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If you’re a small, landlocked country with few natural resources, and a population that’s mostly poor, rural and crowded, you have to get creative about how to grow.
Rwanda’s answer is to leapfrog – to become a regional services center and IT hub, something like the Singapore of Africa.
This is not just an economic quest, it’s an existential one. Rwanda is the most densely populated country in Africa, and about 80 percent of Rwandans live in rural areas and rely on subsistence farming for their survival. Competition for land was one of the factors that drove the genocide in 1994, killing some 800,000 people – about one in ten Rwandans.
Now, about one in ten Rwandans can connect to the Internet, and that number is growing fast. It's representative of just one step in the government’s ambitious plan to turn a place where only 14 percent of the population has access to electricity and 57 percent of Rwandans live below the poverty line, into a high tech, services leader.
“If you want to reach the moon, you aim for the sun,” said Patrick Nyrishema, who heads the Rwanda Development Board’s department of Information and Communications Technology – or ICT.
“Right now, we have got several areas we consider high priority,” he said. “The first is skills development. The development of Rwanda, the strategy is based on building human capacity. And so, ICT skills, both at the level of professional ICT, as well as IT literacy, for people to be able to take advantage of the technology is very key.”
And while the population is getting educated so it can keep up with Rwanda’s hi-tech aspirations, the government has laid 1,500 miles of fiber optic cable, gotten computers into rural schools through a “one laptop per child” program, and set up an online service so farmers can check crop prices on their cell phones.
Eventually, the government would like more of these farmers to consolidate land, form cooperatives, or move to cities and get trained for services jobs – taking pressure off the land while learning skills that could pay a higher income. For now, just getting used to using technology – even a cell phone that sends prices by text message – is progress.
Edward Yin, a native of the northeastern Chinese province of Harbin, opened Rwanda’s first cell phone assembly plant in 2007. He aimed to make phones cheaply enough that Rwandan villagers could afford them. But because the government has eliminated sales tax on mobile phones and computers, to encourage sales, Yin has changed his strategy, and now imports pre-assembled phones from China.
“With these kinds of electronics, almost every day, the price goes down,” Yin said. “So if we need to wait to import parts, and assemble them here, we lose money. Better to import directly from China.”
Yin thinks Rwanda has a good chance of succeeding in its vision to become a regional services center. And he said there’s one thing Rwanda does better than anyone else in the region – good governance. To many outsiders, though, the government also has a reputation for being tough on corruption.
“It’s not corrupt. That’s the truth,” Yin says.
Is that good for business?
He paused and smiled.
“Difficult to say. Sometimes, maybe corruption can help business, to be frank.”
When a Chinese company got the bid to build a big conference center in Kigali, the Rwandan government put a German manager at the helm, to ensure quality control. Yin said he’s heard some of the Chinese on the project grumble.
“They say not it’s not easy,” he said. “I think it’s too strict. What they are thinking is different. I think it’s the culture.”
But Yin’s friend, Li Jianbo, likes doing business in Rwanda. Li is the general manager of China Road and Bridge Corporation – one of China’s biggest state-owned enterprises – which is building several of Rwanda’s roads.
“When there’s no corruption, businessmen can feel comfortable,” he said. “You know, corruption is a problem for both sides, so no one likes that. Here, it is comfortable for the investor and for the businessman. And the government people are also easy to work. So the investors like to come here.”
At a regular Friday happy hour, Chinese managers gathered at Yin’s restaurant, which he runs in addition to his cell phone import business. They sat around a huge roundtable in a red room, knocking back beers, eating Chinese food, and swapping stories about their work weeks. They’re mostly bullish on Rwanda. But they’re part of a fairly small group – -there are only about 1,000 Chinese in Rwanda, a fraction of those in neighboring African countries. Yin said more Chinese investors might come here, if Rwanda made investing here more attractive.
“Right now Rwanda is very strict,” he said. “Maybe they need to be more open. If a foreigner came here, like a businessman, what they need is profit. If you cannot get profit, nobody wants to come.”
For instance, Yin said, there’s the 30 percent import tax, and 18 percent VAT. In some African countries, Chinese barely pay a windfall profits tax on the minerals they extract.
But Rwanda is carving out a different role for itself – a different kind of relationship with Chinese, and other, foreign, investors. It is deliberately picking and choosing what works best for it, as President Paul Kagame said at a recent news conference.
“If you are inviting investment to come to Rwanda, you want investment that will benefit the investor, but will also benefit Rwanda, where the investment is made, “ Kagame said. “How does it benefit Rwandans? It’s the capital that comes in. It’s the technology. It’s employment.”
Kagame has a clear vision of what he’d like Rwanda to become – small, but prosperous; modern and efficient. Just like Singapore.
Kagame has a little of former Singaporean leader Lee Kwan Yew in him. Like Lee, he’s fiercely intelligent, strong-willed, and not averse to using a little velvet-gloved authoritarianism to get things done, or to silence critics. Unlike Lee, he’s a former guerilla leader who came to power in the midst of a genocide, and, however imperfectly, has pulled his country back together.
“We need to just get up and face up to these challenges and dignify ourselves by doing it,” he said. For me, it’s a challenging situation, but it’s very exciting. I enjoy these battles very much.”
The battle now is to ensure a better future for Rwanda, with enough economic opportunity so no one is tempted to stir up ethnic animosities for personal gain. So far, it seems to be working.
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