How to weave around the odds.
September 13, 2005
Sitting in her showroom, Janet Nkubana is recovering from a hectic day spent shipping 5,000 Christmas ornaments and baskets to Macy’s in New York.
It is the first of several shipments Ms Nkubana’s company, Gahaya Links, will send to the department store. Amid displays of baskets, shawls and necklaces, Ms Nkubana says reaching the US market is a big achievement for her and the 400 Rwandan women weavers whom she employs.
“To me, entrepreneurship is part of the answer – I don’t care who you are, where you are from, what happened, all I need is business,” she says. “Among these weavers, I have survivors, I have widows, I have women whose husbands are sitting in prison but to see them sitting under one roof weaving and doing business together, it is great.”
Women are entering arenas previously closed to them. Their success is remarkable in a country in which women enjoyed neither property nor inheritance rights 10 years ago. Yet for all entrepreneurs in Africa’s most densely populated country, where life expectancy is less than 50, the obstacles to launching a business are many.
“The whole country is a challenge,” says Beatrice Gakuba, founder of Rwanda Flora, the nation’s largest exporter of roses, which sells five tons of flowers a week at auction in Amsterdam.
Ms Gakuba had the idea for her roses business when she could not find the flowers she wanted for her father’s funeral in 2003.
“I lose 5 per cent of productivity because of infrastructure,” she says, referring to the country’s irregular electricity and water service. “There is no cooling room at the airport, no one who knows how to handle the flowers. Electricity is lost regularly.”
This means that her six-hectare farm’s irrigation system often has to run on a generator, making unit electricity costs three times higher than normal. Rising oil prices, high demand and a lack of infrastructure investment sparked an electricity crisis in 2004, leading to a doubling of the nation’s electricity tariffs and continued power cuts.
Donatille Nibagwire, founder of Floris, a fruitand vegetable exporter struggles with a shortage of adequate packaging supplies and stiff competition from neighbouring countries, which have lower input costs across the board.
Then there is the question of capital.
When Immaculee Kalisa decided in 2002 to leave her family in Paris to move to Kigali and launch Rwanda Network Computer, the nation’s first computer assembly company, nearly everyone she knew thought she was mad.
She sold her home to purchase land which served as a guarantee for a $1m bank loan with a 16 per cent interest rate. But she says it took nearly two years to receive the entire sum.
“I wanted to buy $200,000 in merchandise and they gave me $50,000 of it, so I had to pay interest on the $50,000 even though I couldn’t do anything with it,” she says, shaking her head. “You end up taking on a lot of debt and you still have to pay your employees and you still have to pay interest on the loan.”
Ms Kalisa also had to combat the notion that goods made in Rwanda were of lesser quality than those imported from overseas.
“Because we assembled them here, people thought they weren’t good,” she says. She fought to shed the image by letting people use some of her initial 50 computers for free. Her company also offered a two-year guarantee. And she marketed her products under the label “Gorilla 1000”: gorillas to convey the computer’s power and 1,000 for Rwanda’s fabled 1,000 hills.
Two years later, Ms Kalisa has secured a contract for 4,000 computers from the ministry of education and the company expects to earn about $500,000 in 2005.
For their part, Rwandan officials are doing what they can to introduce entrepreneur-friendly policies. They stress private sector growth is key to achieving the government’s goal of “converting what is now one of the world’s poorest countries into a successful, middle-income, developing country by the end of the year 2020”.
“Entrepreneurship is the only way we can develop, because it will help us end our dependency on external aid,” says Pierre Claver Uwimana of the Rwandan Investment Export Promotion Agency.
Some entrepreneurs are making steady progress. Rwanda Flora aims to expand to 15 hectares by 2007. Floris’s Nibagwire is searching for other European markets and has plans for a Kigali fruit and vegetable market. And Gahaya Links is slated to ship 7,000 more pieces to New York this month.
MONEY, INFRASTRUCTURE AND SKILLS: MISSING PIECES IN THE JIGSAW OF RWANDA’S ENTERPRISE ECONOMY
- Capital. Banks demand guarantees for loans in the form of property. Interest rates are about 17 per cent, with banks requiring 100 per cent collateral. Entrepreneurs often use the funds of family and friends. Government agencies also have small business funds.
Markets. With more than 60 per cent of the population below the poverty line and income per head at about $250, building an internal market is a challenge. The export market is growing, but it is held back by high input costs and stiff competition from neighbouring countries. The Rwandan government has created a one-stop export promotion authority. Several handicraft exporters are banding together to produce on a greater scale, and there are plans to build supply chains around regional production centres.
Power. Electricity tariffs were doubled in the aftermath of the sector shortage in 2004 and demand remains high. Regular electricity outages result in lost productivity and heavy reliance on generators. Government officials say plans are under way to generate electricity from gas extracted from Rwanda’s Lake Kivu. In the meantime, generators are put to work regularly, and produce is often moved in the evening and shipped out in the morning so it will not have to be stored for long. A cold room is also in the pipeline for Kigali airport following lobbying from the country’s exporters.
Transport. Rwanda is landlocked and heavily dependent on imports, raising the costs of production inputs. Air freight is expensive, and shipping goods to Europe requires transporting them to ports in neighbouring Kenya or Tanzania. The government is studying a proposal for the construction of a railway between Tanzania and Kigali to lower costs. Exporters are beginning to ship goods in groups to raise shipping volumes and negotiate lower rates.
Capacity. Almost 1m people were killed in the 1994 genocide and the economy shrank by more than 50 per cent. The government and the universities are focused on building business skills. The Kigali Institute of Science and Technology runs evening classes on how to write a business plan. Entrepreneurs working in rural areas are also training their workforce in business skills.