A week's visit to Rwanda in November 2020 changed the way Yared Gebremichael thought about investing in Africa. The 32-year-old Ethiopian national, with investments in his country and the United Arab Emirates, had for years been considering expanding his businesses in the Middle East, but the time he spent in Rwanda overturned his plans.
"I liked the country, the people and the environment here. It's a very friendly environment. So, I decided that I had to invest in this country. Now, this is my third year," Gebremichael said in an interview with The New Times.
At first, he and one of his friends started a furniture store in Kigali to test the local business environment. After realising business could work in Rwanda, he started an agribusiness company exporting red kidney beans.
"We already had agro-processing businesses in Ethiopia and we had a big client base in the Middle East. So, we decided to scale up our investments in Rwanda in agriculture, and in the real estate sector because there was a big potential for profit," he said.
Gebremichael's company, YDH Agro Limited, works with tens of thousands of outgrowers and farmer cooperatives in the Eastern Province. It also owns a cleaning and sorting factory based in Rugende, Gasabo District, which serves other agricultural exporters.
In all the businesses, Gebremichael said the investment is more than $2 million (approx. Rwf2.4 billion). The businesses have around 40 permanent employees and more than 70 temporary workers, who can reach 120 during the harvesting season.
Between June and August, the company exported more than 1,400 tonnes of beans.
"There is a positive business environment in Rwanda. It's very easy to start up a business and the bureaucracy is very low. You can access most government services online."
He plans to increase his investments in real estate and start exporting other cash crops, such as chia seeds, sesame seeds and coffee beans. Initially, he had difficulty getting a loan on time, but he recently got one from a local commercial bank which accepted his warehouse and machines as collateral.
What to improve
He suggests Rwandan banks embrace new ways of getting collateral. In other countries, export companies with trusted buyers are allowed to present their contracts as collateral and get bank loans. He said Rwandan banks could facilitate more business growth if they accepted similar contracts as collateral.
Another challenge Gebremichael has noticed is the short life span of new investments in the country. Though it is very easy to start a business in Rwanda, it is hard to sustain it beyond two years, he said.
He suggests government institutions in charge of attracting investments, in particular the Rwanda Development Board (RDB), should make an equally rigorous effort to follow up with the businesses to understand what issues they face. He said that would be a sure way to find solutions and prevent the businesses from suffering in silence.
Africans investing in Africa
Gebremichael's decision to invest in Rwanda opened his interest in other African countries. He has since begun exploring opportunities in countries like Burundi, Kenya, Tanzania, Uganda and Zambia.
"I used to think the opportunities are beyond our continent. But the best opportunities are here in Africa," he said.
He believes more Africans investing in the continent is the best way to develop. In late August, he hosted a group of Ethiopian investors who were interested in Rwanda.
"As African brothers and sisters, we really have to think big and connect with each other. Instead of thinking of a market of 14 million people in one country, we should think of 1.4 billion people in Africa. The bigger potential is in Africa," he said.
Facing labour issues head-on
One of the challenges pointed out by potential investors in Africa is a shortage of skilled labour. While Gebremichael does not have a different view on that, he suggests a practical way to face the challenge from an investor's perspective.
There are engineers in Africa, he said. What you need to give them is just training on new technology.
"When we came here, we brought new machines and new technology and came with engineers from abroad, who trained our Rwandan workers, he said.
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"A three-month training was sufficient for the Rwandan engineers to operate the machines 100 per cent independently. People here are already educated, what they need is a short period for training so that they can do the work perfectly."
He suggests every African investor should consider this proactive approach, instead of complaining about labour issues that are easy to solve.
"As Africans, what is expected from us is hard work through collaboration. Apparently, most of the things we import from abroad are very simple to make. We have to manufacture those things. When we start to manufacture, we are providing employment.
"Businesswise, producing from Africa is more profitable. When you import a product, the transport cost is very high. But if you manufacture it here, the cost will be very low and the profit margin will be very big," he said.
Gebremichael sums up his source of motivation to take responsibility in two questions: "If we are not the ones to start making a change on our continent Africa, who will that be? For whom are we going to wait?"
