Rwanda woos Turkish investors
Rwanda is gradually winning the hearts of Turkish investors with some already having registered their businesses in the country, while a growing number of others are showing interests in various sectors of the economy.
The move shows that Rwanda’s quest to build a private-sector led economy in order to become a middle income country by 2020 is gaining momentum. Nevertheless, a lot can still be done to attract foreign direct investments.
The growing interest from Turkey follows the opening of a Rwandan consulate as well as a liaison office for Rwanda Development Board (RDB) in Istanbul, the Turkish capital in September last year.
The two offices, explains the Head of Investment Promotion and Implementation Department at RDB Vivian Kayitesi, came as a response to the growing interest from the Turkish business community to learn more about Rwanda and consequently invest in the country.
The visit by President Paul Kagame to Turkey last year was also a stepping stone to initiate and strengthen political and economic relations between the two countries. Members of the Turkish businesses community have also come to Rwanda to witness the local opportunities themselves.
But the launch of direct fights between Kigali and Istanbul by the Turkish Airlines last May served as another catalyst for both sides to move faster. Previously, Turks coming to Kigali had to spend four to five hours in Nairobi, Kenya waiting for a connecting flight to Kigali.
“Having the Turkish airlines here is more confidence to the Turkish investors and it is even easier for us to get them here directly,” explains Kayitesi.
Today, says Kayitesi, there is a growing interest among the Turkish investors to set up economic activities in Rwanda. She says that Turks are interested in investing in key sectors such as housing, hospitality, energy, Information Communication Technology (ICT), construction, mining and education. At least two companies have already registered in Rwanda.
“This for us, we feel that it is confidence in the Turkish companies that they are ready to invest in Rwanda,” she says.
The two companies include one that seeks to establish a Turkish school in Kigali, while another one identified as ORTRADAGU is interested in gold exploration. It has already received approval for gold exploration.
In ICT, a Turkish company called YDA seeks to invest in a data center but it is still in talks with RDB’s ICT department to see how this can be done. The government of Rwanda has already invested in an operational data center but there is no limit on the number of data centers a country can host.
Kayitesi says that in hospitality, one company is looking forward to opening up a Turkish restaurant in Kigali to offer varieties of Turkish delicacies. Currently, it is impossible to find Turkish food served in any of the increasing restaurants in Kigali whereas there are restaurants specializing in Korean and Chinese cuisine, Italian and Ethiopian foods and others.
Tangible projects
The Minister of Infrastructure Albert Nsengiyumva says that the Rwandan government is hoping for “tangible projects” from the Turkish companies. One project, Nsengiyumva says, includes the conversion of peat energy to usable electricity which is expected to cost about $300 million. The project will be implemented by a Turkish company called Hakan Mining.
“The company is about to sign an agreement with the government of Rwanda and this is one of the biggest projects we are going to have,” Nsengiyumva says. Hakan will mine peat in the south of Akanyaru River, western Rwanda on the border with Burundi and convert it into electricity.
The company is currently carrying out a feasibility study and by July or August, the minister says that the study will be completed so that the company can design and start construction of the plant.
Rwanda currently faces an increasing energy deficit but the government has set an ambitious target of attaining 1000 megawatts by 2020 from less than 100 megawatts currently. This is expected to lower the cost of electricity thus lowering the cost of production locally but financing production of the 1000MW requires over $4 billion. The government is involving the private sector in order to reduce the burden of financing and has offered to buy any amount of electricity companies would produce.
Nsengiyumva also says that the government has received proposals from a Turkish company (name withheld because it would distort tendering processes) willing to take up construction of the new Bugesera International Airport in southeastern Kigali. He says that the proposal is being studied and the results for the tendering process will be out soon.
A number of foreign companies have submitted bids for the job, while construction of the airport is expected to cost at least $400 million. Once it is ready, it will serve as a solution to the growing air traffic to and from Rwanda.
First Turkish school investment in Kigali
Turkish schools were common in Kenya and Uganda long before one could open in Kigali. Since April this year, Little Gems Pre-Primary School opened in Rwanda as the first Turkish school and investment in the country. Turkey has one of the most advanced education sectors in the world, according to Ismail Ustun, the representative of the school.
Ustun, 29, a qualified teacher majoring in mathematics and sciences for primary school level, has lived and worked in Africa for seven years mainly in South Africa, Kenya, Djibouti and Somaliland in social work.
He says he knows Rwanda through the former Mufti of Rwanda Sheik Saleh Habimana. Sheik Habimana met his colleague in Kenya in 2008 and invited them to come and support vulnerable children in Rwanda, especially Muslim children, a call that they responded to positively.
Ustun did not come immediately but his friend came and introduced a South Africa based nonprofit organization-Universal Islamic Culture and Trust (U.I.C.T)—in Rwanda. The organization was giving support to vulnerable children.
When his friend went back, Ustun came to Rwanda and served as the country representative for UICT. He later resigned and decided to partner with Rwandese to set up an association which is currently providing support to around 40 students and is involved in construction of schools.
As a qualified teacher, Ustun says that Rwanda needed quality education and he decided to be part of the solution. “I decided to do something bigger than just working for an NGO. Distributing food and clothes to students was not enough,” he explains. “I thought what was the best was to give education so I decided to open a school to give much better quality education so that I can change something.”
Ustun and his association decided to lease land in Gikondo, Kigali City for 20 years and constructed a pre-primary school with everything designed in the Turkish style. The school, which began admitting children of 2 years and six months to 3 years, currently has 22 pupils but it has the capacity to accommodate between 200 and 250 children. The school currently offers pre-primary lessons and also admits pupils in primary one. Ustun says that they plan to construct a separate primary school next year.
Ustun explains that he hired Kenyan teachers and one Turkish teacher in order to ensure that pupils master the English language. Currently, the school has three Kenyan teachers, including the headmistress and one Turkish teacher, but it is looking forward to recruiting a French teacher.
Little Gems, says Ustun, has provided jobs to five Rwandans in addition to the Kenyan and Turkish nationals.
Turkey’s Africa Initiative
Turkey is ranked as the 16th largest economy in the world and sixth largest economy in Europe. It has one of the most rapidly growing airlines in the world-Turkish Airlines, and is ranked as one of the countries with the most advanced education, construction and manufacturing sectors in the world.
With aspirations to be among top ten largest economies in the world, Turkey sees Africa as a strong partner in achieving its goal. Ustun says that before 2008, Turkey was not thinking about Africa but in 2008, it declared that year was the Year for Africa.
The Africa Initiative was born with the goal to open embassies in African countries and to propel Turkish Airlines to follow with flights linking African capital cities and the Turkish capital Istanbul. Whether this strategy is already paying off or not, Ustun says that Turkey can still make it in Africa since its name is clean. Unlike some European countries that colonized some parts of Africa, which fueled a natural hate for the Europeans among Africans, Ustun says that Turkey’s name passes freely across the minds of many Africans.
He says the fact that his country was not involved in colonization, or any political activities that put its name in conflicts with African countries, Turkey has higher chances of becoming a trustworthy partner to Africa.
And this is happening. Out of 54 African countries, Turkey has opened embassies in at least 20 countries and its airline operates flights to over 18 African capital cities including Nairobi, Kampala and Kigali.
When Turkish Airlines CEO & President Temel Kotil was in Rwanda in May to officially launch flights between Kigali and Istanbul, he noted that Rwanda was in a strategic position---in the heart of Africa. This itself tells a lot.
Ustun and Kayitesi find it interesting for Turkish investors to target Rwanda with expectations to tap into the bugger East African Community (EAC) market which has a population of over 120 million. Therefore by opening flights to Kigali and following that with Turkish investments in Rwanda, the target becomes the entire central and East Africa.
But Rwanda still has things that make it less attractive. Ustun says that the cost of transport of goods from ports to Rwanda is still high; in Kenya, Uganda and Tanzania the costs are comparatively lower. Rwanda is also still facing high cost of electricity and a high cost of living.
In terms of investments in education, Ustun says that Rwandan parents still have not grasped the culture of investing substantial amount of money in the future of their children, especially those in nursery.
He says that Africa’s image is another challenge to the foreign investors who come and invest on the continent. Most people in Turkey, for instance think of Africa as a place with diseases, wars and hunger. This, according to Ustun, can be changed by African governments. He says that NGOs contribute to the poor African image with their dirty stories that aim at mobilizing aid.
He says that investing in Rwanda remains attractive despite the genocide image because the government has invested in good service delivery.
Ustun adds that Rwanda’s peace and stability are some of the ingredients to investment, which are not found in many African countries. Low corruption and proactive government officials, Ustun says, is an added advantage for Rwanda to become a successful country. But he warns that it will take time to attract a multitude of Turkish business community to come and do business in Rwanda. “It will come,” he says, “but not so fast.”
This year, Rwanda targets to pen down at least investments worth US$825 million and as of June 5, about $365 million had been registered.
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