Rarely does a nation’s economy attract so much investment and positive attention when its “brand” is primarily associated with genocide. However, under the leadership of President Paul Kagame the sub-Saharan country has enjoyed surprising progress in recent years.
Kagame came to power in 2000, when World Bank figures listed foreign direct investment in Rwanda as having been the inflation-adjusted equivalent just US$8.3m. By the end of the decade in 2009, that figure had risen to US$118.7m, a growth multiple of more than 13 times. This jump is especially impressive given that foreign direct investment amounted to a combined US$28m in the first five years of that period.
Investment peaked at US$159.8m in 2012, and was US$110.8m in 2013 (the most recent year for which figures are available). So what drove this immense improvement in fortunes for the country?
- Rwanda liberalized the rules around foreign investment at the end of 2005. Removing restrictions on FDI entry, allowing 100% foreign ownership and giving foreign businesses national treatment was an instant success, driving investment from US$8m to above US$30m within a year of its introduction. Read the copy of the investment law;
- President Kagame treats the country’s governance like a business, preferring to remove barriers to prosperity before non-economic concerns from outside observers (including human rights groups);
- Diversifying the economy into new areas such as coffee washing allowed it to build a competitive advantage in the region, which primarily focuses on growing coffee;
- There are large English- and French-speaking populations in the country, giving Rwandans access to two of the largest global business languages. These languages are particularly strongly represented in Africa, and Rwanda’s move to all-English education will drive further international success;
- Rwanda leveraged foreign investment to boost mineral exploitation, exporting US$340m of mineral products in 2012. This compares to only US$200m of overall exports in 2005, prior to the implementation of the new investment law;
- Balance has been retained in the economy – although exports of mineral products grew in absolute terms, their share of Rwandan exports has grown only from 43% to 45%. A diverse economic base has been key to Rwanda’s success.
Investing in Rwanda
Now to Healy Consultants Group’ specialty: the practicalities of foreign investment in Rwanda. Repeated improvements in law and process have significantly simplified registering a foreign business in Rwanda. Local company law allows for wholly-owned subsidiaries with a single director and no minimum capital, although at least one of the company’s directors must be resident in Rwanda. Thanks to the efficiency of Rwanda’s investment procedures, a new company can be started within a week.
To learn more about incorporating a company in Rwanda, visit our website. When you are ready to move forward with your corporate expansion, contact our experts: