Rwanda is this week hosting Transform Africa Summit, a high-level conference on ICT. The Private Sector Federation chief executive Hannington Namara says this as an opportunity for the Rwandan business community to see potential in the industry. In an exclusive interview, Namara also touched the competitiveness of Rwanda’s goods in the regional arena, the role of private sector in the just-launched EDPRS 2, among others. Excerpts
Tell us about the role of the Private Sector Federation in the implementation of the EDPRS 2
Broadly speaking, the second Economic Development and Poverty Reduction Strategy (EDPRS2) is entirely about the private sector development and the private sector is at the centre of its implementation. The leadership of this country sat and decided that if Rwanda is to attain its development aspirations, it has to be done through private sector development.
Balanced growth is that growth that leads to social transformation to improve people’s lives and for this to be done, all activities, the policies, and reforms, should be planned around the growth of the private sector and I think this is what this government is doing.
On the other hand, there is the need to undertake the transformation of investments that are spelled out in EDPRS 2 because you are going to create jobs, you are going to add value on what is produced through employing the requisite technologies; all that leads to growth hinged on domestic product. So, EDPRS 2 is all about the private sector.
What is the private sector doing internally to make sure the targets spelled out in the strategy are achieved within the stipulated time frame?
We expect our member businesses–corporate, or SMEs or micro–to undertake investments in different sectors, especially in the strategic sectors such as mining, agriculture, manufacturing, construction and ICT, among others. We are looking at it in two ways; expansion of existing businesses and new ones coming on board; they could be Rwandan, or FDIs (foreign direct investments).
Our special focus now is on manufacturing. The problem Rwanda faces today is not lack of food for its people. No, it has sufficient food for the people, it has security, but we still have a problem. We are almost a net-importing economy. we import almost everything we consume here, save for only basics like food, yet we have some of the raw materials here.
We want to see our private sector producing what we consume locally and this will strengthen our currency against the dollar, and people will invest more, because we will have the money in circulation and this is how we will be delivered to a middle income economy that the EDPRS 2 seeks to achieve.
Concerning the role we are going to play, there are no two ways about it; we need to see investments happening and we are positive these will happen because the foundation has been laid; we shall continue doing our best.
Kigali is hosting the Transform Africa Summit 2013 that aims at unraveling the fortunes of the continent through the ICT. What is the role of Rwanda’s private sector in this?
When you talk of ICT as a sector, I think government has done its role in putting the necessary enablers to allow for the growth of the sector. But let us put everything in context. How old is ICT in Rwanda? May be 10 years? This is too short a time for many people to realise the business potential in the sector.
Nonetheless, that being the background, this is one of the major sectors where we are going to have to leapfrog some of the processes in ICT development to make sure the investments happen and I think the Transform Africa Summit is a major blessing to the private sector, especially in terms of creating awareness for our people.
When, for instance, one produces an ICT software or solution that promotes mechanised farming, such an invention will not easily appeal to the farmer’s mind because in most cases this is not something visible. So such events go a long way in sensitising our people, including the private sector, on what wealth can be created with the power of ICT.
We have to get everyone looking at how they can leverage ICT to maximise profits, that person who produces tomatoes for ketch-up should start thinking how they can use ICT to turn around their fortunes. This is a sector where I can say we have a competitive advantage compared to the other countries in the region.
We have that infrastructure, which other countries do not have yet; in terms of policy, we have an already laid mechanism in place to make this country the regional ICT hub and become a service economy.
So this is a new sector but catching up really fast, and I have no doubt that this will be an important sector in the implementation of the EDPRS 2, both in terms of creating jobs and easing how we conduct business.
Now talking about the role of the private sector in the Transform Africa Summit, you realise that without the private sector, ICT can’t produce its intended gains, government only uses a fraction of it, like solutions like e-governance and may be one or two applications in the security world but the biggest consumer of ICT is the private sector and we are working closely with the ministry in charge of ICT.
We are planning a CEOs’ breakfast during the course of the Summit where the top executives with the international companies present will meet with ours to share experience on how the sector can grow in our country. We consider this summit a cornerstone for the growth of ICT sector itself and also to show the other sectors to take this serious because ICT goes a long way in boosting competitiveness of any sector.
In the Summit, the private sector will have a big role to play and the majority of delegates coming are from the private sector except the heads of state and some government officials.
Rwanda has embarked on an integration agenda as one of the ways to help boost the economy and one of the key pillars is opening up markets for businesses from the region. Are Rwandan businesses ready to compete?
There is an analogy that I like to use; business people have been for decades transacting with their counterparts in the region… between Rwanda, Uganda and Kenya, etc. Our Heads of State coming together to form a framework to facilitate trade and investment is out of the conviction that this trade was already happening.
So, for the Presidents to sit and chart this framework, we, as the business community, see it as an added advantage because whether you like it or not people will find ways of making money.
So our governments are coming in to say, lets help you trade better, lower the cost of doing business to make it more profitable, is something we are appreciative of.
Now is our private sector ready to correspond with the expectations that our Heads of State have? The answer is yes and not yet. The yes part is, like I said, trade has been happening anyway and peculiar to our system here in East Africa, this is a one community; you find Ugandans investing in Rwanda, you find Rwandans investing in Kenya and so forth.
So on the ‘not yet’ our private sector, when you look at it comparatively, it is slightly below their counterparts in Kenya and Uganda. The private sector in Kenya is a bit mature compared to the rest while ours is just beginning to blossom. So is our private sector ready to engage that of Uganda and Kenya in trade, investment, capital flows? I do not think so, at least, not now.
Every trader that I know of wants to make money, we all wake up to open a shop in the morning to look for money but how are you going to do it in this competitive environment?
Bottom line is, with the latest developments comes as a task for the private sector in Rwanda. We need to sit and critically think what are we going to do better than the Kenyans and Ugandans. What can we take to their market? What are they bringing to our market? Can we produce it with added value?
Our private sector can only say, we are ready, but can we compete That is a challenge for which we need to get a solution and each company will be required to make its business case. Where not possible, there are opportunities to forge partnerships.
On the infrastructure projects that are being mooted under the trilateral framework, what are the expectations from the private sector?
If these projects come through, they will come a long way in boosting competitiveness, especially the railway. Rwanda is a land locked country, every kilometre that you drive away from the sea, comes at a cost, so minimising the cost through the railway, that will be fantastic.
As for the infrastructure project, it can’t be any better, we have been complaining about the cost of doing business along the Northern Corridor and the trilateral arrangement seeks to eliminate non-tariff barriers. If Rwandan cargo used to spend 15 days before getting cleared from the port, now it’s two days, or even one. This is something enormous for our businesspeople.
Other non-tariff barriers such as the many stoppages, the weigh bridges, and others will be completely removed and this comes along way in making businesses profitable.
There has been talk of having some of the projects being discussed by the framework implemented through public-private partnerships (PPP). Is the Rwandan business sector ready to seize this opportunity?
The projects that are being discussed like the railway, road infrastructure, indeed when you look at them, they should be on a PPP basis and this is the desired position but these are heavily capital intensive projects and require big chunks of money.
I don’t know if there is anyone in the private sector here with such money. And this money has to be long-term capital where return on investment is realised in 40 or 50 years.
Is it true that the rate of mortality of businesses in the country is high?
That is true but there is no explicit reason to attribute that to. The key issue, however, comes with poor planning of businesses. Many business owners undermine the essence of investigating the factors that could affect their business. Many times, SMEs are hungry to do business but the amount of time they put in making analysis of the prospects of the business, look at the numbers is simply not there.
People rush to open businesses, get a contract here and there, and the next day the business has been closed. Businesses close not because conditions of macroeconomics have changed, no, but because that level of planning wasn’t there.
The other reason is the skills-set, majority of the SMEs are born on government contracts and most lack the business acumen. Many would get a contract from District X and the following day they will buy two luxury cars, move into a mansion and before they know it all the capital is gone.
Another reason is the copy-paste business, where people open businesses because they have seen someone else making money out of it, there is no innovation in most of the SMEs.
Do you think graduates from out universities have the requisite skills that suit your ambitions as the private sector?
I have been appointed to the board of the University of Rwanda and that I think is in the spirit of ensuring that graduates that get out of university are linked to industry. Of course, let us put things in context; until about a while ago, we needed business managers, what I can call situation managers. But now time has come when we need technical people to drive innovation and this means the education industry is responsive to this.
And the government is well aware of this, because the technical and vocational initiative was borne out of our plea that we needed people in the technical area. We now have a working mechanism with Workforce Development Authority and the universities to ensure that the needs of the private sector inform the courses taught in these institutions.
Supply is still behind demand, but I would only complain if there was nothing being done to this effect. What we are doing is embarking on periodical skills audits because the demand is dynamic.
What is being done by the private sector to reduce the import-export gap that remains high?
Like I said earlier, we as the federation, do not invest but we preach the gospel; we actually have some members who produce for exports, and what we have done is putting together the exporters’ forum bringing together exporters in different areas to discuss the different problems that they face to ensure they are swiftly addressed.
With the elimination or minimising of such hurdles that the exporters face, we expect to have more people coming on board and venture into this area of export. There are different interventions at different levels both at government level and the private sector. However, for the exports to grow, there inevitably has to be tangible investments.
Such investments should lead to production of goods that have competitive advantage at the international market and until those are undertaken; we will still see this import-export gap. We are doing a lot of work with our partners in government, so in due course we shall have these kinds of investments that I am talking about. Some will have to be domestic and others DFIs.
How far is the project to have a permanent expo grounds?
There have been challenges in concluding the plans to have the Rwanda International Trade Fair and Events Park, challenges related to availability of land, capital and the technology to have the facility in place.
The idea remains firm, we have already secured land and what we are doing now is to have feasibility studies to have the business plan, an architectural design that is in line with the business plan and the studies will also show the general profitability of the facility, we should be engaging experts in the next one month to conclude the studies.
Our aim is to ensure that all the studies are concluded within the first semester of next year, we want to break ground before the end of next year and conclude the project at least by 2017.
It remains work in progress; there could be changes in the timing of the execution, there could be changes in the scale of the project either by expanding or revising it downwards but what I can tell you we have already agreed with our partners, especially the government on the necessity to have the facility in place.
It is in line with Rwanda’s strategy to be a major destination for conferences and exhibitions. Preliminary findings show that the project could cost up to Rwf45 million and the land we acquired is in Kicukiro District.