Africa > East Africa > Rwanda > Nine reasons why doing business in Rwanda is a smart strategy

Rwanda: Nine reasons why doing business in Rwanda is a smart strategy

2015/11/20

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 by presently 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 authentic 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 part the top three nations in Africa for relieve 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 all 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 at the same time as getting your business off the ground or growing it. The secret? A clear schedule 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 chief 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 schedule. 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 evolution and efficiency everywhere you go. Rwanda has as well developed a fully serviced economic trade zone for foreign investors.

4. Low risk factors

At the same time as 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 at the same time as 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 presently, 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 incomparable chance 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 request exists in key sectors

But the country as well has a dynamic consumer base, and there are efforts to develop Rwanda into a medium-gain country, which means that Rwandan consumers would have increased spending power. The country may be relatively small in market size, but the request in certain sectors far outweighs local supply, and that has prompted government to actively seek investors to fill the gap. Great opportunities and huge request 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 part 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 blank 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 an extra benefit that will pleasantly amaze 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 increase 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. Next 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 at the same time as entering Africa’s new emerging markets.

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