When President Mnangagwa went to Rwanda for the African Union Extraordinary Session of the Assembly of Heads of State and Government last month, he took the opportunity to visit the Rwanda Development Board. Impressed by how the board managed to help Rwanda turn into a darling for investors, the President asked his counterpart, President Paul Kagame, to allow the board’s Chief Executive Officer, Ms Clare Akamanzi, to come to Zimbabwe to interact with his officials. Ms Akamanzi arrived in the country this week and has since held meetings with several Government officials.
In this wide-ranging interview with our Assistant Editor Lovemore Chikova (LC), Ms Akamanzi (CN) speaks about lessons that can be learnt from her country.
LC: What is the role of the Rwanda Development Board and how has it managed to help turn around the economic fortunes of your country?
CN: The Rwanda Development Board was created as a single-point organisation for investors. That was a decision made by our President (Paul Kagame) and Cabinet because they wanted to signal in a very practical way to investors that they were taking facilitation of investment very seriously and that they were dedicating an organisation to focus on the key components that investors need.
The first impact that we had in the private sector was that we made their lives easier because they didn’t have to deal with many institutions, to interact with them on what they needed. I think a very clear example is starting a business. Before the Rwanda Development Board was formed, it would take you about 12 procedures and it would take you about three weeks and cost $450 on average to just register a business.
Today, all of that is done online at the Rwanda Development Board and it’s free of charge. That has made it easy for businesses. Instead of registering just 500 companies that we used to do before in a year, we are now registering over 13 000 companies in one year. So, it really shows that making it easy for investors to register businesses or to even get all the different permits has a direct benefit in terms of how many businesses are formalising and are attracted to finish the process of registering.
If you make it difficult along the way, some of them fall off and give up. So, that was a very clear example we made that showed it was really easy for investors to interact with government.
LC: You are here at the request of President Mnangagwa and you have been sent by your President Paul Kagame. What mandate did President Paul Kagame give you on this mission?
CN: President Kagame responded to the request by President Mnangagwa for us to come to Zimbabwe and he basically gave us the mandate to come and share our experiences on what the Rwanda Development Board is and why it was created and the impact of the Rwanda Development Board and all these reforms we have done around investor facilitation. He sent us here to share that experience with the Zimbabwean Government and that’s why we are here.
LC: For the few days you have been here and interacting with Government officials, what areas have you noticed that can be exploited by the Zimbabwean Government for quick returns?
CN: Over the last two days we were interacting with officials in Zimbabwe, it’s just two days, we can’t claim to be experts on what needs to be done in Zimbabwe. I hope you understand that. But what we have observed extremely clearly is that there is a very strong appetite among the Zimbabwean Government officials to reform for business facilitation.
I think it was very clear to us when President Mnangagwa came to Rwanda and immediately invited us to come. It was very quick, it was really a very serious issue from the time he came and the time we are here. But beyond the Presidential level, even interacting with the officials, they are asking a lot of questions. They want to know how we made it easy for businesses, what tools we used, the challenges we faced, how some of the challenges were managed.
I see a very strong appetite for change and for reform for the better which I think is very encouraging. The second observation is that I see a lot of key elements already in place for Zimbabwe to make it easier for businesses to go ahead. I think when you drive around Harare we see infrastructure, we see a lot of key tools that you need for reforms even physically available in the country.
We see economic activity, we see a lot of activities going on. But we also see it when interacting with people. I knew this already that Zimbabwe is one of the most educated countries in Africa, but I can see that when I interact with the people.
You have a very high skilled labour force. I think the feedback that we have gotten from the people in Zimbabwe is that they need to coordinate, how to introduce tools like automation, how they need to consolidate some of the services they give investors in order to make it easier for investors to do business.
That’s the feedback that they themselves have given us in some of the areas they think need to be prioritised now. Obviously our role here is to show our experiences, to share what we have done and the challenges and it’s up to the officials from Zimbabwe to say of all the things we shared what is relevant, even they have given us some of that as their feedback.
LC: What lessons can Zimbabwe draw from Rwanda when it comes to opening up for business and attracting the much needed investment?
CN: I think the first key lesson, if I may attempt to give one is: If Rwanda could do it, absolutely Zimbabwe can do it. If you look at the challenges that Rwanda underwent, we came from a very difficult history – the 1994 genocide against the Tutsis. We also came from a baseline of very low levels of key economic indicators. We are a landlocked country.
So we had immense challenges, but we were able to work within those challenges to really build a country that has been growing at an average of eight percent for a very long time. We were able to cut poverty from about 80 percent, now we are at 39 percent and we were able to increase confidence in investors. Today we run the second ease to do business. All those indicators I think just demonstrate that it’s possible.
You know if a country like Rwanda, with all those challenges, if we could reach where we are I think Zimbabwe is a much bigger country, has a lot of resources, you have a good skilled labour. I just hope this whole process is an inspiration that you could do even a lot more.
LC: I understand that part of your mandate is to help Zimbabwe come up with a one-stop shop for handling investors similar to the Rwanda Development Board. What do you think should be done to come up with such a strong institution?
CN: It is important to create a strong one key organisation to avoid inconveniencing those who come seeking to invest in the country. When you create such an institution, you need to know how do you empower the organisation. Like in the case of the Rwanda Development Board, we report directly to the President, we present our papers to Cabinet and we have a client charter which helps us to look at how we can bring deliverables to investors within a short period of time.
The first key question is what kind of consolidation is relevant for Zimbabwe to create a strong and truly one-stop organisation where all the services investors need will be housed. I think the Chief Secretary (to the President and Cabinet Dr Misheck Sibanda) has said a decision has already been made to merge three organisations- Zimbabwe Investment Authority, ZimTrade and the Joint Venture Unit in the Ministry of Finance. Once you create an organisation like that, how do you empower that organisation to really deliver the mandate that we need?
A third one is how do we bring service delivery that has guarantees of time to the investor. To us, it was an issue of building client charters as I have pointed above. Every service has a client charter. All the list of services we give have published client charters that have time and guarantees and that also goes to say if they do not get it within a given period of time what happens, where do they get redress.
Political will, which President Mnangagwa has already shown, is crucial for this one-stop shop to be successful. Without political will there will be a lot of interference from other sectors that can contribute to the failure of such an organisation. In our case there is no going through another ministry to reach Cabinet or the President.
LC: What are Rwanda’s selling points to investors?
CN: The key selling point for Rwanda in terms of when we are talking to investors, the first one is we share how our economy has been growing in a sustainable and consistent way at a high rate. Growing between seven to eight percent for 15 years is really confidence to investors that this country is always going to be growing and an investor wants to put money where they know that there is going to be growth because they want to grow with the country. I think that is the first thing we tell them.
But related to that, we also show them the other economic indicators. If you look at our inflation, our inflation has always been very low, always below six percent and definitely we try not to go beyond double digits. Again, the reforms around monetary policy, we have a free floating currency. We have a very stable currency. If you look at how our currency, the range around the dollar, the appreciation for a very long time has never been more than five percent. So, those economic fundamentals are what we tell the investors to begin with.
The second part we tell them is the business environment. You can register your business within six hours, you can get your operating licence, your construction permit in just two weeks. If you go to court and you have a case within 100 days you hear judgment from our courts. So, we share the business environment, the best practices that we have and that the investors support.
The third component we tell investors is governance. Rwanda prioritises governance. We have made sure that there is zero tolerance for corruption. We tell them that the cost of doing business is really what it is; what we tell you. There are no other hidden costs from what you see and what we tell you. And they like that as well, they like to know there is good governance because governance assures long-term security not only of themselves, but also security of their investments for a very long time.
Of course, the fourth component we tell them is that Rwanda doesn’t look at itself alone; we look at ourselves as part of the East African Community. So, the market you are looking at, even though we have two million people in Rwanda, we tell investors that remember that we are part of the almost 200 million population around the East African Community including our neighbouring countries.
Of course, we share with them specific opportunities. We go into details. We tell them where they can put money and we even do a lot of feasibility studies where we can on specific projects. That’s in a nutshell how we sell our country.
LC: What measures on accountability and coordination have you put in place to ensure that you change the mindset of officials and the people for them to move along with the vision of President Kagame?
CN: For Rwanda, two cross-cutting elements of our leadership, President Kagame, our President, has been consistent about demonstrating two major cross-cutting elements of leadership and I think one of them is accountability. It’s really sharing a vision with the people, the people being part of that vision. And also reporting back to the people through different fora.
We have the national dialogue where the President chairs meetings and citizens participate in those meetings. Citizens give feedback to government on what they see and how they feel about the governance. That really makes the leadership very much in sync with the people.
The second component is ensuring that the development of the leadership is inclusive. So, accountability and inclusiveness, very key cross-cutting elements. Inclusiveness just means the structures of government are very much decentralised.
We have every small unit of decentralisation. We have a leader that coordinates the people in that village so that they give input to policies and programmes and then it goes up to the President who gets feedback from the people.
We have a national forum in place like the national leadership retreat where leaders sit every year to review how performance has been done. We sign performance contracts. So, all these support accountability to the people, but it also helps inclusiveness because people can directly point out issues they want government to focus on.
Also on accountability, building institutions that work. We have governance institutions and rules like every year you have to declare your assets to the Ombudsman and the Ombudsman monitors your assets. If there is something unusual in how your assets are moving, it can create interest.
I have talked about performance contracts, but we also have institutions like the Auditor-General that fight mismanagement of resources. Most importantly, our President has been consistent about ensuring these institutions actually work. These institutions support the vision that he has and the Rwandans have accepted to be part of the future.
LC: Let’s also talk about technology. How have you managed to harness technological platforms to make it easy for investors to do business in Rwanda?
CN: Automation has been extremely important, one of the biggest programmes that President Kagame put in place, and I think this has been recognised in many ways. President Kagame is the chair of the UN International Telecommunications Union (ITU) Broadband Commission. He is also part of a lot of ICT programmes even in the World Economic Forum as a leader. The reason for all this is because President Kagame has made it his priority, has made ICT his priority at that level.
We started by investing a lot of money in putting in place the infrastructure that is needed. We have fibre optic and broadband infrastructure deployed all over the country. We have a national data centre that is a high level one.
We have institutions like Kigali Science and Technology Institute, we have Carnegie Mellon University that we attracted from the US to set up a campus in Rwanda. All these big reforms require a high level of political attention at the presidential level and President Kagame has been very much an instrument driving this.
That translated into the use, because you can put in infrastructure, good schools and education, but you need to use them. So, we automated all the key services that government uses. In the Rwanda Development Board we automated applications, if you want to apply to set up a company we link you to the national ID system, we link you to the tax system so you don’t have to go there, we link you to the social security system.
So, you simultaneously register your company, at the same time you get your social security, at the same time all the tax administration happens. We also have something called Rwanda Online, which is a system built by one of our local companies to provide all citizens with services online. That includes applying for national ID, applying for birth certificate, death certificate, all the key services that government gives are in one platform. Which is very important because we have this one platform instead of each institution developing its own platform.
LC: In terms of incentives to investors, how do you offer them? Do you have a law which governs that or you just consider each case as it comes?
CN: We have had three alterations of our investment law because we keep learning and adjusting. The most recent investment law codifies the different types of incentives to make them standard. When you have a single law governing incentives, it’s easy to implement because it doesn’t leave someone from customs and someone from the development board to interpret because it’s a standard law.
Some of the incentives we give are a seven-year tax holiday for investors who invest more than $50 million, a reduction of corporate income tax from 30 to 15 percent if you are export at least half of what you produce and if you are in a strategic sector, such as ICT, manufacturing, value addition, transportation and any other sector that we give priority to. Of course, there are other incentives we give. If you bring you headquarters to Rwanda, it’s zero percent corporate income tax.