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.