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More than two decades on from a genocide that claimed 800,000 lives, Rwanda is taking another step toward looking like the closest thing Africa has to Switzerland.
A tiny, landlocked, mountainous nation, Rwandas economy has outperformed almost all its continental peers, with annual growth averaging 7.8 percent since 2000. Like Switzerland, which hosts the World Economic Forum in Davos every year, its also about to welcome delegates to the organizations annual African gathering.
Nurturing
an attractive business environment has become more important for
many African nations to sustain growth, as commodity revenue and
aid
inflows have fallen, Mark Bohlund, Africa economist with
Bloomberg Intelligence in London, said by phone. Rwanda
has led the way by cutting red tape, providing tax incentives
and improving governance, which has helped overcome the disadvantages
of its small size, lack of port access and limited natural resources.
The Swiss parallel of Rwandas economic success story, furthered with a ranking by the World Bank as mainland Africas easiest place to do business, doesnt extend to its reputation for upholding democracy. Civil-rights groups accuse the government of stifling opposition and have criticized a constitutional change that will allow President Paul Kagame, who has been in power since 2000 and taken credit for Rwandas economic success, to stand for a third term.
Kagames administration has built the tourism industry into the countrys biggest foreign-exchange earner by hosting events such as the WEF and the African Development Banks 2014 annual meeting and luring visitors to see endangered mountain gorillas and climb volcanoes. Its also boosted agricultural output and manufacturing by improving roads and electricity supply. Rwandas experiences feature high on the agenda of the WEF gathering, which will focus on how African countries can harness technology and knowledge to spur growth.
The slump in energy and commodities prices has demonstrated the urgent need for greater diversification and entrepreneurship across Africa, said Elsie Kanza, the WEFs head of Africa. Rwanda stands as a good example of how long-term planning and savvy investing can lead to sustainable and inclusive growth.
Kagame, 58, led the rebel army that ended the 100-day killing spree in 1994 that targeted minority Tutsis and moderate Hutus. He was cleared to stand for re-election next year, after more than 98 percent of people who voted in a referendum backed a constitutional amendment to extend presidential term limits.
Opposition parties have very little scope to function freely in Rwanda, while the government imposes tight restrictions on freedom of speech and its views dominate the domestic media, Human Rights Watch said in its 2016 global review. The New York-based group said it continues to receive information on people being held unlawfully in military custody and other unofficial detention centers.
The governments determination to maintain security and its coordinated fiscal and monetary policy should continue to provide impetus for growth and new investment, according to Maurice Toriotich, the chief executive officer of Kenya Commercial Bank Ltd.s Rwandan unit. Foreign direct investment in Rwanda will probably rise 36 percent this year to $1.5 billion, the nations development board said last month.
The government has a good PR machine, Toriotich said by phone from Kigali, the Rwandan capital. Investment returns continue to be attractive.
While global economic recovery is taking longer than expected and the slowdown in China limits growth for commodity-based economies, Rwanda has decided to focus on marketing itself as a conference destination to support growth, Finance Minister Claver Gatete said after briefing reporters Tuesday in Kigali.
At conferences like these, we expect to sign deals during side events in key areas like energy, science and technology, he said.
One agreement was announced on Tuesday on the eve of the WEF meeting. Rwanda and the European Union signed a financing deal worth 177 million euros ($201 million) to support the countrys electricity provision over the next five years, according to a statement on the finance ministrys website. Michael Ryan, the EUs representative there, said he anticipates more such accords in other areas such as agriculture.
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