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Rwanda: The Land of a Thousand Rolling Hills
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Business Daily (Nairobi)
OPINION
8 June 2008
Posted to the web 9 June 2008
Ritesh S. Doshi
Kigali, the capital of Rwanda, can be named the land of a thousand hills.
It is a city like no other in Africa; safe by international standards, clean with dustbins everywhere and bubbling with opportunity for budding entrepreneurs.
For anyone who has watched any of the genocide films, the city will look familiar.
The hills of Kigali are barely recognizable as they are now adorned with sprawling homes and large new estates. Kigali is now a safe and pleasant city to live and work in.
In fact, the sense of personal security is one of the first things you notice on your first visit. This is mostly due to the presence of the security services.
To keep the country clean, Rwandan citizens are required to commit the last Saturday of every month to engage in community service, known locally as "Umuganda".
President Paul Kagame has led the country since 2000 and has been praised by many for re-establishing security and promoting reconciliation. While major strides have been made in the economy, the government has been accused of being overly militant and intolerant to dissent.
The ruling class maintains strong relations with the business elite and the government tends to be very pro-business.
It has also secured strong military and economic support from the West and is seen as a regional ally given its strategic location in central Africa. Interestingly, Rwanda's parliament boasts the highest number of women in the world at 40 per cent.
The West's positive sentiments towards the current government, as well as the optimism of the large number of returning Rwandans has resulted in significant investment inflows.
This has led to economic growth, initially fuelled by the increased output in manufacturing and agriculture, and more recently, in energy, telecommunications, and tourism.
The government also continues to spend significantly on developing the country's infrastructure, which is vital to economic growth.
Business opportunities are abundant especially for SMEs, given the size of the market and economy.
But real estate cannot be ignored, Rwanda is the most densely populated country in Africa with 343 people per square kilometre. It has a limited land supply coupled with the large number of returning and increasingly affluent Rwandans.
These have been purchasing homes, leading to a property boom, although how long it will last is debatable.
Spending is rising across the whole population but there are very few leisure activities to engage in besides the food and drink scene. Opportunities are beckoning in areas such as cinemas, bowling alleys and gyms, just to name a few.
Having been a tourist destination for a number of years, Rwanda welcomes 30,000 visitors every year. Most come to see the gorillas, the rain forests, the savannah and lakeside resorts.
There are already a number of high-end hotels under construction in Kigali, which could lead to an over-supply of rooms soon.
The climate and altitude are ideal for growing a variety of cash crops, such as tea, coffee, passion fruit, avocados, flowers, and nuts. The most obvious opportunities exist in value addition industries such as drying fruits, oil extraction and juice extraction for both the local and export markets.
With the country recently joining the East Africa Community and regional trade bloc Comesa; increased competition is likely to leave only a few manufacturing opportunities. This will probably be in 'Comesa-proof industries' .
Besides industry, the country is becoming a trading hub for the region, especially Eastern DRC and Burundi, providing a bridge between Francophone and Anglophone Africa.
Language is not an issue for conducting business, although it can occasionally pose a challenge in day-to-day situations.
However, challenges to doing business still exist. Transport costs are high, there is a shortage of skilled workers and even though employees are honest and hard working, they are less effective than their Kenyan counterparts.
Electricity penetration across the country is only five per cent (but in Kigali it is slightly higher), but is poised to grow as gas in Lake Kivu is exploited.
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Kigali is fairly well connected, although power shortages and surges are frequent, and the lack of electricity remains a major impediment to growth. Many manufacturing companies still rely on their own generators, raising the cost of production and making competing in the region difficult.
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