Construction, mining, agriculture, tourism, and services like insurance and banking continued to attract investments and entrepreneurs from abroad and the region increasingly see Rwanda as a place to do business, experts said, reacting to the economic trends of 2013.

During his State of the Nation and End of Year Address this week, President Paul Kagame said the first two quarters of 2013 registered an economic growth of 6.6 per cent and hinted that the figure could increase when the remainder of the reporting for this year is in.

The same expansion has also been projected by the Washington-based International Monetary Fund (IMF), which indicated early this month that the economy was on track to expand by a similar margin this year before accelerating to 7.5 per cent in 2014.

Although Rwanda’s economy this year grew at a slower pace compared to 2012 when it reported an 8 per cent increase, continued stability in the country and efforts made to improve the business environment continue to attract investors.

Prof. Josephat Bosire, a lecturer of finance and investment at the newly-created University of Kigali, said more and more people from Uganda and Kenya have come to Rwanda this year to start small businesses.

"A lot of people are investing in small businesses like retail, hotels, restaurants, and housing. There is a good atmosphere in Rwanda, especially in terms of security,” he said in an interview.

The lecturer’s observation resonates with what President Kagame said during the State of the Nation Address, where he reaffirmed his government’s zeal to keep the country secure.

"Rwandans are safe and secure wherever they are; go about their work freely throughout the country at any time of the day. Visitors, both tourists and investors to Rwanda, also recognise and appreciate the level of security in the country,” the Head of State said.

The President said both local and foreign investments in the first six months of this year stood at $456 million, compared to $538 million registered the whole of last year.

Commenting on the reality check of investments, Clare Akamanzi, the chief operations officer of the Rwanda Development Board (RDB), said investment for 2013 could surpass the initial target of $1.3 billion to hit $1.4 billion.

"We are pleased with the results about where we stand today and we are motivated to keep improving, we want to do better next year,” she said.

Despite uncertainties on the international financial markets and effects of cuts and delays of some donor support to Rwanda, challenges that slowed the Rwandan economy this year according to the National Bank of Rwanda, the country exported more goods and attracted more investments.

Kagame said on Monday that by the end of last month, export revenue grew to $489 million, a 27.2 per cent increase over last year.

He observed that most of the exports are from agriculture, a sector in which the majority of Rwandans are involved and is set to grow by 5.4 per cent this year according to the government.

For Prof. Herman Musahara, an expert in development studies at the University of Rwanda, recent research on the ground show that some of the recently introduced policies in agriculture are paying off.

"Priority crops and land use consolidation have improved productivity for most crops,” he said, explaining that efforts have also been made to add value to the agricultural produce.

"The welfare of the people is much better. It’s clear that a lot of improvement has happened.” 

Challenges

Though the IMF, in consultation with government economists, have projected that Rwanda’s economic growth for this year 2013 will be at 6.6 per cent, then 7.5 per cent in 2014, 7.6 per cent in 2015, and 8 per cent in 2016, experts point to a few areas that need serious improvement if the targets are to be realised.

Hannington Namara, the chief executive of the Private Sector Federation (PSF), mentioned lack of sufficient electric energy, skills gap, and lack of access to long term and affordable capital such as bank loans as the major challenges.

Dickson Malunda, a development economist and senior research fellow at Rwanda’s Institute of Policy Analysis and Research, also singled out energy and service delivery as some of the areas that need urgent improvement.

Prof. Musahara points at insufficient research as one of the challenges for the economy and would like to see more investments made to quantify inputs from initiatives such as the monthly community work (Umuganda) and the country’s informal sector.

Both Prof. Bosire and Dr Monique Nsanzabaganwa, the vice governor of the National Bank of Rwanda, recommend that Rwandans think twice before buying imported goods because there are many local entrepreneurs who need to be employed.

The government has also admitted weaknesses in customer care and electricity generation.

"The national electrification and water distribution programmes are progressing. However, the pace of these projects remains unsatisfactory. We have to intensify our efforts to ensure that all Rwandans have access to water and electricity,” Kagame said.

The government has projected to attain 11.5 per cent growth during the five-year implementation of the 2013-2017 second Economic Development and Poverty Reduction Strategy (EDPRS2).

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THE NUMBERS

11.5% - The projected percentage of economic growth by 2017 as government move to implement plans laid out in the Second Economic Development and Poverty Reduction Strategy.

$456m - Local and foreign investments in the first six months of this year, compared to $538 million registered the whole of last year, according to the State of the Nation Address.

$489m - The amount of export revenue growth as of November 30, a 27.2 per cent increase over last year.