Twenty-five years ago, the small landlocked nation of Rwanda was in the middle of a violent civil war. Now it is building a $420m innovation park in the capital, Kigali, which it hopes will transform the country into east Africa’s tech and business hub.
Kigali Innovation City (KIC) is the government’s flagship programme to create a hi-tech ecosystem centred around innovation and talent. The government – led by Paul Kagame, a former army general who has been president since 2000 – wants to accelerate Rwanda’s transition to a knowledge-based economy. To this end, it is modelling itself on the southeast Asian city-state of Singapore.
Rwanda has come a long way since the civil war ended in 1994, having claimed between 500,000 and 1.07m lives. According to the IMF, in 2019 it had a $10.2bn economy and a population of 12.3 million people (around 1.1 million people live in Kigali). The economy expanded at 10% last year – one of the fastest rates in the world, according to the IMF. On average, gross domestic product grew by 7.1% a year between 2010 and 2018. The IMF is now forecasting 3.5% growth this year and 6.6% next year.
Rwanda aims to become an upper to middle income country by 2035 and a high income one by 2050, an ambitious target given that income per head stood at $825 a year in 2019, according to the IMF.
Demand for digital
“We expect that there will be an even greater demand and supply for relevant technologies for the African context in multiple sectors due to the pandemic,” says Tesi Rusagara, managing director at Kigali Innovation City.
“Therefore, we expect a spike in demand for more digital solutions, both in government and the private sector. The ecosystem being built in Rwanda, and specifically within the KIC, will be critical in driving the creation, adoption and scaling up of tech-enabled solutions, not just in Rwanda but across Africa,” she adds.
“We anticipate that each of the KIC focus areas (including financial services, agriculture, healthcare, logistics, energy, cyber security, edtech and enabling technologies such as artificial intelligence) are all mission critical and anticipate to see more solutions emerge in these verticals [after the Covid-19 crisis ends].”
The KIC is a 61.9-hectare development located in Kigali’s special economic zone (SEZ) in the Gasabo district, close to the presidential office. It is based around a work-live-play theme, which integrates grade A office space, residential housing, retail facilities and a high-quality hotel.
In 2019, it inaugurated its first anchor university, Carnegie Mellon University Africa, the only US research university offering full-time engineering master’s degrees in Africa. While the KIC will host the African Institute of Mathematical Sciences, two biotech companies from India and the US respectively, Cooper Pharma and LEAF Pharmaceuticals, also plan to open facilities in the park.
“The KIC is cultivating a critical mass of pan-African science, technology, engineering and mathematics and entrepreneurial talent,” says Ms Rusagara. “We are building an ecosystem around this pan-African talent pool to support the city’s success.”
Pulling in investment
Rwanda secured $398m in FDI in 2018 and $356m in 2017, according to the UN Conference on Trade and Development (Unctad) and total FDI stock reached $2.26bn in 2018. The country had $2.4bn of new investments registered in 2019 – its highest level of investment registration ever – up 23% on 2018, according to the Rwanda Development Board (RDB), the country’s investment promotion agency.
These represent commitments to invest during the next five years and will create 35,000 jobs in manufacturing, construction and other industries.
Major recent investments include the $625m Rusizi III energy initiative, a 147-megawatt hydropower project along the borders with Democratic Republic of the Congo and Burundi; Volkswagen’s vehicle assembly and ride-hailing mobility service; and Mara Phones, a smartphone manufacturing plant located in the Kigali SEZ.
In 2016, construction of the iconic $300m, 32,200-square-metre Kigali Convention Centre was completed, with a 292-room five-star Radisson Blu hotel and a conference centre that can host up to 5,000 delegates.
In December 2019, the Qatari government – through state-owned airline Qatar Airways – agreed to acquire a 60% stake in a new $1.31bn airport located close to Kigali city, Bugesera International Airport. With a 30,000-square-metre passenger terminal, it plans to be Africa’s first green certified building with a net zero emission target. In February, Qatar Airways also announced plans to purchase a 49% stake in RwandAir, Rwanda’s own national carrier.
In March, as the Covid-19 crisis struck, the government closed its borders to foreign visitors and grounded RwandAir’s fleet. However, analysts are confident that the country’s fledging aviation industry will recover at the end of 2020 and in 2021. “The airport will be a very efficient hub in a very stable country in the heart of Africa,” says Akbar al-Baker al-Baker, chief executive officer at Qatar Airways. “We see Africa as another region that has huge growth potential.”
Rwanda is ranked 38 among 190 economies in the World Bank’s Ease of Doing Business annual ratings 2020, down nine places on 2019 rankings. It is the second best ranking of any African country after Mauritius – which enjoys 13th position – and is the only low-income country in the top 50. Transparency International ranked Rwanda in 51st place out of 180 countries in its Corruption Perceptions Index 2019.
“The ‘doing business’ reforms stem from the realisation of the importance of good governance and a stable institutional framework to attract private investors,” says Clare Akamanzi, chief executive officer at RDB. “Foreign investment is welcome; there are no restrictions on foreign ownership or profit repatriation. There is zero tolerance for corruption and Rwanda is a leader in government transparency and digitisation and efficiency of government services.”
Many analysts credit the country’s recent success to Vision 2020, an economic development road map trail-blazed by the government in 2000 that aimed to turn the country into a middle-income nation by 2020.
Rwanda had one of the strictest Covid-related lockdowns in Africa, which was partly lifted after 45 days in mid-May. In the same month, the government announced a two-year $800m economic stimulus package, including tax cuts, to mitigate the impact of the coronavirus crisis.