FRANCIS GATARE: The Director General Of RIEPA speaks to Business Rwanda

On SME’s

Rwanda is known for attracting large investments but Small-Medium Enterprises (SME) make up the bulk of their investors, they bring vital skills and services that are lacking in the Rwandan economy. SME’s are pioneers who venture into virgin economies before larger investors enter the market, the proliferation of these small-medium businesses reflects the growth in the Rwandan economy and bodes well for the future as SME’s are growing into larger corporations. Dubai World recently invested US$230 million in a total package that will include; a golf course, luxury houses, the Akagera National Park, an eco-lodge in Nyungwe, a hotel in the Virunga mountains, among others and this will be a major boost to the tourism industry.

On the reforms Rwanda is undertaking to improve its position on the Doing Business Report Index

As Director General at RIEPA; Francis Gatare is proud of recent reforms implemented by the government; “Property tax is going to be removed, the government used to charge 6% as a way of having a stake in local businesses but that will be replaced by a single charge of Rwf 20,000 (US$36) and the mortgage fee will be waived. Institutions such as the Rwanda Revenue Authority and National Social Security Fund will work together to streamline their payment systems and focus on online payment to reduce bureaucracy.” These are examples of how the Rwandan government is striving to facilitate enterprise. He also mentioned the problems taxpayers used to face: “Before if you were paying Rwf 10 million in tax, you would have to queue and wait for the cashier to count it twice, now we have a payment center here and one can pay by cheque.”

On the recent opening of the stock market;

Gatare said it was going smoothly. “It is going well, we haven’t had any IPO’s (Initial Public Offer) yet but we have introduced bonds as a means of slowly introducing Rwandans to capital markets. We have had a lot of outside interest from Banks, investment funds, insurance companies and we want to introduce cross-registering for foreign firms to register here and Rwandan firms to register abroad.” Asked if he feared that outsiders would have a huge advantage over Rwandans, he argued, “We believe in the free movement of capital, and we operate a flexible policy.”

On Rwanda’s banking sector

Gatare commends the progress of the banking sector in Rwanda; “It is amazing; in six years, Rwanda’s banking and financial sector has grown with six major banks and financial institutions. Foreign companies have invested heavily in modernising both in structure and infrastructure using IT to transform their businesses.” The expansion of the banking sector bodes well for the growth of Rwanda as banking underpins all other sectors. Rwanda hopes to become the financial services hub of Eastern and Central Africa. “Bank de Kigali is very profitable and could go on the way it is but we need investment to improve it. Stanbic, Credit Suisse and Barclays are interested in buying it; they could bring new technology to make it world-class.”

On the attention Rwanda is getting among global leaders

The rapid development of Rwanda has led to global players taking notice; Tony Blair recently took on a role as an advisor to the Rwandan government. “That is a reflection on the stability of Rwanda and the forward-thinking leadership of President Paul Kagame. Tony Blair has tremendous faith in our President and his policies and will use his contacts in business and industry to network on behalf of Rwanda to attract investment.” Brand Rwanda is being created into a dynamic force on the global market and the East African investment conference is central to this.

The Kigali – Kampala Pipeline

One product of this approach is the newly commissioned pipeline from Kigali to Kampala. Gatare explained the situation: “As oil prices increase, we don’t know how high they will rise, so we have to stabilise supply. We will construct a pipeline and construct a base for strategic reserves where we can store up to 3 million cl. for local consumption; this will remove the speculative aspect in fuel supply. For example, in Uganda fuel prices went up 500% during the Kenya crisis, purely due to speculation.” These strategic reserves will help secure Rwanda’s energy needs and will end the absurd situation of importing fuel to export our goods and it is hoped that soon petroleum will be refined in Rwanda to further reduce costs.

Advertisements

THE POWER OF FIVE

Leveraging the East African market through trade and investment.

THE EAST AFRICAN INVESTMENT CONFERENCE

Kigali, Rwanda

26th – 28th June 2008

In 540 BC, Heraclitis, a Greek philosopher said, ‘nothing endures but change.’ As globalisation spreads its wings, nations are realising that they must bury social, cultural and geo-political disparities to create a universally acceptable environment that will reap tangible economic outcomes. It is becoming evident that regional integration shall shape the future of the world’s economies and the East African Community is no exception.

‘The reality of the situation is that we have merged our economies from various national ones to a single regional one’, Francis Gatare, Rwanda’s Investment and Export Agency head says. It is with this in mind that his organisation is involved in frenzied preparations for the upcoming East African Investment Conference set to take place in the Rwandan capital, Kigali, at the end of June 2008.

Rwanda, the region’s leading regional investment conference organizer, is hoping to serve as a pioneer by creating a platform for member states to reap the fruits of regional integration. The conference will serve as an opportunity to evaluate East Africa’s potential to serve as a commercial platform for servicing the continent. The forum will enable producers and industrialists to challenge government officials on regulatory issues and link them with investment bankers to stimulate further investments and expansion in the region.

Under the theme ‘Leveraging the East African market through Trade and Investment’, the conference targets participants from Rwanda, Uganda, Kenya, Tanzania and Burundi. Rwanda is working directly with the East African Business Council (EABC) and all regional investment agencies to ensure that the event is successful.

For Rwanda, there is a lot at stake. On the outset, a landlocked country with a population of under ten million does not offer much promise in terms of return on investment to a multi-million dollar investor hoping for quick returns. On further scrutiny, Rwanda’s location at the precise core of the African continent presents a strategic advantage. For Rwanda, successful regional integration with Uganda, Kenya, Burundi and Tanzania increases the investors’ target population tenfold from 9.7 million to 125 million. East Africa’s total GDP currently stands at US$ 104.2 billion, again ten times higher than Rwanda’s US$ 11.24 billion.

The stakes are high and something needs to be done; Francis Gatare suggests that integration is long overdue. ‘We have always been perceived to be one market, when an investor wants to invest in Rwanda, they are already considering the region,’ he argues.

East Africa was faced with a dilemma between December 2007 and February 2008 when Kenyan opposition and incumbent government entered a deadlock dispute over the country’s political leadership. The turmoil crossed the country’s borders when fuel prices sky- rocketed in Uganda and Rwanda and goods in transit to the two countries were blocked from crossing the Kenyan border.

It is obvious that what happens in Kenya will affect what happens in Rwanda and vice versa. A commonly sited example is the last Doing Business Index, where Rwanda was ranked poorly in the area of doing business across borders; as a result of regional issues “At this conference we are going to confront each other directly on policy issues” Mr. Gatare added.

The guest list of the conference delegates does not suggest otherwise, Amb. Juma Mwapachu, the EAC’s Secretary General and heads of state from Uganda, Rwanda, Burundi and Kenya will all be present. Seven hundred leading business executives from Rwanda, the region and the world are all invited to attend. Among them; Loyd Blankfein (Goldman Sachs), Frank Griffiths (FINA Group), Kithili Mbathi (Stanbic Bank), Patrice Motsepe (Africa Rainbow Mineral), Charles Mbogore (East African Business Council), Cyril Ramaphosa (MTN Group), John Milenge (Electrogaz), Patrick Bitature (Simba Telecom), Jan Mohammed (Serena Hotels) and James Mulwana (UMA).

FLYING HIGH: INYANGE’S CRUCIAL EXPANSION

One of Rwanda’s best known juice makers and mineral water bottlers, Inyange, is currently in the process of unveiling a new state of the art plant that will have the capacity to produce five times the current capacity for its juice and mineral water brands while giving Inyange the ability to add new products into its product line.

The new plant is nearing completion with the installation of machinery planned for completion in October. While the new plant is supposed to be commissioned in the final quarter of 2008, full production is expected in the first quarter of 2009. The new plant will have several production lines and will be able to mass produce new products that will be unveiled to coincide with its opening.

The mineral water and juice lines will have the ability to bottle the products at an impressive capacity of 13,000 bottles an hour. This will be the largest industrial capacity in Rwanda and will ultimately reduce the cost to the customer. The newly designed bottles will be recyclable along with being more stylish.

The Tetra Pak line (UHT- Ultra High Temperature) will produce juice in cartons that will compete with more established foreign brands such as Ceres, Splash and Kenylon. The wide product range in the juice category will include syrup, a ready to drink carton and a low-calorie product for the more health conscious. The capacity of this line is 5,000 packs an hour and about 80% of this output is geared towards the export market.

Since most of these new Tetra Pak products are intended for the export market the branding and product quality are high standard and comparable to any imported brand. There are also plans to export 200 liter drums of concentrated juice to other African and Western countries.

Mineral water from the mountains of Byumba will continue to be bottled at the plant but there are also plans to produce table-water.

The other part of the plant will be dedicated to dairy products and there is a new product range as well. A UHT line to produce long-life milk in Tetra Pak cartons will be installed.

In a country like Rwanda UHT milk is particularly popular because its ability to stay fresh without refrigeration. This UHT milk line will be able produce up to 5,000 packs an hour and will cater for the needs of the local and export market. Three types of milk will be produced to cater for varied tastes; a skimmed (no fat), semi-skimmed (low-fat) and whole milk.

Inyange will continue to produce pasteurized milk but in a new package which will be opaque to protect the milk from damaging ultraviolet rays. Yogurt will also be produced in 250ML and 120ML containers. Yogurt is also going to be available in various flavors such as strawberry, apricot, vanilla and pineapple. Ice-cream, in several flavors, will be produced in the plant as well and will no doubt be a popular addition to the products on sale. Cream and butter will also round off Inyange’s product range.

Inyange is looking forward to the challenge of running this high-tech plant and is doing all that is necessary to achieve this.

Inyange is negotiating with local suppliers to ensure the raw materials of milk and fruit can be provided and it is working with local cooperatives to ensure supply. Inyange are now seeking to expand the skills base of its employee’s because the new plant will require a high level of expertise; it fully intends to employ locals and train its staff highly.

The new plant will employ 120 people but will also employ hundreds more indirectly as suppliers, logistical support and providers of other services. The current Inyange site will remain in use as a depot and is undergoing renovation.

Conceiving the ambience for investment

THE RWANDA INVESTMENT CLIMATE PROJECT One of the critical challenges facing Rwanda is how to stimulate the Private Sector and encourage investment. Not only does Rwanda have to overcome its dark past to attract investors, but it also needs an improvement of its legal and regulatory framework, which is still not ideal for potential investors. It also desperately needs to improve its ranking in the cost of doing business index. 

With this in mind, the Government of Rwanda, in partnership with the Investment Climate Facility for Africa (ICF) has set up the Rwanda Investment Climate Project (RICP). The goal of the Project is to reduce the cost and risk of doing business in Rwanda, which, in turn, will create an investment-friendly environment. 

It is the first comprehensive attempt to identify the constraints on the private sector and put in place the necessary reforms to neutralize them. The Project will be managed by a Project Management Unit (PMU), which will oversee its development. Advertisements are currently running in the local and International media to recruit qualified personnel to run the PMU. 

The RICP will tackle three key areas in need of reform: business registration, commercial legislation and land registration. Each of these components contain fundamental flaws that hinder the growth of the private sector in Rwanda, but it is the objective of the Project to ensure that these flaws will be a thing of the past. 

With regard to Business Registration, there are deficiencies in the provision of modernized methods for business formalization, the registration of securities and intellectual property and effective provision of the necessary information to current and potential investors.  

The centerpiece of these reforms will be the creation of the Rwanda Commercial Registration Services Agency (RCRSA), which will contain a Company’s registry, a registry for non-incorporated Companies, a register for non-land securities and a register for patents, trademarks and industrial designs. The registry will also contain all the relevant application forms and will serve as a valuable information database for existing and potential businesses. It will also enable the Government to have a comprehensive overview of the Business structure and make informed decisions based on the comprehensive and accurate statistics the Registry will provide. The benefits to potential-and-current investors will be enormous and it will bring some much needed clarity to registering and financing Businesses in the country. 

The settling of commercial disputes is also an important aspect of the Project. Rwanda lacks a Commercial Court to deal with commercial cases and it is the aim of the Project to set up specialized, modern Commercial Courts. The difficulty of enforcing Commercial contracts has proved to be a major hindrance to private sector growth (according to the Cost of Doing Business Index, the average time of enforcing contracts is 310 days) so, with this in mind, the RICP has thrown its weight behind the creation of these Courts. They will take on the growing number of commercial cases that are currently being dealt with by specialized tribunals. It is envisaged that the Courts will be fully-equipped and staffed with trained personnel within the next few months. More than twenty Rwandan judges have been selected to take a Masters degree in South Africa and they will oversee cases brought before the Court in the near future while others are being trained.  Overall, by strengthening the means and methods of dispute resolution, investor confidence will be increased and there will be clear evidence that the law will take its course whenever a commercial dispute arises. Investors need to be confident that contracts can be enforced quickly and efficiently and that the judiciary system can handle a wide range of commercial disputes. 

Land registration and administration systems also require an urgent overhaul to make them relevant to today’s modern world. In the past it has been virtually impossible to use land assets as collateral to obtain loans from financial institutions as legal titles were usually granted only after the owner had fully developed the land. In addition, registering land was a costly and prolonged process that provided little incentive for other interested buyers to do the same.  

Such a situation is archaic and has absolutely no relevance to today’s world. Forthcoming legislation will grant titles to landowners at the outset of land development activity and boost economic activity by formalizing the use of land as collateral. It will remove other procedural impediments to land titling and will provide for the transformation of existing land rights into new forms of legal land rights. The legislation also establishes the Office of the Registrar of Authentic Land Deeds (which will be under the structure of the National Land Center) to ensure the smooth implementation of the new Law. 

The legislation will also put in place streamlined registration processes and will create an alternative dispute resolution mechanism suitable for resolving land disputes. Land is, of course, a very critical issue, and its management could make or break the economy. However with the forthcoming modern and efficient land registration system and other incentives to boost the ownership of land, Rwanda will be setting itself on the path of becoming the most business-friendly country in the region. 

This three-pronged approach will help to establish Rwanda as an attractive prospect for investors and RICP will provide the funds, vision and technical expertise to ensure that this will become a reality. 

The overall result of the project’s work will be to reduce the cost and risk of doing business in the country and bring clarity and relevance to laws governing businesses and land ownership. The project also shows the Government’s determination to create a dynamic and innovative economy and its desire to open up the country to the world. Rwanda’s future prospects as a successful and business-friendly economy could very well hinge on its success. 

EABL now in Rwanda

EABL now in Rwanda

 

On March 31st, leading East African brewery officially entered the Rwandan market, one they’ve been already active in without an official launch. In this issue of The Corporate, we trace the roots of East African Breweries and its growth on the continent.

By any standards, East African Breweries is a successful brewery. The portfolio of companies it owns includes Kenya Breweries, Uganda Breweries, Central Glass – a glass manufacturer, Kenya Maltings and United Distillers and Vintners (Kenya) Limited. Continue reading

Kenyan Investors pursue Rwandan Opportunities

Kenyan Investors pursue Rwandan Opportunities

The Fina Bank, Serena Group, Actis, Pemba Grain Mills, and Kenoil/Kobil are among the lead actors in the steady stream of Kenyan investment materializing in Rwanda. Close to 30 percent of imports and 80 percent of Rwanda’s fuel all come from the East African coastal state. This makes Kenya, Rwanda’s top business partner.

Despite being the country with the widest access to the Rwandan market, Kenya’s pursuit of more opportunities and access remains consistent as Rwanda joins the East African Community. Continue reading

‘Agaseke’: Prosperity through the ages

‘Agaseke’: Prosperity through the ages

By Babu Emile

Historically, social status in Rwanda was symbolized through the possession of cattle; however, elaborate hairstyles and distinctive dress-code were equally symbols of high social status. Social and economic functions such as overseeing the livestock and breadwinning were reserved for men whereas women the household and raised children. After the day’s chores, women put their creativity to the test through basket weaving. Without exaggeration, the product was always a beautifully woven ‘gaseke’, a neat and unique small basket that you found ornamented in most Rwandan households. Continue reading