Rwanda's Development: Open Borders and Innovation

Kigali Convention Centre

LAND OF 1000 HILLS

Despite being a small, land-locked country of 12 million people lying in the heart of Africa’s Sub-Saharan region, Rwanda is taking steps to be a leader in Africa for innovation. In a country with a devastating past, the government and citizens are keen to look to the future.

Currently the country is in a position of strength, the government are making progress in all areas possible to encourage development and create a stable country both economically and socially. The population is youthful, with 40% between the ages of 14 and 35.

Despite this, poverty is an ever-present challenge in Rwanda and, according to the World Bank, 30% of the population were still living under the poverty line in 2016. While this is decreasing, it remains a challenge in a country with many employed in the informal economy, and a small market of consumers for businesses to appeal to. Obstacles for Rwanda in the past have also included lack of suitable infrastructure, limited electricity access, and a narrow economic base, widely focused on the agricultural sector.

To target these issues, the government are focusing on a few key areas for development going forward:

  • Infrastructure growth
  • Establishing a knowledge-based economy built on a strong human resource base
  • Incentivising businesses to locate in Rwanda
  • Investing in innovation and research

These goals are all encompassed in Vision 2020, a plan proposed in 2000 summarising the government’s development efforts for the country.

A DEVELOPING INFRASTRUCTURE

Essential to opening borders to innovators in Rwanda is to ensure the infrastructure is adequate for efficient business operations. Rwanda has recently laid a network of fibre optic cables connected to undersea cables from the east coast to enhance internet accessibility across the entire country. According to Vision 2020, it is expected that 50% of Rwandans will be internet users by 2020, up from 4.3% in 2010. Mobile networks now cover almost all of the country. The progression Rwanda has made gives an increasing number of the population access to technology, learning opportunities and the means of developing business networks; all essential elements for innovative entrepreneurs and scaling businesses.

A KNOWLEDGE-BASED ECONOMY BUILT ON A STRONG HUMAN RESOURCE BASE

The Rwandan government are branding themselves as a ‘knowledge-based economy’, using the skills of their population as a means of increasing GDP and growing their economy. To accomplish this they are focusing on a few different areas in terms of education:

  • Vision 2020 plan is focused on the ‘universal education for all’ Millennium Development Goal in terms of education. The success already achieved in this area is illustrated in the United Nations Population Fund Report stating that primary enrolment in Rwanda has risen from 73% in 2000 to 97.7% by 2016.
  • Education around three key areas: technology, management and engineering. Established institutions such as The University of Kigali and The University of Rwanda, have focused on these areas of study.
  • The country is providing places for entrepreneurs to work, collaborate and innovate. An example is kLab, which has recently opened in Kigali. This is a public-private partnership supported by the government, providing free workspace with WiFi, mentoring, events and competitions for tech entrepreneurs, providing an enabling environment for budding entrepreneurs and innovators.

EASE OF DOING BUSINESS

According to the World Bank’s Ease of Doing Business Index, Rwanda is ranked 41st of 190 countries, and 3rd in Africa after Mauritius and South Africa, making Rwanda an attractive location for FDI and start-ups. The index considers a variety of essential elements for successful business operations including reducing insolvency, providing construction permits, starting a business, trading across borders, getting credit and paying taxes.

One of the most important factors for entrepreneurs registering a business in Rwanda is the fast and efficient online process, taking no longer than 6 hours and with no cost. Additionally, the digitising of other processes such as tax payment, managing legal cases, insolvency claims, construction permits and licensing have all improved ease of locating in Rwanda.

OPEN BORDERS FOR INNOVATORS

According to the Rwanda Directorate General of Immigration and Emigration, since the start of 2018 all visitors to Rwanda have been entitled to a free visa for 30 days without any application. Citizens from other East Africa Community Partner States, Ghana, Senegal, DR Congo and a few other non-African countries are entitled to a 90-day visa, based on this being reciprocated. Prior to 2018 only African nationals and citizens from a few other countries could receive visas on arrival.

Specific types of visa available include:

  • The W2 visa for Entrepreneurs in Information Technology which lasts two years, costs less than £90 and is processed in 3 days.
  • The G1 visa for Specific Trade, Business and Services from the region which lasts 3 years, costs less than £20 is processed in 3 days.
  • The G2 visa for Specific Trade, Business and Service from outside the region which lasts two years, costs less than £90 and is processed in 3 days.

The ease of obtaining visas in Rwanda, as well as registering businesses, makes it an accessible gateway into the East African market for start-ups to launch products and services in an attractive business environment. The population is only 12 million and therefore is a great launchpad for new products and services before scaling into larger markets across East Africa.

INVESTMENT INCENTIVES

The Rwandan Development Board has various investment incentives in place to encourage FDI:

  • An investment allowance for the first year when investing in assets worth at least USD $50,000 each and operating in the government’s key sectors for investment.
  • TA registered investors are excused from customs taxes and duties if involved with products used in Export Processing zones.

These incentives indicate that Rwanda are trying to attract not only local innovation and developments, but also FDI from companies looking to locate in a growing tech-hub in Sub-Saharan Africa.

NATIONAL RESEARCH AND INNOVATION FUND

The National Research and Innovation fund, established at the start of 2018, has currently raised USD $68.8 million from the Rwandan government, the African Development Bank, and private investors, and aims to grow to USD $100 million. The fund is being managed by The National Council for Science and Technology. Its goals are to create over 100 tech companies valued at USD $50 million by 2030. It will focus on young innovators and entrepreneurs, supporting them with training in business planning and management and providing financing to small and medium enterprises. Key areas for investment include agriculture, energy, environment, ICT and healthcare, all essential sectors to Rwanda’s development.

The presence of this fund demonstrates on a regional and global scale the country’s intentions to establish itself as a tech hub in Africa, in competition with South Africa, Kenya and Egypt, all countries with similar funds.

WHY SHOULD YOU BE CONCERNED WITH INNOVATION IN RWANDA?

The Baobab Network have run two programmes in Rwanda, working with a range of start-ups tackling challenges such as financial inclusion and access to healthcare. In 2017, The Baobab Network worked with Starlight, a start-up providing solar-powered lamps to people living in rural Rwanda. As part of their business they run STEM education programmes, partnering with local schools and running workshops to engage young people in technology, science and engineering skills, which they otherwise would not be exposed to.

The infrastructure in Kigali has enabled the Starlight founders to grow and scale their business. While developing their initial idea, they worked in a free 24-hour workspace in Kigali called Fab Lab, designed to help entrepreneurs turn innovative ideas into products. From this stage the business has gone from strength to strength, and Starlight have been able to connect with support from across the globe and achieve recognition on an international level, being awarded second place in the World Bank’s Global Ideas for Action competition in 2018.

While Rwanda may not be the biggest tech-hub or centre of innovation in Sub-Saharan Africa right now, the level of investment into infrastructure, education, incentives and funding suggests the imminent future looks bright for the country. Rwanda is progressing; the population are supported through education, a developing infrastructure and favourable business policies to innovate and thrive. Rwanda’s GDP has consistently grown between 4% and 9% annually since 2010 and shows no signs of halting as the economy continues to expand. While the country still struggles with poverty and a tragic past, the efforts the country is making make Rwanda one to watch.