DOING BUSINESS IN RWANDA: LOW-HANGING FRUIT AMONGST THORNS?

Judging from the increasing throngs of loud-mouthed Kikuyu and Somali-speaking businessmen jamming the airports and the bus termini with their excess baggage and incessant complaints, there is no doubt that Rwanda is fast becoming the East African businessman’s new Mecca, and has no shortage of eager pilgrims.

And as Meccas go, the “land of a thousand opportunities” has not only generously thrown its gates open to all friends and neighbours of goodwill, but done it in award-winning style: The country has been named the globe’s top business reformer by the World Bank Group’s Doing Business Report 2010; the World Economic Forum’s 2010 Competitiveness Award and the Commonwealth Business Council’s African Business Award 2010 - just to mention a few have recently honoured the little hilly country in the heart of Africa.

So what, one wonders, has made Rwanda so attractive to investors and professional types?

To begin with, Private investment is such a top priority for President Kagame, he has established a whole industry around it in the name of the Rwanda Development Board. Headed by John Gara, a lawyer, the RDB has the mandate to bend over backward to accelerate national growth through private sector development. The government has also pushed through major reforms, one of which is to ensure no sectors are barred to foreign investors and no restrictions are placed by the government on the percentage of equity said investors may hold.

Other major indicators of the country’s favourable economic climate are myriad. They include strong macroeconomic growth which encompasses an 8.8% year-on-year GDP growth rate, an 11.2%, controlled inflation, increasing government tax revenues, and stable exchange rates. The stability of government with a "CEO President of Rwanda Inc", zero tolerance for corruption,, and extremely low crime levels.

But these are just indicators of the country’s favourable climate. So what exactly, has made Rwanda Inc so attractive to investors and professional types. Why is it that everyone you ask tells you what a breeze it is to do business in Rwanda?

The government will tell you that the ease with which you can register a business is a major factor. Thanks to economic and legal reforms, what used to take several procedures over several weeks has now been reduced to two procedures taking no more than 24 hours. They will also go on and on about other reforms that have made it easier to register intellectual property, attractive incentives, and simple taxation, and how easy it is to do business with the rest of East Africa from Rwanda. Rwanda is also in the process of establishing an industrial park, a Technology Park, and a Free Trade Zone, and has started developing a robust capital markets authority beginning with the stock exchange.

While still on the topic of starting a business, they’ll tell you that online business registration is now operational. This means by simply visiting the relevant RDB website, you can incorporate a company remotely from abroad without going to RDB.

They will also tell you about e-Regulations. A web-based information portal aimed at putting all doing-business procedures online, E-Regulations is currently under implementation by the RDB in association with the United Nations’ UNCTAD; It is an online step-by-step guide to all for doing business procedures; it brings total transparency to investment procedures and is also a truly one-stop concept, is the only one of its kind in East Africa.  Hence, for every doing-business procedure, e-Regulations offers detailed step-by-step guidelines (every mandatory interaction with a civil servant is considered a step) and for each step, a step sheet that shows what one should get from the civil servant at the end of the step; complete contact details of the civil servant in charge and of the person one can complain to in case of a problem; forms and other documents one needs to submit; and finally, time, cost, and legal justifications for the step. So far, potential investors can enjoy online access to all the steps necessary for Business registration, Business Licensing and Permits, Land and property; Business licenses and permits; Immigration; Intellectual property; and Taxation.

There are many other reforms aimed at making doing business in Rwanda a breeze, many of which one never knows until they check the RDB website. These include reforms relating to the ease of acquiring Construction permits, registration of property, getting credit, winding up, and many others. But most of all, they’ll tell you that, despite remarkable progress, Rwanda remains largely virgin territory with limitless unexploited opportunities in Agro-Processing, ICT, Infrastructure, Tourism, Energy, Mining Services, Real Estate, and Construction.

However, even as the loud-mouthed Kenyan businessmen and other investors flock to RDB to register their businesses for as little as 25,000 Rwf (slightly more than 40 USD), they quickly find out that these “low-hanging fruit” have thorns around them.  

“They said that Rwanda is open for business and they have made it easier, “complains a frustrated Kenyan businessman at Magerwa, the customs warehouses in Gikondo, “but they surely make it very difficult for one to make money!”  Like all Kenyans, he is frustrated by the slow pace of things in Rwanda compared to the fast-paced Nairobi. He is also frustrated that what he imagined would be only a five percent import duty for imports from Kenya (under the EAC) has turned out to be a lot more and has almost depleted his margins.

He is not alone. At the single-terminal Kigali International Airport, a bunch of Kenyan ladies scream at an airline staffer who has told them they can’t take the flight they want for they have reported long after the gates were closed and have to wait for the next morning’s flight. “Why,” screams one of the ladies, “do we have to pay for your incompetence?” To his credit, the airline staffer keeps his cool and slowly goes about his business of serving the airline’s customers. No muscle on his face indicates that these foreigners have just insulted him for just doing his job and unfairly lumped him with all the lazy local employees of service companies whose work ethic does not even remotely include the concept of customer service.  A case in point is the experience of a regional supermarket chain when they first opened in Kigali city more than a year ago and had to fire the whole lot of local customer service people they had hired and replace them with a more carefully picked, easier to train lot. For it is not unusual to have a bank cashier staring blankly at your passport clearly not registering what’s written on it; his/her mind clearly elsewhere, while you, the customer, stands there waiting for him/her to come back to the present and give you your hard-earned money. To a visitor from fast-paced Nairobi or Kampala or, heaven-forbid, New York, New York, most service people of local extraction always seem like they deliberately drag their feet with the sole purpose of rankling the customer.  In fact, Davie the former resident wag at the old CarWash once coined the phrase “the only person in a hurry in Rwanda is Paul Kagame.” This, in a way, was true because, despite the slowness of waiter service in most places, all government projects such as schools, roads, and such are done in record time.

Not all is lost though. Pockets of exemplary service are emerging and shining brightly. Having taken the best part of half a working day to open an ordinary local-currency savings account less than two years ago -  a dollar account would have taken longer – a writer we know was recently amazed to open one in a different bank, complete with SMS banking, in less than twenty minutes one day after work. (Yes, banks in Kigali are open till 8 pm on working days and are flexible about weekends too. And still the queues at most bank branches mostly overspill the chairs and queue outside. Again, yes, every banking hall in Kigali has many chairs for customers to wait in, which means you walk into a bank with a novel and prepare to read a few chapters. And while Rwandans don’t seem to mind enjoying this hospitality, the aforementioned foreign investor/ professional can’t help but wish this easy-to-do-business-in place could move a little faster.

The good news is that the “impatient” foreign investor/professional bravely soldiers on; a fearless agent of change – the service standards at the few foreign supermarkets in Kigali are, for instance, beacons of hope for all others to look up to.

To this end, there have been several GoR and pseudo-government efforts to improve service standards. RDB has been running outdoor and print ads aimed at dignifying a culture of service. The board has also supported the production of the widely advertised and most professionally done Service Mag, spearheaded several customer service training events, and – through its Human Resource development arm – set up several initiatives to improve the quality of the growing local workforce.

It is clear to the casual observer that the limitless business opportunities (low hanging fruit) available in Rwanda right now are a function of the ongoing long-term reconstruction efforts aimed at getting Rwanda firmly back on its economic feet after the ravages of genocide. But the question of what happens when Rwandans are finally able to manage on their own is never far from any forward-planning businessperson – and that explains the palpable apprehension of the loud-mouthed Kenyan businessmen and professionals even as they jam airports and bus termini with their wares and portfolios.

©Lloyd Igane, December 2010

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