Foreign investment boosts Rwanda’s goal of middle income status

In the suburbs of Kigali, not far from the airport and set among the lush green hills that characterise Rwanda, is a spanking new industrial development known as the Special Economic Zone (SEZ). Currently in its first phase, the SEZ houses businesses that wish to take advantage of its solid infrastructure including roads, electricity and water. The tax breaks are a draw too, for both local and foreign investment, which is essential to Rwanda’s goal of becoming a middle-income country by 2020.

In line with Vision 2020, the Government of Rwanda launched the second phase of its ambitious Economic Development and Poverty Reduction Strategy in 2013, with the aim of reducing poverty in the country by 30%. For the government this means focusing on transforming the economy, putting the private sector in the driving seat and easing constraints to investment.

Eusebe Muhikira is the acting head of the newly created Export and Business Development department at the Rwanda Development Board (RDB), with a staff of 28 people. “Rwanda’s Economic Development and Poverty Reduction Strategy sets the target for our export performance,” he says. “The projections are very high and to increase exports by 28% every year is very ambitious. But for us to reach a middle income status, we must do so.”

TradeMark East Africa (TMEA) has operated in Rwanda since 2011, supporting trade facilitation. It’s an “all inclusive intervention”, explains Hannington Namara, TMEA’s former Country Director in Rwanda. As a new entrant into the EAC, he says, Rwanda is a “small outfit, with a very low base of development”, which “creates a challenge for Rwanda if it is expected to open up to Kenyan, Ugandan and Tanzanian markets and not get anything in return.”

Rwanda Development Board (RDB) with support from TradeMark East Africa (TMEA) is creating export abilities and opportunities through both local and foreign investment.

Andrew Thorburn, a senior adviser seconded to RDB by TradeMark East Africa (TMEA) joined efforts with Clare Akamanzi, the RDB’s Chief Operating Officer, linked up with Helen Hai, former Vice President and General Manager for overseas investment for the Huajian Group, which makes shoes in China. Their joint efforts brought in many potential investors including Candy Ma who already runs a successful garment business C&H factory, in Kenya. Candy took up the challenge, persuaded by an incentive package that included staff development and the construction of an 11,000 sq. metre factory.

“TMEA brought us an adviser who has been working with us for three years and helping us create a clear strategy to develop exports,” Eusebe says. “We are grateful for this support because all these strategies are implemented.”

The C&H factory, opened since March 2015, is a shining example of the manufacturing Rwanda aims for – modern, clean and efficient. The initial 200 employees, recruited with RDB’s help from one of Kigali’s technical schools, sit in neat rows behind industrial sewing machines, in uniforms and protective facemasks. The first three months were spent training staff to produce high quality polo shirts, for which Candy Ma has a large market in the USA. Now that training is complete the factory expects to produce about 15,000 shirts per month. Phase 2 will commence when the new unit is ready towards the end of 2016.

“This is something the government’s been trying to do in a number of sectors – bring in new activities that will create lots of jobs for the skill levels we have now,” says Andrew Thorburn. “We believe if Candy continues to prove that this is a good location we should be able to generate additional investment in the next four or five years that could create at least 50,000 new jobs.”

Wages educate the next generation

For Joselin Kalonji, 27, this is her first job. “I am very happy,” she says, “because it will assist me to pay school fees for my children. I’m earning a living and getting basic needs and I help my husband when I earn money.”

Joselin learned quickly, says the factory management, and has performed so well that she has been selected as a supervisor. “Even I have got knowledge from this work,” she explains enthusiastically. “I can make a full garment.”

What about her children, when they leave school? Does Joselin expect them to work in the factory too?

“That depends on how they perform, but I would like to support them at least till they finish university,” she replies, affirming that Rwanda’s goal of middle-income status is also hers.

C&H is not all about profits – there’s a social responsibility element too, in that they are developing a formal partnership with ‘Fairtrade’ (a global certification body aiming to raise work and living standards in developing countries), trading under the philosophy of ‘Made in Rwanda Fairly’.

Just as the Government of Rwanda made commitments to C&H, so the company has made commitments to the government, including creating 5,000 jobs by 2020, of whom over 60% will be women. Other commitments include creating a ‘green’ manufacturing concept in Rwanda, continuous upgrading of workers’ skills, support for government training programmes and implementing a share scheme as a staff incentive.

Candy Ma is enthusiastic about her new venture. “After only a few weeks I have been impressed by the speed at which our new workers are developing their skills,” she says. “Already they are capable of producing the quality required for international markets. In this respect Rwanda is remarkable. Our team is energetic, disciplined and keen to learn and to earn a decent living. We are delighted to help them achieve their goals.”