Claver Gatete, Rwanda’s minister of finance, has but only a few minutes to spare on the phone with Euromoney as he darts from one meeting to another at this year’s World Economic Forum in Davos, Switzerland.
The minister is upbeat as investors praise the administration’s deft stewardship of the economy, which is rapidly entrenching its status as an innovative hub for central and east Africa.
Gatete’s gallivanting zeal as the country’s chief sherpa on the global economic stage is designed to send a clear message to the international investment community: Rwanda is open to global business.
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| Claver Gatete, Rwanda’s minister of finance |
The Davos exposure comes as Rwanda braces for a landmark economic event in May – the annual African Development Bank forum. Gatete says the event will prove a watershed in the country’s economic rehabilitation in its post-conflict age. “Having the forum in Rwanda this year is a vote of confidence for us,” he says. “It shows the region and the rest of the international community that we are capable of successfully hosting such a central event in African development.”
Rwanda has proven itself to be an extraordinary African success story relative to expectations in 1995. Although there was a slight slowdown in economic growth in 2013, between 2001 and 2012, real GDP growth averaged 8.1% per year and, between 2006 and 2011, an estimated one million people were pulled out of poverty.
Underscoring the country’s economic ascent, the Kigali Convention Centre, an impressive glass dome that will become a focal point of the city upon completion, was financed by a successful Eurobond issue in April 2013.
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| Kigali Convention Centre: Artist's impression |
The debut issue was priced at the tighter end to yield 6.875% and attracted a $3.5 billion order book – more than eight-and-a-half times the issue size and more than half the country’s GDP. The conference centre will house a five-star hotel with 292 rooms, a large conference room with a capacity to hold 2,600 people, as well as 24,000 square metres of office space.
The administration hopes the China-backed project won’t in the coming years be seen as an under-used vainglorious construction effort. Instead, it’s hoped it will be seen as a proactive capacity-building project as Rwanda attracts greater FDI flows, buoyed by its reputation as a regional business and transport hub for the East African Community.
Early signs are encouraging. Last year, the World Bank ranked Rwanda – a commodity-poor landlocked nation – the second-easiest country to conduct business in sub-Saharan Africa, after Mauritius.
Globally, Rwanda is ranked at 32. The Rwanda Development Board has drastically cut the time it takes to register a business in the country: it’s possible to be in and out of their offices with all necessary licences in less than six hours.
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| Rwandan president Paul Kagame. Source: World Economic Forum |
However, questions over president Paul Kagame’s human-rights record, and tolerance of dissent continues to dog the administration, testing international support. In the latter part of 2012, Kagame was accused of supporting the Democratic Republic of Congo’s M23 rebels in the Great Lakes conflict. Gatete is anxious to reject any accusations of collusion. “It was proven that the government of Rwanda had not provided any assistance to [the M23],” he says.
“The country got all of its aid back, all bilateral and multilateral agreements were restored, and donors are continuing to offer their support with no exceptions. As I have said, confidence in Rwanda – politically and economically – remains firm.”
He adds: “We work closely with the international community to reach a peaceful solution in the Congo, nothing more.”
However, Rwanda’s international standing came under the spotlight again recently, after the US criticized scathing comments made by Kagame, who claimed that political opponents ought to be treated harshly.
The remark came after one of his exiled critics, Patrick Karegeya – a former director of external intelligence and a former opposition leader – was found dead in a hotel room in Johannesburg, raising questions about the administration’s involvement.
“We didn’t do it, but my question is: shouldn’t we have done it?” said Kagame at prayer breakfast on January 12, as was reported by Reuters.
Says Gatete: “Karegeya was part of the opposition and was responsible for setting off bombs in Kigali, but the death had nothing to do with us and we will leave the South African government to look into the case. All Kagame is trying to do is protect the country.”
Anxious to shift back into Rwanda’s international-investment bid, Gatete cites two landmark projects that highlight the country’s dynamism.
“One of the most interesting [projects] is Visa International’s project here to roll out mobile payments and transfers,” he says. “If it’s successful, it will be rolled out in the rest of the region.
“The East African Commodities Exchange is another example. Rwanda was chosen for the site of this despite its size and because of its insight into business. Rwanda is a good place to do trials such as this one. We are a government that international companies can trust and it’s a place where business runs smoothly.”
The exchange aims to increase liquidity and offer a commodities market for 130 million people in the region. One of its goals is to create a platform for smaller, regional producers and give them access to futures and options – an ambitious project given nascent financial infrastructure, limited listed equity products and issuers, as well as illiquidity.
Nevertheless, the commodities exchange is another step towards East African integration, aimed squarely at the economies of scale.
“We already have freedom of movement and freedom to seek employment within the region, which helps business in Rwanda and elsewhere,” says Gatete. “We already have certain things in place, including a customs union and a common market.
“The next phase will be a monetary union and a single currency.”
Few consider the integration project will be plain sailing, but Gatete’s enterprising zeal highlights how Rwanda – the small country with big ambitions – represents a competitive challenge and opportunity for its reform-shy regional neighbours.