Investment Policy Review - Rwanda - UNCTAD Virtual Institute

Investment Policy Review of Rwanda
The most advanced competitor in manufacturing and services in the region is doubtlessly Kenya,
and South African firms are increasingly penetrating the East African market. Rwanda should consistently
benchmark itself against Kenya where it is a leader, and aim for South African standards in the medium
term. At the moment, Rwanda lags behind regional leaders in many indicators that determine enterprise
competitiveness and investment location decisions (table III.2). The weakness is particularly strong in
terms of cost, availability and reliability of electric power, transport cost, availability of local suppliers and
in human resources. In contrast, Rwanda compares favourably in the region in terms of corruption and
commitment and speed of reforms.
Regional market access
Rwanda is currently member of COMESA, as well as its subset of 11 countries that have constituted
a free-trade area. 71 It has also applied for membership of the EAC 72 and SADC. 73 While joining SADC
may take some time, there are indications that Rwanda could join the EAC within about a year, together
with Burundi.
Hard infrastructure
The Government is developing indicators of internal road access that will enable it to benchmark
Rwanda against regional countries. Trunk road network coverage and quality are good for an LDC and
compare well with neighbouring countries. Rwanda has about 4 kilometres of paved road per 1000 square
kilometre of land, which is almost as much as South Africa, and more than all other neighbouring countries.
Trunk roads are also in good general condition and well maintained. Feeder roads are in a poorer
condition, however, and many parts of the country remain a long distance away from trunk roads.
Most international air connections are operated from Kigali’s Kayibanda International Airport, with
Kamembe Airport near Cyangugu also equipped to handle international traffic. Scheduled international
passenger services to Kayibanda airport are provided to Addis Ababa, Bujumbura, Entebbe, Johannesburg
and Nairobi. There is only one transcontinental scheduled flight, operated twice-weekly by SN Brussels
Airlines to Belgium.
Kayibanda Airport has adequate capacity for near-term needs, although there are operational
restrictions, particularly for cargo-handling. The absence of a taxiway parallel to the runway also limits
the traffic that the airport can handle, and can generate potential safety issues in case emergency landings
are required. There is space to build a taxiway, however, and it has been estimated that Kayibanda
Airport should have enough capacity, pending some additional investment, for the next 25-30 years. The
Government has nevertheless initiated a feasibility study to build a new airport some 40 kilometres
outside Kigali. The study should clarify the need for this new facility.
Air cargo facilities (warehousing and handling) are basic, but have recently been expanded and
improved, including the construction of additional warehouse for exports and the installation of basic
cold storage equipment. There are three all-cargo carriers operating on a scheduled basis, in addition to
71
COMESA members are Angola, Comoros, the Democratic Republic of the Congo, Eritrea, Ethiopia, Namibia, Seychelles, Swaziland and Uganda,
together with Burundi, Djibouti, Egypt, Kenya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Zambia and Zimbabwe, which constitute the COMESA-
11 subset.
72
The EAC, which includes Kenya, Uganda and the United Republic of Tanzania, turned into a Customs Union in January 2005.
73
SADC members are: Angola, Botswana, Democratic Republic of the Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South
Africa, Swaziland, United Republic of Tanzania, Zambia, Zimbabwe.
81