I am back! I have just returned from my business trip to Rwanda and I am buzzing with energy and excitement! The country is full of mind-boggling African business opportunities, you must not miss!
But above all: They are available in a country rating extremely low on red tape and corruption, and high on personal & investment safety, effectiveness, business incentives, oh….and an amazing level of cleanliness in its capital city Kigali that must be seen to be believed. It looks like someone is hovering through the streets and parks with a mega vacuum cleaner in hand whenever the city is at sleep. I absolutely love it!
Many of you know that this was my second visit to Rwanda within a year and this time, it was intense, but exceptionally successful. I assisted clients with their market entry strategy in Africa. I set up 2 meetings with my contacts at the Rwandan Development Board (RDB) for Monday morning. This is how it works in Africa. You can’t expect a neat line-up of meetings for the entire week. When you take the right approach, people will see you.
By Monday evening (yes, same day!) we had registered a local business and by Friday evening I had banked a whopping 26 meetings with major stakeholders across industries – yep 26. Only possible because in Kigali you can hop from one office to the next in 15 mins – the city is easily overlooked and does not suffer from traffic jams. This was my extreme African approach to local market assessment with a strict time limit. (Well, and I shall add that I never had a problem with knocking doors in Africa. Literally. It always works better than sending an e-mail)
Today, I would like to take the opportunity to share with you some of the amazing opportunities I have come across during my recent business trip where I met with a wide range of government stakeholders and local business owners. I am happy to make you aware of valuable details you would hardly read about anywhere else – having said that, of course this is only an article, so I will pack into it as much as I can.
By the way, also read my Best Business Advice from Kenya – where I share similar business secrets for the Kenyan market.
So let’s get started – shall we?!
1. Kigali needs 400,000 housing units – and fast!
Rwanda has a worrying shortage of housing units, and the capital Kigali alone is in need of 400,000 of them in the next 10 years. This year only 1000 units have been built! Talking to a variety of high-profile stakeholders in Rwanda’s construction and real estate sectors it became quickly clear that there was in particular a huge need for affordable housing, so much so, that the government offers a variety of significant incentives in this regard. I did a very detailed assessment for my clients in this sector and I can tell you the opportunities are vast and very profitable.
In fact, the whole issue of building houses is surrounded by a true sense of urgency and related departments are under a lot of pressure to deliver.
Keep however in mind that your investment in affordable housing will somewhat require a mass approach in the long-run, as profit margins will be relatively small. High-end and luxury housing is also in high demand. Profit margins are much higher, but you will not receive government incentives on imports and taxes in this regard.
I have more news for you: Rwanda needs bricks. There are only 2 commercial brick factories in the country, one producing from cement and the other one from clay. One high-end housing constructor told us he had to wait 4 months for his order of bricks to arrive. So here you go, start manufacturing good quality bricks (the ones in demand), and you will have orders flowing in before you have even started production. Both cement and clay are available locally, and just recently Rwanda increased local cement production 6-fold covering now the greatest deal of local demand. There is a similar situation regarding the demand for tiles, by the way.
2. Huge need for locally produced packaging….think biodegradable!
I was told that there were huge shortages of local packaging material of all sorts and shapes. This was in particular a problem in Rwanda’s fast growing food and agricultural sector. Now, here is the catch (and opportunity!): Non-biodegradable plastic bags were outlawed in Rwanda in 2008 leaving a vacuum in the packaging sector and the food industry…and this is where you are needed!
Some paper bags or biodegradable are imported, and that makes them expensive for many local businesses to use.
Just a simple example: A sambusa in a restaurant costs Rwf 100, if you want to buy it for take away, it needs to be wrapped. But a nice looking imported paper bag costs Rwf 20 to Rwf 100. Some local foodstuff sellers use locally recycled bags that cost Rwf 5-10, but there is a lack of availability and as a result, many simply use newspapers, although they are not allowed.
However the shortage of packaging material seriously affects larger local traders, too, especially those who want to export. While the government works hard on boosting exports, the lack of packaging has now been identified as a significant hurdle.
This is where you come in! And biodegradable packaging will be high up on the list, as your material needs to be approved by the National Environment Management Authority (NEMA) and the Bureau of Standards before you can start production, and they are clearly looking for environmentally sustainable material.
And, I was told, there was also a particular shortage of container lids.
3. Tourism sector is very profitable – but don’t run a hotel
The tourism sector remains to be a top earner of Rwanda’s GDP, in fact, it has been growing rapidly in the last two years – a development that stands in stark contrast to the tourism industry of its regional big brother, Kenya.
Rwanda has wonderful wildlife to offer, including elephants and rare birds that people want to see, I have been told. But it is undoubtedly the conservation of Mountain Gorillas that brings in the biggest chunk of revenues.
On a less enthusiastic note, my insider tells me that Rwanda also sees an increase in ‘historic tourism’, as a lot of people show growing interest in learning about Rwanda’s terrible genocide in 1994.
Interestingly, the same insider also runs a mining company for cassiterite, wolfram, and cobalt – and according to him, the tourism company does better, because mining, although very profitable was at the moment hit by declining and overall vastly fluctuating prices, which posed a major challenge to smaller companies.
The fast rising travel and tourism sector in Rwanda has prompted major international hotel chains such as Hilton, Marriot, Sheraton, Kempinski and Radisson to plan outlets in the country.
But I advise you not to invest in setting up a hotel yourself. Although room prices per night remain ridiculously expensive in Kigali (no idea why that is) a hotel manager and a real estate agent are both telling me that business in this regard is somewhat slow. There are too many hotels in Rwanda now and competition is simply too big.
So, here you have it – gorilla tours yes, hotel based hospitality no.
4. Local businesses are looking for you !
One aspect that surprised me was how many of the local businesses and government stakeholders mentioned that they were looking for both investors and buyers who could improve the capacity of already established companies.
It was such a significant pattern that I decided to include it here in my very personal list for Rwanda business opportunities. A quick overview:
a. I was told by a representative of the RDB that the local commercial brick factories are looking for investors to increase their production capacity. They struggle to meet local demand.
b. A small mining company is ready to sell its mining processing arm. It owns several machinery for processing and rapid laboratory assessment and I was asked by the founder and managing director to spread the word that it is looking for buyers.
c. Local housing contractors are looking for partners from abroad, so they can build more houses.
d. Rwanda has just released its first made-in-Rwanda high-speed laptop and while the last formalities are happening, the local production company will soon be looking for local distributors across Africa.
I am sure there are many more opportunities, and in most cases local manufacturing businesses in particular seem overstretched with the task at hand and have an urgent need to expand their capacities.
5. Secret strategy to success in Rwanda’s coffee export
I visited the Rwandan Coffee Exporter Association and loved the sight of their huge compound. You hear the chatting of a couple of hundreds of women sorting the coffee beans under an open-air shade, you smell the wonderful scent coming out of the roasting hall, and wonder about the magnitude of their warehouse. Although I grew up in Germany and I am of Eritrean origin (both strong coffee drinking nations) – I prefer my green tea to keep me hydrated and healthy, but I could not resist to admire and was blown away by the coffee export compounds: It looked like such a happy African business world to me.
But of course, all is not rosy. I spoke to one of the directors of the National Agricultural Development Export Board and was told that most of Rwanda’s coffee was shipped to the auction in Mombasa (Kenya) and great quantities are traded with large buyers from the US and Europe directly. That made the coffee farmers very prone to global market fluctuations, and when prices went down it seriously impacted the coffee farmers and ultimately resulted in poor motivation and bad management.
It was part of the global coffee trade, but, I was told, there was an effort to improve the local value chain (process, package, and brand it locally). Further – hear this – to grow and develop Rwanda’s high-quality speciality coffee and link those particular farmers to smaller traders and outlets who were less affected by fluctuating global commodity prices and who were prepared to buy directly from the source.
Sounds like a great start-up focus. Sustainable and profitable niche development in speciality coffeee is where you can come in!
6. Local ICT hub opens small Investor Fund – and you can put your money in!
I managed another short visit at Rwanda’s amazing tech / ICT hub, the Klab. It is buzzing with amazing young talents and this platform will be right at the center of Rwanda’s ambitious development plans to grow into a regional ICT hub in Africa. That’s why they are now expanding their offices into another floor.
One of the Klab managers who welcomed us with an extra-large smile made us aware that they are now opening an Investor Fund. This will enable small investors – be they local, foreign, or from the Diaspora – to put small amounts of financial capital into the fund. I think it is a brilliant effort, as there are many small investors who would love to invest in Africa, and don’t know where to turn. ICT/tech has usually an above average ROI across the world offering a wonderful opportunity if you have a few thousand Dollars to spare. The first round, I was told was looking at a fund size of just US$50,000.
Now you have an avenue to put your money into Rwandan tech start-ups within a regulated environment and I will share more about this particular opportunity on my home page soon, so watch this space!
In closing I want to say how hopeful it has made me to see an African country turn from unrepresented brutality and tragedy into a country of triumph. The horrors of the genocide have not left the memories of Rwandans, but in the country now lives a strong desire for development and progress and that can be felt where ever you go. Rwanda is not only buzzing with entrepreneurial spirit and national ambition, but it has become an African market that leads by example in many ways.
For me, doing business in Rwanda is not just another option: Continuous market growth and a uniquely enabling business environment have turned it clearly into a smart strategy available to anyone looking for success in Africa.
And while I plan to visit some new markets in Africa, I shall be back in Rwanda very soon!
I would love to hear your comments and questions!