For an economy that hit negative growths less than 20 years ago, Rwanda needs continued inflow of investments in order to broaden and strengthen its foundation to achieving sustainable development. Strides have been made to ease doing business in the country for instance the slashing of unnecessary procedures during business registration which lowered time spent in the process to less than six hours and can be done both online or the one-stop centre at Rwanda Development Board (RDB) premises from where all investor concerns are addressed.
With several strategies in force, reasonable investments have been wooed into the country and local business giants mobilized to increase economic activity. However even after the strides made, there remained need to spice up the attractiveness of Rwanda’s nascent economy to both local and foreign investors hence the conception and birth of the Special Economic Zones (SEZs) as a concept way back in 2006.
The SEZ program was developed especially to accelerate economic development of Rwanda which clearly showed positive policy development and implementation from the beginning.
What is a Special Economic Zone?
SEZ is a geographically specified and physically secured area administered by a single body, offering certain incentives including more liberal and simplified economic regulations for businesses to physically locate and operate within it. Special Economic Zones are generally implemented to meet fiscal, social, and infrastructure policy rationales.
The most important fiscal goal of an SEZ is to facilitate economic growth through the use of reduced tariffs and more efficient customs controls. Since the outset, SEZs are viewed by the Rwandan government as an ingredient that will not only boost attracting foreign and local investments but also as a platform to facilitate infrastructure development and in so doing speed up national growth and Development.
As a result, the roll out of SEZs is a priority activity as scored in the implementation of the Economic Development and Poverty Reduction Strategy phase two (EDPRS II).
EDPRS is Rwanda’s five years development agenda which will be running now for the second time. The first phase of the strategy which ended in 2011 is credited to have seen over a million nationals out of poverty. Currently, the only designated area for a Special Economic Zone is situated in Kigali; and the initial phase of the particular area has already been developed, served with the necessary infrastructure and operational while development of the second one is progressing as planned. According to John Bosco Sendahangarwa the Head of the Special Economic Zones Authority of Rwanda (SEZAR), Government has plans to create more SEZs across the country in the near future.
SEZs contributing to increased economic development
To best portray the picture of a special economic zone, it is generally a designated area within a particular economy but governed by different regulations that more often are more liberal and flexible in nature.
These “rules” and regulations are in most cases are different from the prevailing ones. The SEZ then operates in such a way that it simplifies procedures for new investments to be born in the country and to ensure that the available package for investors destined for Rwanda is as attractive as none else can be.
The major aim therefore is to facilitate the creation of new investments and thus bring about increased economic activity in the country.
As a result of the fresh investments, the country is capable of creating jobs for its citizens mainly youth in addition to expanding the revenue base. All these work together to facilitate achieving set targets for economic growth for Rwanda’s case.
For instance in the already operational Kigali Special Economic Zone (KSEZ) phase one, an individual user employs about 200 workers, an illustration best explaining the impact of the zone’s existence to the people and government of Rwanda. Also as Sendahangarwa explained, the role that this particular KSEZ had in the development of infrastructure cannot be overemphasized. “Rusororo where the zone is situated was formerly a poorly settled
Globally, for the SEZ to operate well, the best management practices have to be put in the employ, with the key players being; the regulator, developer, operator and user.
The Regulatory Authority is an independent agency responsible for planning the national SEZ regime, Designation of land as individual SEZs, coordinating with public agencies, licensing and permitting SEZ enterprises (developers, operators and users), monitoring Performance And ensuring compliance with SEZ rules and legislations. The current SEZ regulator in Rwanda in the Special Economic Zones Authority of Rwanda (SEZAR)
Generally a private sector entity under a contractual agreement with SEZ status and holding the responsibility as the owner to bear the risk and financing of designing and constructing all the necessary SEZ infrastructure and facilities. The developer of the Kigali Special economic zone also own this land and are therefore responsible for entering into sale agreements with the various users.
This is generally a private sector entity under a contractual arrangement with the owner or Developer and responsible for the day –to-day management of SEZs and provision of specialized support facilities and services. The developer can also be the operator.
A private entity engaged in commercial activities in the SEZ and is compliant with the prevailing rules and regulations regarding SEZ. The SEZ user must be holder of the SEZ status in form of the license provided by the Authority.