create 3,096 jobs of the total 11,797 jobs.
Akamanzi also noted that government is fostering a private sector-led process of economic transformation to reduce the country’s dependence on agriculture.
“To do this we will need increased levels of public and private investment to build the core and sector specific infrastructure required,” Akamanzi said. She also added that capital investments need to increase to 25 percent of the Gross Domestic Product (GDP).
For 2010, Akamanzi said government will continue to improve Rwanda’s investment climate to make it more attractive for private investment. The country’s Vision 2020 also seeks to make the private sector the engine of growth and driver of the economy.
“We will continue to reduce the burden of business regulations. Reforms are underway to simplify the taxation system to reduce compliance costs,” she said.
In a parallel interview, Molly Rwigamba, the acting Chief Executive Officer of the Private Sector Federation singled out capacity gaps within the nascent private sector as a major obstacle affecting local investment.
“Government has tried to introduce a condusiive business environment and also provide incentives. However, when assessing you find that the capacity does not tally with expectations,” Rwigamba observed.
To boost the capacity of local entrepreneurs, Rwigamba said the industry’s lobby group has rolled out capacity building programmes countrywide including setting up business development centres.
“We are trying to professionalize them so that there are able to expand especially micro, small and medium enterprises.”