Unpacking opportunities for Zim businesses in Rwanda

BETWEEN 24 to 26 March 2020, Zimbabwe and Rwanda will hold a join Trade and Investment Conference in Kigali as the two countries seek to deepen bilateral ties and increased economic cooperation for mutual benefit.

Zimbabwe and Rwanda relations are at all-time high and the two countries are already planning to set up a Joint Permanent Commission of Cooperation, which will strengthen economic and political engagements. One of the areas, which the Joint Permanent Commission is expected to focus on is trade relations, in the context of African Continental Free Trade Area (AfCFTA), which seeks to make it easy for African countries to trade with each other. This deepened economic cooperation comes from the realisation that the development of Africa requires improved economic integration amongst its countries. In addition, Zimbabwe and Rwanda are both party to The Common Market for Eastern and Southern Africa (Comesa), which means both countries stand to benefit through reduced and zero customs tariffs on goods traded.

The Rwanda-Zimbabwe Trade and Investment Conference, due in two weeks’ time, will, therefore, explore trade and investment opportunities that will further economic cooperation between the two countries. ZimTrade, the country’s trade development and promotion agency, is coordinating preparations for the high-level business indaba, having done surveys in order to assist local businesses to reap positive outcomes from participating in the event. Rwanda has been enjoying a strong economy, which has grown at an annual GDP average rate of eight percent for the past decade. This growth has largely depended on the services sector, which is the largest contributor to GDP, according to Rwanda Development Board. The services sector contributes about 48 percent to GDP, followed by agriculture at 29 percent and the industrial sectors at 16 percent. This strong economy, therefore, offers opportunities for Zimbabwean businesses and access to the market can be easily realised if local companies focus on areas they enjoy comparative and competitive advantages.

Services sector

Rwanda is currently developing its skills base and this has opened opportunities for local businesses to supply an array of services, including labour to the country. There are supply opportunities for services in almost all sectors, but easy wins are in tourism, education, construction and agriculture. Zimbabwe is home to a diverse skills base, which are in demand in Rwanda and local companies can consider coming up with creative offerings that can appeal to a young generation who make up the bulk of consumers in Rwanda.

Tourism sector

Rwanda is currently positioning itself as the leading destination for conferences in Africa, under the Meetings, Incentives, Conferences and Exhibitions (MICE) framework. This has opened up opportunities for Zimbabwean companies to supply services and products into the growing tourism sector.

Zimbabweans have a strong command of English and have a deeper understanding of the tourism sector, thanks to programmes offered by local learning institutions. Knowledge of operations of the tourism sector is a skill that is in demand in Rwanda and local consulting firms can consider tapping into this sector by offering skills training to personnel in the Rwanda tourism sector.

Local human capital development consulting firms can offer training such as etiquette and grooming to Rwandan tourism sector.

There is also room for local tourism companies to partner Rwandan companies to offer joint packages that will allow visitors from across the world to visit the two countries on one package. Rwanda is well renowned for mountain guerrillas and Zimbabwe is home to the majestic Victoria Falls. Riding on daily flights between Harare and Kigali, there is room to boost tourism in the two countries by focusing on improved engagements at company level.

Education sector

Riding on Zimbabwe’s stellar academic reputation and high literacy rate, there are opportunities in the education sector, with easy wins in export of study programmes and distance learning. Rwanda is a former French-speaking Belgian colony but the drive for more foreign investment has seen its Government looking to align more to English, given that it is a global language. There is, therefore, demand for English teachers as well as tutors in science, technology, engineering and mathematics subjects. Local learning institutions can export such programmes, and this can be benchmarked and modelled around existing frameworks used by leading online institutions such as University of South Africa which services over 130 countries globally. Already, Zimbabwe has a decent pool of qualified professionals that can satisfy these demands.

Furniture sector

Rwanda’s manufacturing sector is still taking shape and consumers have had to rely on imported furniture products. Currently, home and office furniture products are being sourced from Asia countries such as Turkey and China.

However, the quality of these products is lower than furniture produced in Zimbabwe, hence there is room for local furniture producers to take command of this market. Given the bulky nature of furniture products, local manufacturers should move away from exporting assembled products to producing collapsible modular designs that can be easily assembled at the final market or by the end user at their home.

This will ensure that the cost per unit in production and transportation is cheaper, thus making Zimbabwean produced furniture competitive in the Rwandan market. Currently, available infrastructure in Zimbabwe makes it ideal to produce high-end furniture that can compete well in the Rwandan market. In addition, Zimbabwe boasts of abundant timber resources with high quality hardwoods such as teak, pine and mukwa. These are used on most of highly sort-after and luxurious furniture products that fetch higher prices in Rwanda.

Agriculture sector

Agriculture is one of Rwanda’s main economic activities and there is potential for growth through increased productivity and value addition for local consumption. There is room for local suppliers to export agricultural inputs, mechanisation equipment and implements. Currently, there is demand for seeds of all crops and Zimbabwean seed producers can easily penetrate the market if they set up shop in Rwanda.

There is also demand for skilled personnel in the agriculture sector, such as agronomists, agricultural engineers and agriculture economists.

Fast-Moving Consumer Goods

Rwanda is currently importing Fast-Moving Consumer Goods (FMCGs) from across the world, with indications that Zimbabwean products can perform well in the market. Products from countries such as United Arab Emirates, Brazil, France and Portugal have found a way into the Rwandan market, and given Zimbabwe’s proximity to the country, there is potential for local products. What is important for Zimbabwean producers is to ensure that they have visible merchandisers in the Rwandan shops, who can assist in marketing to consumers on the ground.

Construction sector

Rwanda is modernising its buildings and creating residential parks, along the models of Singapore. Other construction activities are targeting improved housing, transport, water and energy infrastructure and this presents opportunities for companies directly involved in timber, steel products, building and construction materials as well as furniture industry for furnishing the buildings. This has created a huge market for supplies in the construction sector, including furnishings and electricals. Further to these supplies, there is demand for professionals and services such as structural engineers and surveying.

Linkages to East and West Africa

Rwanda is a hub for a rapidly integrating Africa and is part of East African Community Common Market and Customers Union with market potential of over 132 million people. Increasing trade with Rwanda will open further markets to the EAC, and in turn increase Zimbabwe’s exports to the region. The EAC has combined Gross Domestic Product of more than US$177 billion. Rwanda and Zimbabwe are both members of the Common Market for Eastern and Southern Africa, a free trade bloc involving 19 countries. There is further room to supply the Democratic Republic of Congo (DRC) through Rwanda, particularly in areas difficult to reach through Zambia. Currently there are Rwandan distributors, familiar with DRC terrain who can make it easy to further distribute Zimbabwean products.

Going forward

Having discussed these opportunities, it is important for local businesses to consider a route to channel that will make sense for their money. The most viable option for supplying Rwanda is to set up and operate shop or distribution centre in Rwanda. The Rwandan Government has made this easier by reducing the time required to set up a company in the country, which is only six hours. They have also developed export development zones that are available for occupancy by foreign companies that are looking into manufacturing processes. These export zones are also in special economic zones, which reduces the cost of doing business in Rwanda. Thus, it will be easier for local companies to set up distribution warehouses in Rwanda where they can stock supplies, as well as set up retail shops for Zimbabwean products. — Major insights provided by ZimTrade

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