An investor perception survey released recently shows that Rwanda is a preferred destination due to the political stability and security.
The investors also pointed out the country’s present market opportunity and economic trajectory as incentives that influenced their decisions to set up in Rwanda.
The survey was jointly undertaken by the Rwanda Development Board and the World Bank Group, with support from the UK Department for International Development (DFID).
The survey focused on a database of over 600 international firms built over time, across various target sectors.
The findings also show that investors perceive Rwanda’s biggest challenges to be a limited market, skilled labour and high production costs.
The perception of high production costs are linked to logistics, finance and energy especially for those in manufacturing and processing.
Access to a skilled workforce was also found to be a cross cutting challenge.
To address this, Lisa Kaestner, a practice manager for Finance Competitiveness and Innovation at International Finance Corporation said regional countries should take advantage of regional cooperation for cross border transportation and regional infrastructure projects.
“I see Rwanda is keen on this and trying to support through the East African Community. This is one way to reduce the cost of doing business. If you look at it through the doing business lenses, all countries are trying to improve,” she noted.
Experts also say that the costs of doing business can come down significantly if energy costs and supply are addressed adequately.
Hamidou Sorgo, a senior private sector specialist at the World Bank Group said that regional countries can jointly undertake energy related infrastructure projects which would greatly reduce costs.
Rwanda, he noted, could greatly benefit from energy imports from the region in the medium term, he added.
“There is also the cost of energy. There are already exiting interventions to address the issue. These include; regional infrastructure projects that can help decrease the costs with increased generation, cross border supply and exports. There are also funds to support power generation and distribution to bring down the cost,” he said.
Rwanda Energy Group recently moved to discuss power tariffs for producers such as industries. The revision of tariffs was to kick off in May this year but was postponed.
Over 90 per cent of the investors said that they have plans to further invest in the country having experienced a favourable business climate so far.
The findings further showed that a majority of investors would be keen on partnering with other international firms to set up joint ventures in the country.
The investors also recommended for more clarity on computation of taxes, tax predictability and access to finance.
While the issues raised are not new, Emmanuel Hategeka, the Chief Operating Officer at RDB said that the survey is an important feedback tool as it works as a benchmark to further improve the local investment climate.
Going forward, he committed to continue addressing the issues that investors pointed out.
Rwanda, however, has ongoing interventions to address these issues raised. In relation to skills development the country has invested in technical education and partnerships with top global universities to set up campuses in the country.
The country’s economy maintained double digit growth in Quarter One of 2018, recording 10.6 per cent which was a slight increase from 10.5 per cent from the previous quarter, according to figures from the National Institute of Statistics of Rwanda.