Remarks by His Excellency President Paul KAGAME,
President of the Republic of Rwanda
 on “Challenges of improving investment climate in Africa”
at the City of London Symposium on Investing in Africa

 

Merchant’s Hall, London
6 November 2007

 

I am happy to be here today to share views and insights with you – business men and women, policymakers and development partners on the challenges of improving investment climate in Africa and in Rwanda.

I thank Mr Snyder and the City of London Corporation for providing this vital platform to discuss and encourage investment on our continent.

I also wish to acknowledge DFID as co-organiser and note that the department’s interest in identifying approaches to sustainable growth beyond aid is a significant and welcome development.

The topic under discussion today is very critical because social and economic transformation or stagnation is determined by investment climate. Indeed by improving the environment for investment, a country stands the chance of attracting business capable of creating the wealth we all aspire to draw into our economies.
Most of us no doubt share an understanding of what contributes to a good investment climate – these include minimal risk to business, low transaction costs, availability of a skilled workforce, flexible labour conditions, unrestricted movement of profit, effective and supportive infrastructure, ability to borrow and finance business, as well as fair laws and regulations.
These “fundamentals” in turn assume unequivocal property rights, transparent public management, and generally, a rules-based society.
Attaining this ideal investment climate calls for effective national institutions that spearhead economic growth. In order to build and sustain effective institutions, governments have to develop a stock of skilled and talented human resource, recruited and retained on the basis of merit and necessity.
There is also the question of individual and institutional mindsets for “dynamic governance” – this means an approach that is forward-looking, continuous learning, with effective execution and unending change, accompanied by a sense of urgency.
This is in sharp contrast to the conventional bureaucratic mindset, which is characterized by attitudes of deferment, inability to make timely decisions and a lack of innovative approaches to finding solutions – put differently, habitual postponement in implementation.
I believe this is what Abdullah Badawi, the Prime Minister of Malaysia was referring to when he remarked that the problem affecting his country was a case of “having first world infrastructure and third world mentality from poor execution and inept management to shoddy maintenance and appalling customer service”.
In my view, the benefits of investments, or the institutional dynamism required to promote them, are well-understood – the challenge in Africa is to build effective institutions and adopt the right mindset to undertake this work.
In the case of Rwanda, I have requested that we expand the definition of institutional development to include the question of mindset. This is because, in my view, successful public administration requires a different mentality that incorporates commitment, shared purpose, rapid decision-making and generally a sense of urgency in implementation.
Without these additional factors, it is impossible to fully appreciate attracting investment in its real context of a tough global competition that leads either to wealth or perpetuated poverty.  
I should note here that mindset challenges are not limited to developing countries but also affect the developed world.

Africa for example is often approached as a place for pity, charity and aid, disregarding its stable economic growth and huge potential. Instead of a place for serious investment and high returns, Africa tends to be seen as a continent for “social responsibility”. Costly and ineffectual technical assistance replaces genuine building of capacities that would transfer real skill and talent to local people.

In actual fact, Africa’s need for investors is far greater and more important than that for other groups that often compete with individuals and institutions for resources.
One of the key ingredients for improving Africa’s development prospects is entrepreneurship. History teaches us that development is largely driven by entrepreneurs and a business-oriented middle class. Likewise, our programs of improving investment environment in Africa must incorporate an agenda of enabling and facilitating domestic business classes. Only then can we achieve a productive public-private sector partnership on our continent.
We realize that most of our private sectors, including that of Rwanda remain relatively weak – but part of this weakness is due to barriers to their expansion brought about by poor investment climate. These obstacles include lack of seed capital, poor infrastructure, and training.
All these must be changed if we are to create a dynamic domestic business class, alongside foreign investors. Indeed, in healthy business sectors these two coexist, with the state providing them a level playing field, underpinned by transparent and effective governance.
In Rwanda, we continue to improve our investment climate in order to achieve our legitimately ambitious economic development agenda. In particular we have undertaken a complete overhaul of our business legal framework. Essentially, all key areas identified by the World Bank’s “Doing Business” are now subject to review and improvement.
It is in this context that we are registering a significant increase in foreign and domestic investment in the services sector such as hotels and tourism, financial services, ICT, real estate development, energy, agricultural production and mining.
We still face some challenges, however – among them the problems associated with being landlocked. We therefore have to invest in infrastructure nationally and regionally in order to mitigate these factors.
We must invest in people, value-addition and ICTs as a means of creating alternative development models that are not wholly dependent on conventional export routes via road transportation.
Our recent entry into the East African Community also means that we can work together with our partner countries to improve regional infrastructure. This integration effort means that we are becoming a larger and more viable market – and that our chances of attracting a bigger share of foreign investment are greatly enhanced.
It in this context that we have in Rwanda adopted an open immigration policy to draw into our country people with skills and talent –professionals that are critical for pursuing our development efforts and objectives.
With these ongoing efforts, progress is being made in turning Africa into a competitive investment destination. But we need to work harder, smarter, and more consistently to earn a bigger share of global investment. Achieving this requires the right mindset, strategy, institutions and partnerships to lead us in the global competition for resources.

It is, in effect, a stark choice between prosperity and poverty.
In conclusion, I once again thank the City of London Corporation for your invitation and hospitality, and look forward to continued collaboration with you in promoting investment in Africa.

I THANK YOU FOR YOUR KIND ATTENTION