Rwanda has embarked on the implementation of the National Strategy for Transformation 2 (NST2), a medium-term plan to transform the country. Under this strategy, the government targets to double private investment from the current $2.2 billion to $4.6 billion in 2029.

To achieve this target, the private sector is said to play a crucial role in

This was emphasised in a meeting that brought together members of the private sector, Rwanda Development Board, Ministry of Trade and Industry and other government institutions to discuss the role of the private sector in achieving NST2 as well as what can be done to create a more conducive environment for the private sector to thrive.

NST2 prioritises the ‘Made in Rwanda’ initiative to significantly boost export coverage of imports and reduce the trade deficit, while doubling export levels from $3.5 billion to $7.3 billion through scaling up private investments.

While the private sector acknowledges its critical role, members say that a number of challenges have to be addressed for the private sector to play a meaningful role.

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Packaging

One of the challenges that the private sector points out is lack of alternative packaging materials.

In 2008, Rwanda became one of the first countries in the world to ban single-use plastic bags and bottles. While this policy brought positive changes to the country, the lack of alternative packaging materials posed a challenge, one that the private sector says has put them at a disadvantage.

"It is quite costly to find alternatives to plastic packaging materials in the country, making the Made in Rwanda products expensive and less competitive compared to imported goods," Francoise Mubiligi, Chairperson of the Private Sector Federation (PSF) told The New Times.

She noted that there is no law banning the importation of products packaged in plastic materials into the Rwandan market, creating an uneven level playing field.

In response to this, Juliet Kabera, the Director General of Rwanda Environment Management Authority (REMA), said that the challenge creates an investment opportunity.

"There is an opportunity to invest in sustainable packaging and we as government will have to take lead in this to ensure there are available and affordable packaging alternatives in the Rwandan market," she said.

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Kabera also said that they are working to see how the proposal to introduce an environmental levy on imported products that come packaged in plastic can be enforced to create a level playing field.

Bureaucratic procedures

Members of the private sector also raised concern over the bureaucratic procedures that cause long delays and slow service delivery.

"There is a serious backlog of paperwork at the Kigali construction and urban planning One Stop Center, causing very long delays especially for us in the construction sector," Dennis Karera, a Kigali-based businessman said, adding that time lost in waiting for responses from government offices is equivalent to revenue losses.

Echoing his sentiments, Emilienne Benurugo, CSR and PR Manager at Skol Brewery LTD said that delays are compounded by regular changes to regulations.

"More to the long procedures, there is the issue of changing regulations in different government institutions, requiring the private sector to take more time to make adjustments and comply with the new laws and regulations," he said.

Private sector members also pointed out the need to streamline services at the One Stop Center at RDB, saying that while business registration is easy and fast, operating the businesses takes a long time due to bureaucratic processes.

Acknowledging these challenges, Deputy CEO at RDB, Juliana Kangeli Muganza said that some reforms will be done to ease processes at the one stop center in RDB.

"We have realised that there are a lot of duplication of roles at the One Stop Center, therefore, RDB is undertaking a digitisation process, where all services will be accessible online so as to cut the red tape and ensure faster service delivery for the private sector," Muganza told The New Times.

Access to finance

The cost of financing, especially for those in the manufacturing sector, has been said to be high, limiting growth.

Robert Bafakurera, a businessman and former Chairman of PSF, said, "Capital is expensive especially from commercial banks where we borrow money at a range of 15-18 per cent interest rate."

Bafakurera highlighted that the Manufacture and Build to Recover Programme (MBRP) had been quite supportive to the manufacturing sector in the country, but with its removal, manufacturers have to find ways of getting affordable financing.

The now phased out Manufacture and Build to Recover Program, was established in 2020 following the Covid-19 pandemic, and provided incentives aimed at boosting economic recovery efforts by attracting private sector investments in the manufacturing, construction, agro-processing and real estate sectors.

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Speaking on incentives, Minister of Trade and Industry, Prudence Sebahizi said that a balance must be struck to ensure a win-win situation for both government and the private sector.

"We provide incentives to enable the private sector to invest, get a return on their investments and pay taxes to contribute to the revenues of the country," he said.

"These incentives mean that the government is forfeiting revenues in the hope of getting more in the future, so we find the balance by giving incentives to businesses with very high return on investments,” he added.

The recently released World Bank’s Business Ready report recommended that Rwanda must work to design a package of incentives that will not only serve good for investors, but also enable the country to raise much needed revenues without burdening the taxpayers.

The dialogue between the private sector and government institutions was described as eye-opening and a crucial step towards supporting private sector growth and increasing private investments in the country.

Muganza indicated that there was a need for increased dialogue between the private sector and government, saying that solutions to existing challenges are within control.