Rwanda Targets US$800m investment in 2012
RWANDA Development Board’s Chief Operating Officer (COO), Clare Akamanzi (pictured) says the interests of investors attracted to do business in Rwanda should not compromise the government’s vision.
Instead, according to her, investors have an interest in supporting the vision. The Chronicles’ David Kezio-Musoke and Magnus Mazimpaka talked to her about a wide-range of issues including this year’s investments targets. Below are the excerpts.
The Chronicles: Let us talk about investments in general. Did you achieve your targets in 2011? Clare Akamanzi: The year 2011 was satisfactory. In 2010, we attracted US$390 million. In 2011 we targeted investments worth US$550 million. However by the end of the year, we had registered US$626 million. These were investment deals closed over that period. We passed our target by US$76 million. Our biggest attraction was from tourism, Information Communication Technology (ICT) followed by energy and then agriculture in that order. ICT was on top mainly because of the entrance of BhartiAirtel. Energy was also top because of a deal with a Danish company to produce energy. Last year, we also attracted some pretty good investments from agriculture. We registered a project from a Canadian company to grow Stevia, which is a plant used to process a sweetener like sugar. Stevia is for export and this project is in Rulindo.
When you give these figures, are they investments attracted or investments that actually kicked off? These are investment deals that were closed. Actually in 2012, we want to make sure that when investors register and promise a certain kind of investment, they can actually deliver on their promises. However, within the course of this year, we shall be able to sit with the National Bank of Rwanda and National Institute of Statistics to track the actual investments that kicked off.
What about forecast for 2012, what is your target for this year? We are revising our 2012 target upwards because we exceeded the 2011 target. We think we can reach US$800 million this year but will announce the figures once we have finalised.
To some people, this figure seems unrealistic. What parameters do you use to come up with these estimates? First and foremost, we want investments to be 30 percent of GDP by 2020. Today, investments attract about 22 percent of GDP and since in 2005 it was just 16 percent that is growth. We look at all national targets, like say EDPRS, and we work backwards on what we need to achieve for each year. We know where we want to go and we know where we come from and we see what is realistic.
There is a feeling that you concentrate on attracting foreign investments and ignore attracting local ones. I think that is an assumption. For us at RDB, local investments are equally as important as foreign investment. They both bring something on board. Last year in 2011, about 56 percent of the 139 projects registered were Rwandan investments. The strength is that we get to have more Rwandan projects. Foreign projects bring in higher value because they have access to more capital. Last year alone, foreign projects accounted for 68 percent of the value. We attracted US$626 million in 2011 of which US$372 million was the value of foreign investments (excluding EAC) and US$199 million was value of Rwandan investments.
With a struggling global economy, you still managed to surpass your 2011 target by US$76 million. What was the magic? At global level, the economy is not healthy. So, because of this, investors are looking to enter new markets and Africa offers that. In Africa, there are more opportunities because our economies are still growing and are not as exhaustive. In other African countries, IMF expects exponential growth. And this is not growth you will witness in other parts of the world. So Africa is becoming more attractive. Rwanda’s continuous work to have a more attractive outlook makes us a preferred destination for investors. Look at our investment climate and our sovereign rating, the latest from ‘Standard and Poors’, Rwanda was rated with a ‘B’ but with a more positive outlook. This shows a high level of optimism about investing in a country like Rwanda.
What is RDB doing to make sure this kind growth is sustained, more especially on the side of investments? We have developed a rapid economic growth strategy. We have re-aligned the way we work with Singapore, a country we want to pick lessons from. During the course of 2011, our senior management visited Singapore with the purpose of learning from them. They also visited Rwanda. With the economic growth strategy, every department in RDB promotes investments. It is no longer one single department doing investment promotions. For example, ICT promotes investments in ICT and so does the tourism department. This increases the effort of investment promotion. We have also developed a systematic way of attracting investments called the cluster approach. With this approach, each department identifies four key projects and concentrates on these. For example, ICT has chosen mobile phone applications, cloud computing, ICT education and ICT security. So, this department will ask pertinent questions like; Do we have the right infrastructure in place for applications? Do we have the right equipment for cloud computing? And if we don’t, we procure it. For ICT security, we look at which country does this best. So if this is country like India, we target it. We also look at Business Process Outsourcing (BPO). If we know a country like Philippines is good at this, we visit it.This is a systematic approach that is very successful in countries like Singapore. It is very measurable. This year, we are adding more focus on ‘after care’. When an investor registers our departments, we make a follow-up to make sure their needs are attended to.
Talking about ICTs, what happened to the Kigali Wibro and National Data centre? Both are actually operational. We created a company called Broadband Systems Corporation that runs all government ICT projects and they include those two and National Backbone (fibre optics). Sometimes, government invests in such projects for services to be available and accessible for all Rwandans, in all the 30 districts. It’s not easy for a private company to invest in ICT infrastructure that covers the whole country; so government comes forward. Our expectation is that once these companies are up and running smoothly we can then be able to privatize them.
How does RDB draw the line between the interests of the country and those of the investor? First of all, there is no contradiction between what government wants and what the investor wants. We shouldn’t make assumptions on this. Rwanda’s vision is to drive economic growth through the private sector. This is top priority and facilitating private sector to achieve it is important. This means we do business reforms, cut red tape look at how taxes are filled and ease this as well. But in doing our part, investors’ presence should not be at the expense of policies like, for example, environmental regulations. Some of these policies and regulations are created to make Rwanda a better place for Rwandans and even investors themselves.
Let us talk about the case of LAP Green, particularly Hotel Umubano and Rwandatel. Don’t you think the interests of government came in at the expense of investors? LAP Green’s license was revoked by the regulator (Rwanda Utilities and Regulatory Agency) simply because they failed to do what they were required to do. They had obligations in their license requirements which they didn’t probably fulfill. A license is a contract between government and the telecom. Sometimes we don’t simply attract an investor for the sake of having an investor. Investors have to deliver on their license obligations. If you have the mentality that government should ignore its vision at the expense of the interests of the investor, then you risk assuming that government and the investor don’t have a common interest. The interest of government and the investor are aligned.
What are the challenges you have encountered in this whole process of attracting investors and investments? One of the biggest obstacles is availability of infrastructure to produce energy. Despite the fact that investments in energy were top attraction in 2011, it is still a priority for us in 2012 because without energy, the manufacturing industry can’t grow. Right now, we are negotiating with several companies that produce energy including a Turkish one. We are also talking with Orascom from Egypt, we have a memorandum of understanding with them, and they are already carrying out a feasibility study which should be finished in the first quarter of this year. The other pertinent issue is availability of finance. If one wants to finance a US$30million project, there must be funds, but this can be a challenge.
But this is being addressed, we are attracting investors in the financial sector as well and there is positivity. Recently, Kenya Commercial Bankk entered the market and now Equity Bank is here. We have many projects that need to be financed like say the Bugesera Airport, which is worth about US$600million; we have a railway project coming up as well and many others. Though there is an improvement in acquiring skilled human capacity, it is a challenge. We are encouraging companies to train and equip their human resource with skills. We also have some top notch institutions like Carnegie Mellon University, a top world computer institution, which is soon setting up in Rwanda.