More Chinese investors will set up manufacturing plants in Rwanda as soon as cheaper electricity is made available in the country, the Chinese ambassador Shen Yongxiang has said.

The envoy said that many investors from China are eying to invest in the country but are being kept away by the current high costs of production, especially electricity.

"We are doing our best to provide the necessary information and encourage Chinese investors to come and invest in  Rwanda, but there are still some difficulties including  high production costs which we have to solve before we start seeing an influx of Chinese business people to the country,” Yongxiang told The News Times in an interview.

Yongxiang added that foreign investments, especially in the manufacturing sector, will not only play a crucial role in economic development but will also be a platform to build capacity and an avenue to transfer expertise to local people.

Currently, industrialists pay between Rwf96 and Rwf198 for every unit of electricity.

The government plans to increase electricity production from current 110MW to about 563MW by 2018 by harnessing several resources such as hydro, peat, methane gas, solar and geothermal.

Yongxiang said that instead of tax incentives, the country should move fast enough to develop cheaper energy. His advice echoed recent remarks by Paulo Drummond, the IMF deputy division chief for Africa, who advised Rwanda to be moderate when dishing out tax incentives. "The dollar you give away as a tax incentive to an investor could earn you two dollars elsewhere and sustain your economic growth,” Drummond told this newspaper.

Rwanda is considering tax breaks to investors, according to the revised investment code. According to the new code, investors in energy, transport and logistics, as well as fund managers and export-oriented projects could enjoy tax incentives if the code is approved.

The new code, which still needs cabinet approval, is part of a broader strategy to wean Rwanda’s economy off aid and speed up the country’s development, officials at the Rwanda Development Board say. It is expected to be in place by the end of the month.