Kigali — The 2014 African Retail Development Index developed by AT Kearney, a global consultancy, indicates that Rwanda is the top destination for global goods and services suppliers in Africa thanks to its focus on reforming the business climate and seeking to attract foreign investment.
The report indicates that, although Rwanda is geographically small, it is more attractive market than African countries with larger economies.
"With one of Africa's fastest growing economies-an annual GDP growth of more than 8 per cent-Rwanda leads the ranking. Although small in land area and just 20 years since the 1994 Genocide against the Tutsi, Rwanda has an efficient government and strong macroeconomic indicators that opportunities for international retailers can offer basic packaged goods," the report says.
"Specifically, infrastructure reforms have focused on developing an efficient transport and road network and turning Rwanda into a regional logistics hub. With a low income per capita, most consumers base their shopping decisions on price and affordability, and are reluctant to change brands."
Speaking on Rwanda's attractiveness, Minister of Trade and Commerce Francois Kanimba said, "There are different factors but one that makes this sector a success in Rwanda is the potential and urgency of doing business here is very enticing due to the numerous reforms undertaken, the low rates of formal retail penetration and the relative security and investment protection regimes."
Minister Kanimba also indicates that important reforms have been in the areas of doing business which have made it easier for businesses to register, get credit, pay tax and deal with construction, trade across borders all of which have boosted Rwanda's ratings again in the World Bank's 'Doing Business Report'.
In 2014's index, Rwanda was the 2nd most improved country in the world after Ukraine - and the second easiest place to do business in Africa. It came in 32nd on the overall list, up from 52nd last year, a jump of 20 places.
"This and low rates of formal retail penetration coupled with increasing urbanization and the relative stability of the Rwandan economy represents massive room for retail growth and hence the high ranking," Minister Kanimba said
A couple of foreign enterprises operate in Rwanda at the moment, the largest being Kenyan retailer Nakumatt, but the report implies that global retailers such as Wal-Mart and Carrefour Rwanda's market.
The report further earmarks sub-Saharan Africa as "the next big thing" in retail business, with seven countries in the region making the top 10.
The report shows that formal retail business in malls and shopping centres are still in early stages in most sub-Saharan African countries but cites Rwanda as the most promising major retail market on the continent.
The report predicts that by 2020, nearly half of all Africans will be living in cities and their spending on consumer products will grow to almost $1 trillion.