Essays on Investment Opportunities in Rwandan Special Economic Zone Case Study

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The paper "Investment Opportunities in Rwandan Special Economic Zone" is a perfect example of finance and accounting case study.   The progressive economic development in Africa provides a viable market for international investment. Countries within the continent are rapidly upgrading from the undeveloped states to become economic powerhouses. According to Iimi, Humphrey and Melibaeva (2015, p. 2), a majority of the countries in Africa with the example of Rwanda manage to establish agglomeration economies by strategically locating firms in specific geographical regions. The special areas include urban sectors or industrial zones that enhance the proximity to infrastructure as well as direct access to labour.

Iimi et al. (2015, p. 2) explain that the strategic locating of companies aims at increasing productivity, reducing the cost of trade and transactions. Based on Iimi et al. (2015, p. 2), Rwanda experiences strong and steady economic growth following its agricultural sectors and contributions by the government to boost the industrial sector. Figure 1 illustrates the economic performance of Rwanda by according to the major sectors. Through the government, the country established Special Economic Zones (SEZ) such as the Kigali Free Zone (KFZ) to provide focal points to serve both the domestic and regions markets (Iimi et al.

2015, p. 3). The SEZ in Rwanda target industrial sectors of mining, trade, agribusiness, and information and communication. The location of SEZ concentrates in Kigali which is the capital of Rwanda. Suitability of the location includes its huge population of 1.1 million people (Iimi et al. 2015, p. 4). Moreover, the infrastructure of Kigali promotes the concentration of enterprises about these regions with 75% of the new businesses locating in the capital (Iimi et al.

2015, p. 4). Figure 2 and 3 identify the concentration of businesses in Kigali compared to other regions of Rwanda.   The Rwanda Special Economic Zones (RSEZ) in collaboration with the government and other private companies manage the SEZ as a joint venture (Hitimana, 2012, p. 1). According to Hitimana (2012, p. 1), the government owns 30% of the SEZ, with the remaining 70percent shared among the Rwanda Bank of Development (BRD), RSEZ, public institutions, Bond Trading, and other privatised firms. The development of RSEZ included stages with the first phase settling on 98hectares of land while the second phase developing the 175 hectares (Hitimana, 2012, p.

1). The design of the project includes the division of the land into plots of between 2,000 square meters (sqm) and 3,200sqm with the cost of construction of Rwf 20, 000 per sqm (Hitimana, 2012, p. 1). The imperative of the project involves its ability to attract investors from neighbouring countries of Kenya and Uganda as well as international with the examples of China and India. Hitimana (2012, p.

1) includes that the international investors account for 30percent of the RSEZ with the larger percentage being Rwandese companies. The mode of entry in these RSEZ includes a booking process where the potential investor pays a 30percent of the total cost as a down payment with the remaining 70% paid over a span of 5years. With the down payment, the investor gains a three-year grace period to set up the firm. The advantage of these RSEZ in attracting investors is their interest rate of 10percent which is considerable amount relative to other countries (Hitimana, 2012, p.

1).

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