Rwandan Investment Policy Review

Remarks by Gerald Anderson
Deputy Assistant Secretary
U.S. Department of State

Tuesday, October 3, 2006

We welcome the timeliness and clarity of the Investment Policy Review.  It provides a thorough analysis of the obstacles to attracting foreign direct investment to Rwanda and an insightful discussion of recent reforms by the Government of Rwanda.

Following the Paris Declaration on Aid Effectiveness and the many comments during this year’s Trade Development Board on the importance of donor and recipient coordination, we congratulate the Government of Rwanda on its preparation of an Economic Development and Poverty Reduction Strategy (EDPRS) that will guide its own and donor activities in Rwanda over the medium term. 

The EDPRS includes recommendations in specific priority areas to strengthening the investment climate. The UNCTAD report can be an important contribution to this effort.

UNDP is leading a structured donor coordination process in support of the EDPRS. As part of that coordination process in support of the Strategy, we are pleased to co-chair the Private Sector Cluster with the Government of Rwanda.

Improving business climate

Last year’s World Bank publication, Doing Business 2006, gave Rwanda credit for being one of the top reformers in 2004 and stated “ If reformers of business regulation in Africa are seeking an example, they should look nearby- to Rwanda. ” Since initiating reform, Rwanda has had economic growth averaging 3.6% a year – among the highest levels in Africa.

This indicates an impressive commitment to reform as does Prime Minister Makuza’s participation in today’s meeting.

We also welcome Rwanda’s commitment to creating opportunities for women. As President Bush noted when he met President Kigame earlier this year, the Rwandan government includes more women than any other government in Africa. We hope that this important role of women in government will be complemented by a vibrant role for women in the private sector as Rwanda’s economy expands.

Business Opportunities

As a landlocked country in Central Africa, Rwanda must depend on her neighbors for both imports and exports. To attract significant investment, Rwanda needs to follow through on its objective of becoming a sub-regional hub for the Great Lakes region.

On a regional level, USAID is working with the Government of Rwanda to facilitate trade and transport along the Northern Corridor connecting Kigali to the port of Mombassa. We are also helping Rwanda to harmonize customs operations and modernize the clearing process with its neighbors.

Domestic Investment

What is not mentioned in the report, however, is the role of domestic investment. Under the right conditions, domestic investment can play an important role in the growth of the Rwandan economy and is even more essential than foreign investment.

To that end, we are working with our Rwandan partners to develop domestic businesses.

o For example, in order to attract financing for the domestic specialty coffee sector, a USG credit program guarantees loans from local banks to businesses in the coffee sector. Thanks to this risk reduction facility, local banks extended $2 million in loans to this sector in 2006.

o This followed our $10 million investment since 2000 for other projects in this sector, including USAID-supported coffee washing stations.

o One result of this was the introduction of Rwandan coffee into 5,000 Starbucks outlets in the United States, thus increasing Rwanda ’ s exports of specialty coffee from zero in 2000 to 1,100 metric tons in 2005, with quality rating of “ best of best. ”

Land ownership

A major issue mentioned in the report, but perhaps not significantly highlighted is the evolving laws and regulations around land ownership in Rwanda.  

We congratulate the GOR for having passed the organic land law in 2005 setting the framework in land policy. The GOR is moving quickly in this area to enact much needed implementing legislation around critical issues like expropriation, ownership and registration.

For land reform to promote stability and economic growth, it is critical that the public understand and support the process. To that end, we encourage even greater efforts by the Government of Rwanda to inform the public of impending changes in land regulations and to solicit the public ’ s input on the specifics of land regulation.

Conclusion

We are pleased to be partnering with Rwanda in creating a positive environment for investment and the entrepreneurial ambitions of its citizens.