Nine reasons why doing business in Rwanda is a smart strategy
Written by Dr Harnet Bokrezion, co-author of the book 101 Ways to Make Money in Africa
Many decisions for market entry in Africa are made on the basis of market size. Some decision-makers will consider market maturity, level of local infrastructure development, or certain business links they have already established in a certain market prior to entry.
As a result, Rwanda is often overlooked as a profitable and viable option.
Indeed, you won’t stumble upon the usual multinationals that operate in South Africa, Nigeria, or Kenya. In fact, Rwanda has so far struggled to attract a single international bank. And with 12 million inhabitants and a small land size comparable to that of Hawaii, it cannot be measured against the vast natural and human resources that Ethiopia or the DRC have to offer.
Although Rwanda is no longer a hidden secret, it is by and large still widely ignored as a practical and strategic destination – and a remarkable opportunity to increase your success rate. I suggest this is in particular true for new market entrants into Africa, because simply put, entry barriers are low and doing business in Rwanda is easier.
Here are nine reasons why you should consider Rwanda for increased success:
1. Doing business is easier
Rwanda is among the top three nations in Africa for ease of doing business following Mauritius and South Africa. But it will probably take the trophy for registering your business. I have just accompanied some Polish investors during their market entry in Rwanda. They applied for business registration around noon and registration was fully completed later that evening!
The issuing of certifications for construction or manufacturing takes just two to three working days and you are ready to go.
There is no minimum amount required to invest in the country, and the Rwanda Development Board (RDB) is a one-stop entity committed to support both business owners and investors.
2. Effective public enterprises and civil servants
Rwanda’s public sector is amazingly well organised and efficient. And that is crucial in cutting time and energy when getting your business off the ground or growing it. The secret? A clear agenda coupled with a young, effective, and ambitious workforce in leadership positions, largely in their thirties. We must admit this is a rare (albeit increasing) sight in Africa. You meet the director general of a line ministry, the head of investment promotion, or a Rwandan business delegation travelling abroad – and most look like they have just left university.
3. Overly ambitious vision to boost development
Rwanda has an overly ambitious development agenda. To give you a taste: only 17% of the country is currently urbanised, but the plan is to reach 35% urbanisation by 2020. The pace is felt across industry sectors, and both public and private stakeholders in Rwanda are under pressure to deliver. You will feel the quest for progress and efficiency everywhere you go. Rwanda has also developed a fully serviced economic trade zone for foreign investors.
4. Low risk factors
When you think about doing business in Africa you will naturally think about a wide range of risk factors. Rwanda, however, has one of the lowest crime and corruption rates on the continent. This means both personal safety when you stroll through the streets of Kigali by night, and the delay of deliverables because people are waiting for a bribe are a non-issue. Other common risks such as prolonged droughts, terrorist attacks, armed conflict, or high and unstable inflation rates are equally low. One challenge you may however face is the frequent change in policy and related frameworks. Just over the last few years Rwanda changed 80 policies to get it where it is now, and that trend continues. Be prepared to adapt.
5. Strategic regional positioning
Rwanda’s small market size is widely viewed as a downside. While that indeed poses a limiting factor for certain companies, Rwanda has a unique advantage to offer: a powerful geographic position regionally. Some international firms have made use of that: they see Rwanda as a smart and safe gateway to both the East African Community trade region with 150 million inhabitants to the east, and the DRC with vast untapped market opportunities to the west.
The fact that Rwanda is land-locked is a downside that increases cost. But having said that, newly designed railway plans will connect Kigali with the ports of Mombasa (Kenya), Dar es Salaam (Tanzania) and Kinshasa (DRC) – this will speed up transport and cut current cost in the long-run.
6. Huge local market demand exists in key sectors
But the country also has a dynamic consumer base, and there are efforts to develop Rwanda into a medium-income country, which means that Rwandan consumers would have increased spending power. The country may be relatively small in market size, but the demand in certain sectors far outweighs local supply, and that has prompted government to actively seek investors to fill the gap. Great opportunities and huge demand currently exists in housing and real estate, construction, energy, commercial agriculture and food processing, degradable packaging, light-weight manufacturing, ICT, telecommunications, and business services.
7. Great connectivity
Rwanda has one of Africa’s fastest internet connections which allows you to remain effective in your communication. In fact, the Rwandan government has decided to make internet available throughout the country, and you will get numerous free wireless spots in public places as part of this plan.
8. Kigali is clean and has little traffic
Kigali is most probably among the cleanest cities in Africa, if not in the world. One must have seen it to believe it. It is difficult to even spot a paper or an empty bottle laying around anywhere in this city of over one million people. How this works will probably forever remain a secret. Rwandans will simply tell you they have developed a culture of not throwing things onto the roads.
The low level of traffic is another benefit that will pleasantly surprise anyone who does business in the capital. It is absolutely possible to get from A to B in 15 minutes and you can easily fit five meetings into a working day.
9. Economic slowdown? Rwanda is growing fast
Recently we hear a lot about the economic slowdown that is impacting growth in Africa. Some African economies are feeling the heat. Nigeria, for example, has been significantly hit by the steep decline in oil prices. South Africa’s economy has shrunk profoundly this year, even raising the fear of a recession.
Rwanda in the meanwhile has been identified by the World Bank (2015) as one of the world’s fastest growing economies alongside Ethiopia, Ivory Coast, and the DRC. While the world worries about an economic slowdown, Rwanda continues to march forward and is growing at around 8%.
And lastly, The World Economic Forum (WEF) on Africa has taken notice, too. After Nigeria and South Africa, world leaders will be hosted by Rwanda in June 2016 to discuss economic development on the continent.
Dr Harnet Bokrezion is the co-author of the book 101 Ways to Make Money in Africa. She coaches start-ups and consults existing companies assisting them to make smart and strategic business decisions when entering Africa’s new emerging markets. Follow her blog on africajumpstart.com