by Introduction
Rwanda, land of a thousand hills. Land where one can find the delightful mountain gorillas, land which has experienced a phenomenon that vehemently denies the fact that ,we are the so called “most advanced” species of this universe- a genocide. Of all these depictions, the one that has been given primary attention is the ‘genocide’, reason behind such partiality? Well, the answer is both easy and difficult. Since this article pertains to the business environment of the place, it will not delve much into the cause and facts of the humanitarian crisis of 1994; however, its impact and consequences shall be discussed.
Following are certain elementary pre-requisites for an ideal business environment:
– Suitable geographical factors (i.e. climate, location, resources, environmental stability. etcetera)
– Political stability where the public interests are held in highest regard.
– Education and Skill development given primary importance by the people.
– Robust transport and communication network.
– Public tolerance towards various local and global cultures.
– Cordial relations with neighboring and other countries.
This article would give a relatively detailed account of where Rwanda stands as a place for doing business considering the above mentioned points as a frame of reference.
Geography of Rwanda.
Rwanda is a small country located in Central/Eastern Africa , landlocked by Uganda in the North, Tanzania in the East, Burundi in the South and Congo in the West. It is the 149th largest country with an area of 26,338 sq km . The country is at an elevation decorated by mountains in the west and central regions ,savanna and swamps in the eastern region and several lakes throughout the region. Rwanda has relatively lower temperatures in spite of being an equatorial country, since; it is located at a high altitude.
Kigali the capital city, is present in central Rwanda. It is divided into three districts namely Nyarugenge , Kicukiro and Gasabo. The other major cities of Rwanda include Kibungo , Byumba , Butare ,Kibuye,Ruhengeri,Gisenyi and Cyangugu.
Rwanda does not boast of rich natural resources, however gold, tin ore, tungsten ore and methane are present in fair quantities. Most of the population is dependent on subsistence agriculture . Coffee, tea , bananas ,pyrethrum ,beans ,haricot and potatoes are the crops which are generally grown by the people . Coffee and tea are the major cash crops contributing to 80% of export earnings, quinine and pyrethrum are also exported.
Current issues which are affecting the environment of Rwanda are deforestation, soil exhaustion, soil erosion and widespread poaching. The region is affected by periodic droughts. Vistoke, located on the border with Congo is the only historically active volcano.
As far as the geography of the place is concerned, Rwanda would be a suitable place for entrepreneurs especially in the sector of energy, tourism and tea & coffee export.
Political & Economic Stability
The current sociopolitical state of Rwanda should be an eye opener especially for those who reminisce with Rwanda for the horrific genocide which occurred in 1994 over a span of 100 days during which over a million Rwandans were slaughtered.
The following facts are in support of the above statement.
– Rwanda has featured at the 50th position out of 185 countries listed on the World Bank’s global ranking pertaining to ease of doing business.
– It is also regarded as one of the least corrupt countries.
– The country’s economy has averaged 8 percent annual growth over the past five years, with a 7.5 percent increase forecast for this year.
Since 1994, Rwanda has seen remarkable political stability, holding three elections and a constitutional referendum. President Paul Kagame came to power as the leader of the Rwandese Patriotic Front (RPF or Front Patriotique Rwandais) which ended the 1994 genocide and became the ruling party of the post-genocide period. Rising to presidency in 2000, he won a landslide victory in 2003, although these elections were marred by irregularities and intimidation. The 2008 election was significant as Rwandan women were appointed to a staggering 56.2% of the parliamentary seats – the highest representation of women in parliament globally. Rwanda has seen extraordinary growth rates boosted by high levels of international aid.
Sadly, in the face of all these gains, worrying trends have also begun to appear with regard to human rights. The 2010 elections produced an overwhelming result of 93.8% of the vote in favor of Kagame – a result rarely seen since the fall of the USSR. International observers noted that the election was “devoid of critical opposition voices” and that the other three candidates were linked to the RPF coalition. According to a Human Rights Watch report published in January 2011, in the run up to 2010 elections, opposition parties, government critics and independent journalists faced relentless intimidation and harassment, including arrests, detention, ill-treatment, death threats, and at least two extrajudicial killings. Civil society and human rights organizations claimed that they were confronted by hostility from government, which made it difficult to work.
Education and Skill development
The education and skill development sector needs major augmentation. What’s important is the quality of education that is imparted rather than highlighting the literacy rate which often presents a virtual scenario.
This sector is looked after by the Ministry of Education (MINEDUC). The mission of the Ministry of Education is to transform the Rwandan citizen into skilled human capital for socio-economic development of the country by ensuring equitable access to quality education focusing on combating illiteracy, promotion of science and technology, critical thinking and positive values. Apart from the MINEDUC, the following groups also play an important role in this sector:
– High Education Council: supporting the transformation of higher education so that it is fit for purpose and internationally credible.
– Rwanda Education Board: mission is to fast-track education development in Rwanda by enabling education sector growth.
– Workforce Development Authority (WDA): an institutional framework to provide a strategic response to the skills development challenges facing the country across all sectors of the economy.
Though primary and lower secondary education is mandatory as per Rwandan policies, the education levels remain dismal. Presently the literacy rate of the country stands at 71%, however, the percentage of children attaining secondary education is at a low 31%.
Rwanda’s goal for the future, its Vision 2020, envisages a knowledge-based economy that will allow for strong growth. This requires an improved education system producing an inspired and skilled workforce. The Rwandan industrial sector needs more people with high quality skills to realize its goals for sustainable strong growth. To respond to this need, the Rwandan Government is eager to strengthen Technical and Vocational Education and Training (TVET) and established Tumba College of Technology (TCT), Rulindo District, Northern Province, as a model TVET institute.
The Rwandan Government has allocated Rwf78 billion (£80.7 million) for technical and vocational education (TVET) and workforce development in 2013 to 2014, as announced by Education Minister Vincent Biruta last week. Rwanda’s total education budget of Rwf224bn (£231.5m) will cover 14programmes, of which TVET is allocated the largest share of the budget, at 17 per cent (Rwf38bn/£39.3m).
All in all the Rwanda education sector needs support and guidance from other countries with rich educational background and modern infrastructural facilities.
Transport and Communication network
Road network in Rwanda on top of being poorly developed was severely affected by the 1994 civil war. Portholes characterized a few tarmacked roads while defeated soldiers had looted airport facilities. The telecommunication sector only established a year before the genocide after the formation of Rwandatel in 1993 was left vulnerable.
Currently Rwanda has a total of 12,000 km of roads, of which 1,000 km are paved. The remainders are dirt roads with quality varying from smooth hard surfaces with drainage to rutted, extremely uneven tracks passable only with a four-wheel drive vehicle. The country has an international airport at Kigali, serving one domestic and several international destinations, and also has limited transport between the port cities on Lake Kivu. There are currently no railways in Rwanda.
The country’s telecommunication network is small, inadequate and primarily serves business, education, and government .Pan-African landine network operator, Liquid Telecom has acquired most of the telecoms network assets belonging to Rwandatel, Rwanda’s fixed line network operator.
This sector is highly lucrative for transport and telecom enterprises. Various Asian telecom companies have already started investing in the region. Improvement of the transport and communication network will definitely be a boost for its economy and will pave way for bright business prospects.
Public tolerance towards various local and global cultures
The people of the Republic of Rwanda, who speak an Interlacustrine Bantu language known as Rwanda. They are divided into two main ethnic groups: the Hutu, traditionally farmers; and the Tutsi, traditionally cattle-owning pastoralists. A small third group, the Pygmy Twa, is hunters and potters. The Rwanda language (also known as Kinyarwanda) is mutually intelligible with Rundi, which is spoken in Burundi. Rwanda peoples live as refugees in Burundi, Congo (Kinshasa), Tanzania, and Uganda. More than 7,000,000 people speak the language.
. Nothing describes Rwanda’s culture better than the affectionate hospitality of its people, the thrill of its intoned culture dancers and singers as well as the usual determined ethic for work and industry. Little wonder some have referred to Rwanda as a land of a million smiles. Nearly 20 years after the astounding 1994 crisis, not only are Rwandans living together but they also share the common aspirations as it used to be. Music and dance plays a central role in the tradition of Rwandans
Relations with neighboring and other countries
Rwanda has been the center of much international attention since the war and genocide of 1994. Rwanda is an active member of the United Nations, having presided over the Security Council during part of 1995 and again in 2013-2014. The UN assistance mission in Rwanda, UN chapter 6 peace-keeping operations, involved personnel from more than a dozen countries. Most of the UN development and humanitarian agencies have had a large presence in Rwanda. However, during the height of the crisis, a three-month period in 1994, the UN removed most of its peacekeepers, and virtually all other formal foreign support fled as well. The only other nation to directly involve itself at that point was France, which sent a contingent of soldiers to create a safe haven for the perpetrators of the genocide.
Burundi and Rwanda dispute sections of border on the Akanyaru and the Kagera/Nyabarongo rivers, which have changed course since the 1960s, when the boundary was delimited; cross-border conflicts among Tutsi, Hutu, other ethnic groups, associated political rebels, armed gangs, and various government forces persist in the Great Lakes region.
In 1998, Rwanda, along with Uganda, invaded the Democratic Republic of the Congo to back Congolese rebels trying to overthrow then-President Laurent Kabila. Rwandan troops remain in the Congo, backing rebels that aim to overthrow Laurent Kabila’s son, Joseph Kabila, who is now the President of the Congo. Rwandan troops have pulled back, however, behind disengagement lines set forth in the Lusaka Ceasefire Agreement.
Rwandan President Paul Kagame met with the Democratic Republic of the Congo’s President Joseph Kabila in Goma on 6 August 2009. It was the first presidential meeting between the two countries for 13 years.
In 2008, a commission of inquiry set up by Rwanda’s President Paul Kagame accused France of having “played an active part in the preparation and execution of the genocide in 1994”. On 12th September, 2011 a less hostile Mr. Kagame met President Nicolas Sarkozy in Paris as part of a continuing bid to mend ties. Words were carefully picked to reflect growing reconciliation, but the visit could not mask plenty of lingering resentment.
Though the relations of Rwanda with neighboring countries were in a spot of bother few years ago, it is slowly and steadily gaining stability now.
Current Business Scenario of Rwanda
Emerging from a decade marked by civil war and political instability, Rwanda began a comprehensive and ambitious campaign in 2000 to rebuild, foster national reconciliation and drastically reduce poverty. The government’s agenda gave priority to health, education, infrastructure, and private and financial sector development, showing commitment to improving citizens’ living conditions and building a solid foundation for reconciliation.
Rwanda currently have businesses or emerging ones in the following sector:
- affordable buildings for factories, storages, houses
- A- energy (methane gas, electric power, horticulture) B- greenhouse horticulture
- animal feed
- poultry industry
- dairy processing plant
- avocado packaging plant
- beans processing & canning plant
- organic oil production
- fruit processing
- fertilizer import, and distribution business as privatization
- power plant, 5 MW
Investment opportunities in RwandaOpportunities in buildings / houses, energy, horticulture, animal feed, poultry industry for the private parties
politically stable with well-functioning institutions and zero tolerance for corruption (Ombudsman office since 2004). Macroeconomic stability manifest in high GDP growth at 7 – 9% and low inflation. Stable currency and exchange rate (related to the USD). Stable interest rates (7%-9%). Inflation 2011 was 6, 6%.
There is an open trade policy, a favorable investment climate, cheap and abundant labor, tax incentives to businesses, specific free-zones, stable internal security, and crime rates that are comparatively low.
Rwanda has solid institutions like an Investment Board, a Chamber of Commerce, land registration; a UK based legal system and a transparent tax system.
The Government of Rwanda has sought to privatize several key firms. Since 2007, the telecom and mining sectors have been largely privatized, and the government has sold off several government-owned tea estates and made great strides in completing privatization of the banking sector. RECO, the utility monopoly, remains to be privatized, as do several other parastatals.
There is access to wireless internet all over the country. Electronic banking is very well developed.
Rwanda is a member of the free trade zone EAC common market: 130 million people (with Kenya, Tanzania, Burundi, Uganda).
Investment insurance also is available through the Africa Trade Insurance Agency, the Overseas Private Investment Corporation, and the World Bank’s Multilateral Investment Guarantee Agency (MIGA). Increasingly attractive for Foreign Direct Investors (FDI)
The implementation of a value added tax of 18% and improved tax collections are having a positive impact on government revenues and thereby on government services rendered. Banking reform and low corruption also are favorable current trends.
Today, there are about 20 institutions of higher learning in Rwanda. Between 1963-1993, Rwandan university graduates numbered roughly 2000; today, Rwandan university graduates exceed 45,000.
The biggest tax payer in Rwanda ($100 MN.) is Heineken and the biggest employer (> 2000 employees) is BPR, a bank managed by (Dutch) Rabobank. Rwanda has its own stock market.
Investment opportunities are (among others) and supported by the Dutch Government (in specific food security, energy, the legal system, and clean water):
Infrastructure (Kigali convention center, Bug sera Int. Airport, Isaka railway)
Agriculture (Horticulture, fresh wholesale food market, irrigation projects) and livestock programs including milk processing.
Energy (extraction of methane gas Lake Kivu (and the drilling of three geothermal exploration wells, at a cost of $20-million, will start this year. A program of $900 million).
Real Estate & construction, Financial services, Mining (Tin, Colombo, Wolfram)
(newly listed companies on the capital market shall be taxed for a period of 5 years at 20% if those companies sell at least 40% of their shares to public). Venture capital funds will be accorded 5 years tax free if registered in Rwanda.
Conclusion
Rwanda can be considered a dark horse amongst all African nations especially in terms of potential. It is difficult to predict its future as a nation. The people and the place have seen the worst and are still waiting for the brightest day.
“Listen to the mustn’ts, child. Listen to the don’ts. Listen to the shouldn’ts, the impossibles, the won’ts. Listen to the never haves, then listen close to me… Anything can happen, child. Anything can be.”
― Shel Silverstein
References:
Land of a Thousand Hills: My Life in Rwanda
www.un.org
African Economic Outlook
Institute of Policy Analysis and Research- Rwanda
www.economist.com
www.guardian.co.uk
en.wikipedia.org
allafrica.com
www.youtube.com
