The chief executive officer of the Rwanda Development Board (RDB), Ms Clare Akamanzi, arrived in the country on Tuesday at the invitation of President Emmerson Mnangagwa.
She is in the country to share her personal and country’s experiences on how Rwanda recovered from one of the world’s worst genocides in 1994 to become one of the fastest growing economies in Africa.
Geographically, Rwanda is a small country, 26 000 square kilometres in extent and has a population of 12 million. It is not really rich in terms of mineral resources and is landlocked. Since it is geographically small, there isn’t much land for agriculture in the Great Lakes country, at least as compared to Zimbabwe.
It is not because of magic that Rwanda overcame these disadvantages to rank among Africa’s best destinations for foreign direct investment (FDI). It is simply because of good leadership at political level and in government.
Among the reasons why Rwanda is an investment paradise are the hefty tax incentives that the government offers. Companies headquartered in that country that invest at least $10 million are exempt from corporate income tax. Those that export at least 50 percent of their goods pay only 15 percent in tax. Cases of corruption are next to zero in Rwanda and transparency in government is the rule of the game. It is a stable country politically and security-wise. On average, it takes less than 24 hours to set up a company.
Like Swaziland, Angola, Chad, Comoros, Seychelles and Sierra Leone, Rwanda has shot up in the rankings for Africa’s best destinations for FDI, according to Quantum Global, an international business consultancy.
Yesterday Ms Akamanzi had time to address permanent secretaries and other senior Government officials in Harare. She is expected to engage the private sector as well on how her country has been able to lure investment.
Presidential spokesperson Mr George Charamba said President Mnangagwa made an official request to his Rwandese counterpart, Paul Kagame, for Ms Akamanzi to come over.
“When we went to the extraordinary summit for the signing of the Continental Free Trade Area in Kigali, one key question we raised bilaterally was how have you been able to raise so much FDI in so short a time and so successfully and President Kagame said I have an institutional home where investors arrive and are received and that is called the Rwanda Development Board and you are free to interface with its CEO and for a good two hours the President had a whole meeting with the CEO of the Rwanda Development Board,” Mr Charamba said.
We learnt that the RDB is a very strong entity which has authority to make crucial decisions that in many other jurisdictions, such as ours, normally have to secure Cabinet approval first before implementation. For example, the RDB can grant tax holidays and environmental impact assessment approvals. It offers fully serviced land for business on 99-year leases, serviced beyond the traditional water, sewer and road connections to include internet links.
Factory shells are provided by the government of Rwanda too.
The Rwandan experience cuts bureaucracy that tends to test the patience of investors, resulting in some walking away. It is cheaper to start and run a business in that country.
Therefore, our government, keen to lift the country out of the prevailing economic challenges, has a lot to learn from Rwanda with regard to attracting and retaining FDI. We have to follow the Rwandan example in enhancing the ease of doing business — issues relating to the period an investor takes to register a business, tax issues and so on.
Although Zimbabwe improved on the World Bank’s 2018 ease of doing business global rankings that were released in November last year, more has to be done. The country gained two places to 159 out of 190 countries, a welcome but not good enough improvement that came after the Government implemented positive reforms in four key indicators to make doing business easier for investors.
According to the multi-lateral funder, Zimbabwe gained 10,44 percentage points in starting a business, 1,09 points on getting electricity, 0,87 points in resolving insolvency and 0,54 points in registering property, which left its overall distance to frontier (DTF) score at 48,47 from 47,47. The distance to frontier measure shows the distance of each economy to the “frontier,” representing the best performance observed on each of the indicators across all economies in the doing business sample since 2005
FDI into Zimbabwe totalled $545 million in 2014; fell to $421 million in 2015 and slumped further in 2016 to $294 million. The figures for the past two decades aren’t pleasing but we are confident that with the new Government of President Mnangagwa coming in in November last year, and the work it is doing under the “Zimbabwe is open for business” agenda, FDI inflows will shoot up. In fact, they have shot up already as commitments for investment since November last year have surpassed $3 billion.
We have seen a number of projects that had stalled prior to November 2017 being revived while completely new ones are coming up.
Aliko Dangote, the Nigerian billionaire this week renewed his ambitions to invest $1,5 billion in Zimbabwe after being frustrated by the toxic environment that obtained before President Mnangagwa took over.
Last month Karo Resources signed a deal to invest $4,2 billion in a platinum mine and refinery in Mhondoro-Ngezi, Mashonaland West. In February, the Zimbabwe Mining Development Corporation struck a deal with a foreign investor to exploit lithium deposits worth $1,4 billion in Matabeleland North.
In addition, the Government is working to restore diplomatic and economic relations with the West.
Ms Akamanzi’s working visit adds impetus to progress already being made under the new dispensation to lure more investment, thus transform Zimbabwe’s economy in a big way in the short to medium term.