## Private-sector development in Rwanda — In the trenches

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**Canonical URL:** [Private-sector development in Rwanda — In the trenches](https://www.imf.org/-/media/files/publications/fandd/article/2019/june/private-sector-development-in-rwanda-trenches.pdf)

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### RDB role and mandate
- The Rwanda Development Board (RDB) is a multiagency governmental department billed as a “one-stop shop” for investors.
- RDB responsibilities:
  - Promoting investments and exports.
  - Providing services covering negotiation of contracts with the private sector, helping investors secure concessions, and settling disagreements.
  - Managing privatization of government assets and tourism promotion, including national parks management.
- Vision: “to transform Rwanda into a dynamic global hub for business, investment, and innovation.”

### Major achievements and quantitative outcomes
- Ease-of-doing-business rankings:
  - Won the “#2 spot regionally in the World Bank’s ease of doing business rankings.”
  - “Rwanda the 29th easiest place to do business in the world and the second in Africa.” (Previously ranked at 150.)
- Investment attraction:
  - Registered $2 billion worth of investments in the most recent year cited.
  - In 2010, registered $318 million.
- Job creation and self-reliance:
  - “On average, the private sector now creates about 38,000 jobs per year.”
  - “About 25 years ago, we were 100 percent reliant on aid, but today we are 86 percent self-reliant,” implying dependence on aid for “only about 14 percent of our budget.”
- Business registration and formalization:
  - Company registration reduced from about 500 companies at the earlier stage to “about 13,000 companies a year.”
  - Current ability to “register a company in six hours.”
- Sectoral growth examples:
  - Volkswagen assembling in Rwanda.
  - Positivo assembling laptops.
  - Andela training “about 700 local programmers.”
  - A company refining coltan.
- Tourism segment:
  - MICE (meetings, incentives, conferences, and exhibitions) “is already accounting for about 10 percent of our tourism receipts” and is “the fastest-growing segment of our tourism sector.”

### Policy reforms and implementation approach
- Focused sector selection:
  - RDB and the Ministry of Economic Planning prioritized sectors that require private-sector engagement and can “generate wealth and jobs for Rwandans.”
- Regulatory simplification and digitalization:
  - Simplified processes for starting a business, registering property, filing taxes, and accessing tax-related information.
  - Digital solutions used to enable reforms, including automation of the business registration system.
- Tradeoffs acknowledged and managed:
  - Example: Eliminating the requirement for articles and memoranda of association to simplify company formation—recognizing a short-term cost to lawyers (loss of revenue) to achieve long-term gains in private-sector growth.
  - Estimated cost barrier: cost for having these documents done via a lawyer was about $400.

### Enablers of reform
- Political leadership and commitment:
  - Strong buy-in from Cabinet, a steering committee, and President Kagame; “President Kagame has made himself available to us.”
  - Political will described as essential for implementing bold or risky initiatives (for example, automating registration despite vested interests).
- Strategic positioning:
  - Given Rwanda’s landlocked status, strategy emphasizes knowledge and services sectors that “do not rely heavily on transport and logistics.”

### Constraints and ongoing challenges
- Structural constraints:
  - Landlocked geography leading to “the high cost of transportation, especially for imported goods,” raising costs across sectors.
- Cost of doing business:
  - Need to reduce overall costs, specifically “costs of financing, energy, and infrastructure,” despite progress removing red tape.
- Transition costs and distributional effects:
  - Short-term costs for some stakeholders (e.g., lawyers) when removing procedural barriers.

### Responses and strategic initiatives to address challenges
- Sectoral focus to mitigate transport disadvantages:
  - Developing Rwanda as a knowledge and services hub.
  - Promoting leisure tourism (e.g., mountain gorilla visits) and MICE to leverage service-based activities less reliant on logistics.
- Investment promotion and practical industrial projects:
  - Attracting assembly and training operations (examples cited above) to provide jobs, incomes, and diversification.

*Source: Interview with Clare Akamanzi, Finance & Development, June 2019.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2019/june/private-sector-development-in-rwanda-trenches.pdf_