Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Few non-agricultural products are produced in Rwanda, which leaves most distribution and sales channels reliant on import-export partners. No single company dominates the import-export business. Instead, numerous trading companies import goods, mostly from the region, but also from Europe, China, India, and the United Arab Emirates. Construction of the Kigali Free Trade Zone (KFTZ) was completed in 2012. The KFTZ is designed to serve as a distribution platform to the entire Great Lakes region. The KFTZ’s location allows for easy access to the main road corridors to Uganda (en route to Kenya’s port of Mombasa) and Tanzania (en route to the port of Dar es Salaam), as well as to Kigali International Airport. It was also designed for easy access to the planned new international airport in Bugesera and future potential rail links. Currently, the nearest railway terminal is a dry port located in Isaka, Tanzania, almost 500 miles from Kigali.
Transport remains one of the biggest economic challenges in Rwanda. Transportation expenses in Rwanda are nearly twice as high as in most of its EAC neighbor countries (except Burundi and eastern DRC). Delays in delivery of imports and exports are common and Rwandan manufacturers in time-sensitive industries often rely on expensive air transport to ensure timely receipt of inputs and timely export of finished goods. Government-owned airline RwandAir currently subsidizes cargo export rates in an effort to support the growth of export industries. On October 21, 2019, Dubai Port World and the Government of Rwanda inaugurated East Africa’s first inland dry port. Transport cost and timing is expected to be reduced as a result of this new “port.”
Using an Agent to Sell U.S. Products and Services
Using a local agent who speaks the national languages (Kinyarwanda, English, French, and Swahili) can help with licensing, locating warehouse space, hiring staff, and other administrative start-up tasks. Using an agent or distributor is not legally required in Rwanda.
In general, finding a reliable agent or distributor requires a visit to meet with local businesspeople. Through a Contact List, Gold Key Service (GKS), or International Partner Search (IPS), the U.S. Embassy’s Economic and Commercial Section can assist U.S. firms interested in a relationship with local partners. For more information on these services, please visit https://www.trade.gov or contact the U.S. Embassy Economic and Commercial Section at (+250) 252-596-400 or KigaliEcon@state.gov.
When interviewing potential agents, key criteria include contacts with the appropriate labor market, ability to secure warehouse space, knowledge of local competition, previous work experience, and proven ability to work with government officials and U.S. businesses.
When interviewing distributors, key considerations include the distributor’s sales records, sales territory, sales force, product mix, facilities, marketing policies, and customer profile.
Establishing an Office
The RDB provides an efficient business registration service and potential tax incentives to investors in specific sectors. These include exports; manufacturing; energy generation, transmission and distribution; information and communication technologies, business process outsourcing and financial services; mining activities relating to mineral exploration; transport, logistics and electric mobility; construction or operations of specialized innovation parks or specialized industrial parks; affordable housing; tourism that includes hotels, adventure tourism and agro-tourism; horticulture and cultivation of other high-value plants; creative arts in the subsector of the film industry; and skills development in areas where the country has limited skills and capacity. The RDB offers one of the fastest business registration processes in Africa. New investors can register online at the RDB’s website and receive a registration certificate in person in as little as six hours at RDB’s Office of the Registrar General. RDB’s “one-stop shop” helps foreign investors secure required approvals, certificates, and work permits to start their businesses. Investors should be aware that RDB often is unable to enforce tax incentives it has offered – even when in contracts and formal legal agreements - and all such incentives should be reviewed and approved separately by the Rwandan Revenue Authority (RRA) in writing to improve enforceability. RDB is often unable to assist with long-term work and residence permits for expatriate and third country staff after the initial start-up phase of a business. For current regulations and/or assistance, contact the Rwanda Development Board.
Franchising is still uncommon in Rwanda, although Kentucky Fried Chicken, FedEx, MoneyGram, DHL, Western Union, and Jibu Water have established franchise operations here. Regulations in this sector are not yet well established.
Marketing is conducted primarily through word-of-mouth, radio, mobile phone ads, printed journals and outdoor campaigns. The internet, social media, and mobile phones are emerging as particularly important marketing media. The Rwandan postal system is insufficiently developed to support large-scale direct marketing.
The government encourages joint ventures with foreign firms, particularly in sectors requiring expertise not available in Rwanda. Investment conferences and trade missions seeking partners are carried out by Rwandan businesses in Asia, the United States, Europe, and the Middle East. Over the past three years, the Rwandan government has exhibited strong interest in establishing public private partnerships (PPPs), particularly in the energy and infrastructure sectors. The Rwandan government has created a number of special purpose vehicles (SPVs) to facilitate PPPs and joint ventures with foreign investors.
Rwanda’s express delivery industry is a nascent and growing sector as e-commerce and online marketplaces continue to grow in importance. FedEx, DHL, and UPS operate in the country through franchisees. High express shipment charges have made it very expensive to ship to Rwanda. Rates range from $50 to $112 per kilogram to ship products from the United States to Rwanda within 6-10 business days. To get an online quote for FedEx, DHL, and UPS, visit the IPS parcel website.
Customs barriers are particularly important to express delivery providers who offer guaranteed delivery times. Delays at customs reduce delivery speeds, potentially increasing costs for consumers who provide fast, on-demand, integrated, tracked, and door-to-door movement of shipments.
U.S. companies should perform due diligence on potential local partners, distributors, or agents prior to any proposed business deals. The U.S. Commercial Service can provide valuable background information on Rwandan firms through our International Company Profile (ICP) service. Further information can be obtained by visiting export.gov or by contacting your local U.S. Export Assistance Center (see contact numbers at the end of this guide). A list of local attorneys and consultancy firms can be found at the U.S Embassy’s website. Disclaimer: This list is not comprehensive, and inclusion does not constitute an endorsement or recommendation by the U.S. Government.