Musiitwa is also Founder of Transitional Trade, a non-profit whose mission is to promote social trade, investment and entrepreneurship in post-conflict countries and transitional communities.  She is the 2011 Ibrahim Leadership Fellow at the World Trade Organization.  She was previously an advisor to the Rwandan Minister of Justice on legal matters related to trade, investment and regional integration. Musiitwa has also been an Adjunct Professor of Law at universities in the US and Rwanda.

Musiitwa is a thought leader, speaker and writer on African issues. She is an Archbishop Desmond Tutu fellow 2011 (African Leadership Institute) and a Young Global Leader 2011 (World Economic Forum).  She has completed executive education at the Harvard Kennedy School and Oxford Said School and holds degrees from Davidson College and the University of Melbourne.

For those who have followed ISOKO Institute’s Q & A series, ill-defined laws (to varying degrees across the continent) have emerged as a common inhibitor to attracting FDI to Africa. ISOKO Institute was privileged to speak with Ms. Musiitwa on matters related to law and investment.

ISOKO: In our interview series, the lack of rule of law has emerged as a common inhibitor to attracting FDI to Africa. First of all, would you agree that this is a top inhibitor to attracting FDI? Why or why not?

Musiitwa: Rule of law is one of many inhibitors to doing business in Africa.  Once this and other related problems such as corruption and creating credible institutions (legal, accounting, trade related etc) are adequately addressed, then Africa’s competitiveness internally as well as with the rest of the world will increase.  If Africa wants be a true global player it has to play by the rules.

ISOKO: For those readers that may not know, what is rule of law?

Musiitwa: Rule of law is comprised of several elements: fair and impartial courts; clear laws and precedents that are respected and followed (in the case of common law countries); local enforcement of foreign judgments and arbitration awards; and strong legal and supporting institutions e.g. accounting, anti-corruption.

Rule of law is not only necessary for the proper functioning of society, it is critical for investor confidence. Though law is an evolving field, having laws that do not change at the whim of government or industry increases investor confidence. Without rule of law the operating environment is too unpredictable, which increases both the cost and risk of doing business.

The enforcement of laws is the role of government; however, the private sector and civil society also have a role to play as far as monitoring activities domestically to make sure that the investment climate remains prosperous. When aspects of the investment climate are deteriorating, it is essential for them to either bring this matter to the government’s attention where necessary or work among themselves to rectify the situation.

ISOKO: I realize that legal frameworks will vary a great deal from one country to another and perhaps even from one region to another, but can you paint a picture of the legal situation that foreign investors might encounter upon coming to Africa? In other words, when someone says that a lack of rule of law is a problem in many African countries what do they mean?

Musiitwa: Every country has a unique legal system.  Even though the various systems can broadly be put into common law, civil law and other legal systems, countries usually have locally adapted ways of making and enforcing laws.  Therefore, it is important for investors to be familiar with local laws and to retain good local counsel to advise on local aspects of deals.

However, there is an increasing trend towards regional integration in Africa. For instance, the African Union aims for a continental free trade agreement by 2017.  So far, many of the existing regional blocs have made progress. For instance, the Organization for the Harmonization of Business Law in Africa (OHADA) is a system with sixteen members that has streamlined business laws and implemented institutions in order to attract foreign investment not only to their individual countries but also to West and Central Africa as regional blocs. Further, the East African Community has taken significant steps towards execution of the common market, customs union and ancillary matters related to integration.

Oftentimes the phrase “rule of law” is used too broadly.  I think it is necessary to do the research about specific countries and identify their respective challenges.  Otherwise, many problems risk being masked. A problem I have consistently faced has been the lack of laws or the lack of clear laws. For instance, I was working on an energy deal in a country and the country did not have strong laws dealing with energy generally, much less dealing with the complexities of the commodity being dealt with in the contract.

ISOKO: Whose responsibility is it to remedy these types of issues?

Musiitwa: It is the role of government to build and sustain transparent, fair and sustainable institutions that support a country’s investment climate.  The judiciary must ensure that it is impartial.  The legislature must be well informed about various issues before passing the requisite laws.  The executive must also identify issues of national importance and ensure the macro goals are accomplished.  Government has the duty to inform as many people as possible of the investment opportunities available.

Investors must also demand and prod the government for the necessary legal and regulatory infrastructure they need in order to effectively operate.  Investors (foreign, local and diaspora) have different needs, so unless they specify what they need there is the risk that government will not create the most applicable laws for their needs.

ISOKO: Where do you see progress being made in this arena? Is there an African state, province or city that has a model legal framework?

Musiitwa: Rwanda has done a phenomenal job of improving its investment climate over the years.  The World Bank’s Doing Business report, which ranks countries based on various indicators that determine ease of doing business in countries, has consistently ranked Rwanda as a top performer.  South Africa, Mauritius, Botswana also consistently do well.  However, these statistics should be viewed with other indicators such as those dealing with governance as well as corruption.

ISOKO: Where do we go from here?

Musiitwa: One of the constraints to investing in Africa is that there is not always readily available information about what is going on in industry. As such, research institutions and think tanks have a critical role to play in not only identifying problems but also coming up with innovative and multi-disciplinary solutions to problems.  Immediate and ongoing needs include the need for better data collection and compilation of statistics related to investment and writing briefs to be distributed to potential investors and the government.  Additionally, some governments need assistance putting laws, regulations and policies on the Internet.

The private sector in Africa is in many ways still defining itself.  Multinational corporations, state owned corporations, SMEs and microenterprises rarely speak as one or a few voices.  As such, if each level of the various groups of industry would share information and lobby government as a single group concerning the laws they need to be more effective, it would be beneficial in informing government of industry needs.

Africa is on the move. The promise of peace and prosperity is dawning. The middle class is expanding and standards of living are improving for many. Africa’s enterprising leaders are studying the extraordinary growth of the “Asian Tigers” and the “BRIC” nations. They are asking the question, “Why not us?”

We believe that the creative power of entrepreneurship offers Africa the fastest and surest path to sustainable transformation.  Individual liberty and competitive free markets under the rule of law can unleash the innate energy of the private sector to accomplish what governments cannot.  And unlike charity and entitlement programs, profitable businesses are sustainable and offer people dignity.

To accelerate Africa’s private sector growth, three significant ideas should be promoted:  attract foreign investment, educate entrepreneurs and implement sound policy.

First, most of the world still views Africa as a “basket case”. Reality changes, but perceptions linger. It is time for Africa to aggressively market a truer and more compelling reality:

Africa is the world’s last great economic frontier. It offers endless opportunities for entrepreneurs, corporations and investors.

Economic growth is a tide that lifts all boats and Africa offers investors growth rates far greater than the US and most developed and emerging countries. For bold players who want to catch the Africa wave, now is the time to start building networks, cultivating talent and learning the nuances of Africa’s varied marketplaces.

Second, for too long Africa’s best students have defined success as a college degree and a secure job in government or with an NGO. This mindset must change for Africa to prosper. Entrepreneurship must be elevated and business creation promoted. Africa’s next generation must be encouraged to see themselves as entrepreneurs and principled servant leaders – wealth creators rather than job seekers.

The best long-term investment a nation can make is to prepare the next generation for responsible citizenship and productive lives. Rigorous quality education, market-driven training and job opportunities are essential if Africa’s young people are to be equipped to compete in the global marketplace.

Finally, while business is the engine that drives long-term prosperity and stability, government leaders play a critical role in establishing the institutional environment and rule of law that allows entrepreneurship and private enterprise to take root and flourish. Nowhere has this truth been more clearly demonstrated than in the remarkable comeback of Rwanda.

From one of the world’s most failed states following the 1994 genocide, Rwanda has transformed itself into a model of reconciliation and free-market hope. Effective leadership implementing sound policy has made Rwanda one of the safest, least corrupt and fastest growing countries in Africa. If Rwanda can do it, anyone can.

There are 54 countries on the African continent and every one of them has the same opportunity.  The “Asian Tigers” and “BRIC” have shown the world that extraordinary growth and national prosperity is possible. The 21^st century will see the rise of the “African Lions” and marketing, entrepreneurship and leadership will define the winners.

Dale Dawson is Chairman of ISOKO Institute. An investment banker and entrepreneur, he serves on President Paul Kagame’s Rwanda Presidential Advisory Council and is founder and CEO of Bridge2Rwanda, a business development and training firm. Dale also serves on the board of Urwego Opportunity Bank of Rwanda.

Hi all, it has been too long since the last Tim’s Take, let’s jump right in to a topic nobody wants to talk about when getting ready to engage Africa, “What happens if something goes wrong?”

My last piece tackled another classic gut-check question for those looking to invest in Africa, “What is my exit?” However, the reality is, those investing in Africa hope they have that problem because it assumes that the enterprise was successful and there is cash to move back to the investors. The tough question is what to do when the project never takes flight, disputes derail the effort, fraudulent behavior is discovered or any number of other scenarios that a seasoned entrepreneur is all too familiar with.

This is where my business and law oriented mind can help. The business side only wants to see the potential, the victory, the success; asking “what are my exits” and assuming the profits. The lawyer (or accountant or financials expert) is out to “rain on the parade” and set him up for all the contingencies, stress cases, what-if’s and worst-case-scenarios that may befall the enterprise. However, like anywhere else in the world, neither party can be overlooked. As I mentioned last time, in Africa, the more thinking on this topic, the merrier — even experienced entrepreneurs are going to see curveballs they’re not used to.

So here is how it might play out; boy meets girl, instant spark, both want to spend all their time and money together, they formalize this desire, time passes, one thought the other would change or they hoped the other would not change (which they did or didn’t), and now they are looking for a divorce. There is no reconciling this matter. Sigh.

Of course we would bring in the counselors, mediators, and all other natural options to avoid the divorce; but assume we find ourselves faced with separating the property and giving what is due. The options: settlement, courts, arbitration. These are pretty standard, but depending where you come from, the options have different levels of comfort or reliability.

In my experience, settlement is often the way to go. The agreed, fixed sum and the confidentiality often provides the safest route for the parties. You will have to put your sense of justice aside and simply look at the numbers. Depending on the nature of the dispute, you may be forced into local courts and as a foreigner you will always have a more difficult time navigating that process than a local. The level of uncertainty, and the chance of a windfall ruling, make settling quickly and quietly an attractive option. The confidentiality also makes it easier to move on in the same community with other projects or relationships, avoiding long, drawn-out gossip in the close-knit communities of this region.

But let’s assume settlement fails. The project agreement should call for dispute settlement through either the courts of a selected country or arbitration. At this point in the region’s development I’d say we hope for the arbitration clause. However, the rules, place, and arbitration body the parties choose will dramatically affect this option. Arbitration at the large “renowned” bodies such as the International Chamber of Commerce (ICC) or London Court of International Arbitration (LCIA) can routinely cost $500,000 in fees just to crack open the file for a small case. And we’re not even talking about legal fees yet. For the type of Small and Medium Sized Enterprise (SMEs) that are the norm in this region, these costs can soar to double or triple the entire size of the project, and we haven’t even factored in whatever the panel declares for damages!

The parties should look at the region and determine if there is a developing arbitration body with some good references. Staying close to the project locale keeps travel costs down for arbitrators, witnesses, access to information and local arbitration center fees are lower. Here in Kigali, for instance, the law establishing the Kigali International Arbitration Center is in its last phase of promulgation. However, the center will still require the availability of veteran arbiters to gain the confidence of the business com munity, both in Rwanda and abroad. So in the meantime parties may consider Kenya’s arbitration center. With a little legal advice in structuring your dispute resolution clause and taking into account the local context, parties can make the process infinitely easier, more efficient and much fairer.

However, not all of your disputes may be the result of a contract you were able to craft to your own preferences. What happens if an employee feels they were wrongly fired? Or someone is injured during the course of the project? Depending on the laws and subject matter of your enterprise, the national courts may be your only choice.

The good news — the justice system is rapidly improving in East Africa with Rwanda leading the way. Many countries are heavily investing development dollars into the justice sector in Rwanda. As the immediate needs of hunger, war, and disease stabilize, the next step in development involves building institutions, with rule of law ranking near the top. Today, training for attorneys, judges, and enforcement agencies are a regular occurrence around Rwanda.  The recently formed Rwandan commercial courts are making great strides to defeat backlog. Overflowing case loads are a familiar problem in all court systems, but within a short time these courts have completed 81.5% of the cases referred to them. Out of the over 6,800 cases received, 3,300 were backlogged, some pending in other courts of law for more than 8 to 10 years. Since time is money, this dramatically improved timeline is a big step to a viable dispute resolution option. However, it is still a work in progress. For instance, a recent dispute between two telecomm providers was too technical for the court’s capacity and was referred to arbitration.

A robust national commercial court is vital as commerce becomes more integrated in the East African Community (EAC). The EAC Secretariat noted in May that they are creating a streamlined legal framework to protect investments and businesses. Now the newly institutionalized East African Court of Justice will work with national commercial courts to protect and enforce commercial activity in the region.

Outside these formal options, it is also wise to invest in the community surrounding your enterprise. As mentioned, the close-knit nature of East African business communities can be a blessing. If an outsider takes the time to build a network of people from the community — people who’ve known the employees, partners, and government stakeholders for years — they can go to bat for you in resolving issues before you’re faced with the aforementioned problems. And besides the business benefits, it’s always good to have friends different from you.

Break-ups are never easy, but they are a part of life. Investors will find that with a bit of planning and investment in the community around the enterprise, they can survive the process and move on to one of the other fish in the sea.

Tim Shirk is an attorney currently serving as an advisor to the Minister of Justice in Rwanda, advising on government contracts with international parties. He continues to work on foreign direct investment opportunities with Renew Strategies based in Washington, DC. He can be reached at tshirk@renewstrategies.com.

From the Archives:

March 2011 – Welcome to a new Africa

Consumer Products Sales & Marketing: Daily mentoring of the sales manager for a large (500K USD annual turnover) consumer products company.  This includes creating the template for establishing a baseline of existing customers, volumes and prices – business has been operating for four years and this information isn’t available.  It involves one-on-one mentoring including some basic guidance like the following:

Sales Manager: “I’ve spent the day out talking to customers promising them better quality and better service.”

Karisimbi Partner: “Please don’t promise anything unless you know how you are going to deliver on that promise.  The first job has to be to listen to the customers’ concerns and let them know that the company is working hard to address those concerns.  Secondly, start the conversation by simply asking them what would be required in order for them to be willing to distribute a small additional volume of your product.  Let’s meet again in two days to review the list of customers and their responses to your questions.”

Project Management: Understanding from the Director of Project Management the current status of Project Management Reporting in a large (more than 5M USD annual turnover) construction company.  Ultimately concluding that none of the daily, weekly or monthly reports focus on analyzing changes in critical path task schedules.  Reporting only focuses on financial indicators.  As a result, most of the company’s projects are delivered significantly behind schedule.  Currently developing and conducting one-on-one training for project managers on an excel-based reporting process that focuses more heavily on adjustments to critical path task schedules.

Investing: Analyzing the variety of businesses within a holding group and advising the owner of the company as to where to invest the next one million USD that he wants to put into his businesses.  Realizing that most of the financial reporting is on a cash-basis (as opposed to accrual), and there are significant difficult-to-track transfers between different businesses and therefore limited insight into true profit and loss per business unit.

These interactions were not mass market training sessions.  These were not generalized approaches to particular aspects of business management.  These were relationship-based practical interventions addressing particular challenges in individual companies.  The impacts are clear and measurable and as advisors, Karisimbi Partners is actually held accountable in many ways by the client for the outcomes.  In every one of these interactions, Rwandan business managers experienced significant growth in their business management capacity.  And that growth will be passed on directly to sales people, project managers and investment analysts in those companies and other companies in those industries.

While our work often begins with asking many questions and delivering some analysis in the form of a report, interactions such as those described above suggest that is simply the beginning of the partnership we form with clients in order to ensure implementation.  These implementations are where the greatest impact is possible, and they are perhaps the most rewarding part of what we do.

This approach is not necessarily the only means of building business management capacity in Rwanda but it seems to be a method that is in demand by the marketplace and we believe that ultimately the market is what should drive approaches to business management capacity building.

______________________________________________________________

Dano Jukanovich is a partner and co-founder of Karisimbi Partners. He has accrued experience in the following industries: military intelligence, residential homebuilding and financing, satellite communication, information technology, and wireless communication. He served five years as an Army Airborne Ranger and Senior Intelligence Officer for the United States Army prior to his career in business development and finance. As part of his military service, Dano lived in Seoul, Korea and learned Mandarin Chinese while studying in Beijing, China.

Watch Part 1: Kigali’s bold vision for 2020

In 2009, Latif founded TLG Capital – a private equity fund dedicated to the belief that commercial and social returns go hand-in-hand in frontier markets. ISOKO’s Mark Darrough sat down with Latif in Kampala, Uganda, where he was attending the inauguration of TLG’s newest project: Vero Food Industries, a producer of mineral water and rice.

ISOKO: Explain your initial involvement in African markets and the creation of TLG Capital.

Latif: My initial involvement in sub-Saharan Africa (SSA) came about five to six years ago. I was at HSBC at the time, and there was this great opportunity in SSA where investors were looking for higher yielding assets. Through my work at HSBC, and later at Merrill Lynch and Goldman Sachs, I became quite successful in bringing large-scale African corporations to these western capital markets. But such capital-heavy banks are focused on the top-tier segment of the market. They’re focusing on those companies or sovereigns that can actually absorb over $100 million of financing.

Now, if you take away Nigeria, and possibly Kenya and Ghana, if you’re really stretching it, there are very few businesses in SSA (excluding South Africa) that can sustain that sort of capital. And if you take out traditional sectors like oil and gas, mining, and infrastructure, you find very few opportunities in the more mainstream consumer-driven industries. I think this is a very lucrative space in these markets. And that was how TLG was born. TLG was born of the idea that there is a whole segment of consumer-driven industries that has not been able to attract the necessary level of capital, despite an overwhelming demand that I believe exists.

ISOKO: What has created this demand for investment in consumer-driven markets?

Latif: It goes down to the perception issue. When people think of measurements of wealth, or when they think about how rich a country is or how big the middle class is, they look at a very oft-used statistic called GDP per capita. GDP per capita is not an accurate measure of wealth in Africa. Look at Ghana, which is a leading economy in West Africa. 90 percent of Ghana’s workforce is in the informal economy. And in Uganda, less than 5 percent of the people have a bank account. So you have a situation where all the informal activity of a nation simply isn’t captured in those official figures. Therefore, if a country has a GDP per capita of $500 per year, you have a feeling that they won’t be able to afford many of the consumer products that we in the West take for granted.

Now let’s take a look at something that is very fascinating: the telecom revolution. In 1995, Africa had less mobile phones than New York City. Fifteen years later, the continent had as many phones as North America. ­This incredible, world-leading growth came from a population that many thought could not afford mobile phones. In a place like Nigeria for instance, a low GDP per capita says that Nigerians can’t afford mobile phones. Yet there are over 60 million mobile subscribers in Nigeria. Obviously something doesn’t add up.

So our philosophy is that there is a huge demand for consumer-driven industries; industries like information technology, health care, water bottling, and agro-processing. But the demand exists only if you can provide the right price and the right quality – the two strategies that made the telecom industry so successful.

ISOKO: How do you compare the rewards of Africa to the rewards of more advanced emerging markets, markets like India and China?

Latif: In India and China you’re paying for the growth that has already taken place. Most Chinese and Indian companies are already valued with this growth in mind. So when you look at a place like Uganda, at places like Tanzania and Rwanda, the valuations are far lower simply because there’s not that much access to capital. At this early stage of the game, your ability to go in and determine the valuation is that much higher. Your ability to go in and say, “This is what we want to do, this is how we want to do it,” is much more flexible.

The opportunity, therefore, to get better deals – just on a valuation basis – is simply incomparable to places like India and China. So it depends on the risk-side of an investor. In our view we feel that the risks, especially when compared to India and China, are vastly overstated in Africa. We feel that there are businesses here that are also much simpler to employ.

ISOKO: What are such risks that exist in the African marketplace, and how can investors mitigate these risks?

Latif: Of course there are challenges in Africa, much as there are in other emerging markets. The very definition of an emerging market says that its commercial risk is as equal to its political and stability risks. And that’s what makes it different to more developed markets like Europe and the U.S. But you can learn to mitigate those risks using tools that are widely available, tools like the World Bank’s MIGA risk guarantee. If you do experience some sort of political instability, where the government decides to nationalize your assets or does something that is non-contractual, MIGA gives you the ability to recover your investment.

What’s fascinating is that in the past 25 years, the World Bank has only paid out on these guarantees five times. So people need to understand that the reality of these markets differs from what is portrayed by the international media. There are very real risks here, but there are also ways in which you can mitigate those risks. And that’s what we try to do, and that’s what I think is going to be a winning philosophy going forward in these markets.

ISOKO: Reports like Lions on the Move are showing that SSA has experienced unheralded growth in the past decade. Investors now have the choice of getting in while there are opportunities for high returns. What is your final argument for these potential investors, especially at such a crucial stage of the game?

Latif: When you look at the macroeconomic situation of a place like Uganda, where they recently found 2 billion dollars worth of oil, you must recognize the increasing interest that will occur over the next 5 to 10 years.  With all the proceeds that will come into the country and have a trickle-down effect into various sectors, it’s going to become much more difficult for an investor to be involved.

So the ability to come in now – to understand the situation, to build those relationships, to figure out where one wants to play in the various sectors that are open to an investor – is critical. And for us that’s a decision we’ve made, that we’re going to enjoy first-mover’s advantage. And we’re going to build our relationships here, so that down the line the people, the countries and the governments will appreciate the fact that we were with them from the beginning. And that to us is very important.

ISOKO: And how can this relate to an overall economic impact?

Latif: We’re in this to see strong development. The ability to impact people’s lives here, with the amount of capital that we’re employing, is incredible. Our ability to give people an avenue for job creation and prosperity, through the private sector, is vitally important. What is happening right now is when a person graduates from college, their best choice is to work for the government. They feel that’s where they can have job security, where they can probably get their best monetary returns; and that needs to change. That will only change when there is enough capital to build up dynamic, driven, and sustainable businesses. For us, and for people who want to see development in Africa, this is where you start.

The pharmaceutical plant that we’ve helped finance in Uganda, the Quality Chemicals plant, employs over a thousand people both directly and indirectly. That sort of job creation gives the people an income, gives them a chance to climb up the ladder, and is something that I’m very proud of. That to me is another very important reason why Africa cannot be ignored, and why investment in consumer-driven industries should considered the surest way to ensure prosperity. Not just for the community, or the country, or the region; but for the entire world.

Latif looks on as Ugandan businessman Emmanuel Katongole inaugurates his mineral water and rice production company - Very Foods Industries – at his country estate outside Kampala. Latif's TLG Capital acquired a twenty percent stake in the company.

The Pie:

Rwanda’s emergence onto the world stage is evident from the growing success in the tourism sector. Recently, the Rwanda Development Board (RDB) reported that the country received $200 million in tourism revenue and brought in a total of 666,000 tourists in 2010 alone.^[1]. This is indeed a promising sign for the small, landlocked country that regards its tourism industry as one of its most important economic assets. The opportunity to trek the iconic mountain gorillas, located in Volcanoes National Park in Rwanda’s Northern Province, has undoubtedly been the major catalyst in the country’s dramatic increase in tourism revenue since the park reopened in 1999 (with only 417 visitors that year). The international attention surrounding the gorillas, coupled with rising awareness of Rwanda’s inspirational post-genocide development, has given the country a reputation as an alluring tourist destination. Furthermore, in a study conducted by The Africa Group [TAG] and Africa investor [Ai], it was concluded that Africa, as a whole, is missing out on approximately $200 billion a year in tourism revenue ($254 Bn as opposed to the actual $54 Bn earned in 2010).^[2] The key for Rwanda going forward, it seems, is to figure out how to best position itself to gain a substantial slice of a potential 254 billion dollar pie.

Read TAG's article in Ai Magazine

www.africainvestor.com

The question is: How big is Rwanda’s sweet tooth?

The Challenges:

Tourism in Rwanda, like many other African countries, is not without its challenges. In Rwanda, human resource development and skills training are not proportionate to the relatively high price for accommodations, dining and park permits. This has created a value-for-money discrepancy that hinders the quality of hospitality that the private sector is currently able to offer. Business owners suffer from a lack of qualified applicants and rely heavily on training employees in-house or on bringing in staff from neighboring countries. A more critical issue might be found in the country’s greatest tourism asset: the mountain gorillas. There are a total of fifty-six permits available each day to visit the gorillas, representing 20,440 permits a year; conservation concerns and environmental restrictions keep the number of daily permits from increasing significantly. In 2008, there were almost 20,000 visitors to Volcanoes National Park, gorilla trekkers accounting for roughly 85% of those (17,000).^[3] As the allure of the mountain gorillas continues to swell, the demand for permits will eventually exceed the supply available, which is now the case during peak trekking seasons. Increasing the already high price for a permit ($500 per person) is an option but will only be advantageous to a certain point, after which clients will simply choose to trek elsewhere—trekking is also available in the Ugandan and the DRC sections of the park. Revenue from gorillas will reach a point of saturation, where the exponential rise in profit, which has marked the last decade, will ultimately mature.^[4]

Still another issue of concern is the ‘cherry-picking’ of Rwanda’s mountain gorilla asset by neighboring countries. Tour operators from these countries, whose tourism markets are well-established and bring in millions of visitors every year, take clients into Rwanda for the shortest amount of time as is necessary to trek the gorillas and return to their country’s ‘safari’ experience. This trend points to a crucial problem in Rwandan tourism, namely, the lack of complimentary experiences available to entice tourists to prolong their visits. The average length of stay for high-end visitors in Rwanda is just over three nights with an average spending rate of $500 a day.^[5] This statistic is especially astounding considering the heavy amount of travel time necessary to get to Rwanda in the first place—which is a problem in itself. Simply increasing the average length of stay for high-end visitors from three to, say, six nights, would make an immediate and decisive impact on Rwanda’s tourism industry.

The key is creating experiences worth staying for…

The Potential:

Rwanda’s over-reliance on the gorilla market is not without genuine reason. The country’s other tourist attractions, including two other national parks, twenty-three lakes, and a number of cultural and community-based initiatives, have largely remained underdeveloped and underutilized. However, this trend is set to change in the near future as the Government has recently recognized six high-potential tourism locations, dubbed Destination Management Areas [DMAs], that are to be sustainably developed, maintained and marketed by both public and private entities.^[6] The potential of these DMAs, as attractive and profitable tour destinations, is far greater than their current earnings might suggest. Let’s take a look at the country’s two other national parks, Akagera and Nyungwe—destinations offering two very unique and authentic Rwandan experiences.

One of the oldest national parks in Africa, Akagera was gazetted in 1934. Rwanda’s only true savannah terrain, Akagera was well known for its rich wildlife, unique vegetation, and massive wetland systems. The permanent water supply from the wetlands allowed animals to stay near the park year round instead of making long, annual migrations in search of fresh water and grass. This attribute made Akagera an ideal park for viewing (and hunting) big game. In the 1970’s and 80’s Akagera dominated Rwanda’s tourism market, accounting for an average of over seventy-three percent of total park visits between 1974 and 1989.^[7] Conversely, the years leading up to and following the genocide of 1994 saw the near destruction of the park due to high instability, encroachment and poaching. The park’s original size of 2500 sq. km was reduced almost two-thirds to roughly 1000 sq. km, and much of the rich wildlife that made Akagera such a popular destination was lost.^[8]Recently, however, the RDB signed a renewable, twenty-year joint partnership with African Parks Network, an accomplished South African based non-profit managing nearly 2,500,000 sq. km of protected area in five different African countries. The public-private partnership created Akagera Management Board, a body mandated to manage, oversee, and facilitate the restoration of the park to its former glory. Initial strategies include: improving law enforcement, constructing a state-of-the-art electrical fence, reintroducing key wildlife (making Akagera once again a Big Five reserve), educating and empowering local community members, and building a luxury game lodge or tented camps within the park.^[9]

Nyungwe Forest became a national park in 2005 (although it became a forest reserve in 1933) and is one of Rwanda’s most exceptional destinations. The park is located along the Albertine Rift, a series of mountain ranges regarded as one of Africa’s most important conservation hotspots due to its plethora of biodiversity and endemic species.^[10] Nyungwe covers almost 1000 sq. km and reaches elevations of up to 3000 meters. This mountainous, high-altitude rainforest is extremely rich in biodiversity, claiming over 280 avian, eighty-six mammal, and thirteen primate species.^[11] Nyungwe Forest is also said to be the location of the ‘truest’ and most remote source of the Nile River.^[12] Recent development of the park has led to a network of hiking trails, guided chimpanzee and colobus monkey treks, and a brand new canopy walk that stretches ninety meters long and as high as fifty meters above the ground. In addition, a new five-star lodge is now operating just outside the park, which is swiftly becoming the staple of Rwandan luxury and hospitality.

The ‘gorilla-only’ knock on Rwanda as a destination doesn’t feel so ominous after looking at these two diamonds in the rough. Are we beginning to salivate?

The Solution:

The key to gaining a profitable and sustainable competitive advantage is in the successful positioning of Rwanda as a distinctively unique package, an amalgamation of three (and potentially more) of the most diverse and extraordinary experiences available anywhere in Africa. Adhering to Aristotle’s famous saying, the whole, in this case, is truly more than the sum of its parts. Thus, the true value of the iconic mountain gorillas lay not in its potential to bring in exponential returns, but in its goodwill—that is, in its intangible worth as Rwanda’s key, and most recognizable, attraction. The future success of Rwandan tourism is contingent upon both the public and the private sectors’ ability to bring the country’s most promising tourism assets to an elite and competitive level, while effectively branding them as such. If accomplished, East African competitors will no longer be able to ‘poach’ on the gorillas, because visitors will know Rwanda as a destination in and of itself— a clean, safe and stable country worthy of a full-length adventure.

Ultimately, potential must yield to product, talk must yield to action, and dreams must become reality. Rwanda’s hunger will then be satisfied—with a fat piece of pie.

Griffin Richards is the new Hospitality Coordinator at Bridge2Rwanda. He spent the last year running Discover Rwanda, a tour company based in the Northern Province.

Photo of leopard by Bryan Havemann

References

Havemann, Bryan. “Interview with Project Manager– Akagera National Park.” Telephone interview. 16 Feb. 2011.

Mugisha, Ivan R. “Rwanda Named Top Tourist Destination.” New Times. 10 Feb. 2011. Web. 11 Feb. 2011. <http://www.newtimes.co.rw/index.php?issue=14534&article=38292>.

Mushinzimana, Serge, Yvette Ingabire, and Joel Rudasingwa. Rwanda Visitor Satisfaction Survey. Rep. Comp. OTF Group. May 28, 2010. Print.

Nielsen, Hannah, and Anna Spenceley. The Success of Tourism in Rwanda – Gorillas and More*. Rep. World Bank and SNV. Apr. 2010. Web. 17 Feb. 2011.

Nyungwe National Park – Nyungwe Forest – Antioch University New England. Web. 17 Feb. 2011. <http://www.nyungwe.org/>.

“Quest for the Source of the Nile : Image of the Day.” NASA Earth Observatory : Home. Web. 17 Feb. 2011. <http://earthobservatory.nasa.gov/IOTD/view.php?id=7236>.

Republic of Rwanda. Ministry of Trade and Industry. Rwanda Tourism Policy. Kigali, 2009. Web. 10 Feb. 2011.

Republic of Rwanda. Project of the Republic of Rwanda/ United Nations World Tourism Organization. Sustainable Tourism Development Master Plan for Rwanda–Final Report. May 2009. Print.

Republic of Rwanda. Rwanda Development Board. Tourism and Conservation. Highlights on National Parks Visitation in Rwanda-2009. Kigali, 2009. Web. 09 Feb. 2011.

Republic of Rwanda. Rwanda Development Board. Tourism and Wildlife Conservation. Highlights of Tourist Arrivals in Rwanda-2009. Kigali, 2009. Web. 10 Feb. 2011.

Republic of Rwanda. Rwanda Office of Tourism and National Parks (ORTPN). Rwanda Office of Tourism and National Parks (ORTPN) Strategic Plan 2009-2013. By AH Consulting. January 2009. Web. 10 Feb. 2011.

Rwanda Tourism. Web. 17 Feb. 2011. <http://www.rwandatourism.com>.

Thomson, Matthew, and Hubert Danso. “Beached Prospects.” Africa Investor. 01 Jan. 2011. Web. 10 Feb. 2011. <http://www.africainvestor.com/article_mag.asp?id=8161&magazineid=46>.

Wildlife Conservation Society. “Albertine Rift Programme.” Home. Web. 15 Feb. 2011. <http://www.albertinerift.org/>.

1. ^[1] Mugisha, Ivan R. “Rwanda Named Top Tourist Destination.” New Times. 10 Feb. 2011. Web. 11 Feb. 2011. ↩
2. ^[2] Thomson, Matthew, and Hubert Danso. “Beached Prospects.” Africa Investor. 01 Jan. 2011. Web. 10 Feb. 2011. ↩
3. ^[3] Nielsen, Hannah, and Anna Spenceley. The Success of Tourism in Rwanda – Gorillas and More*. Rep. World Bank and SNV. Apr. 2010. Web. 17 Feb. 2011. ↩
4. ^[4] The following list of problems facing the tourism industry is by no means exhaustive. Rather, they are the problems I feel present the most formidable obstacles to ‘getting a slice of the pie’. ↩
5. ^[5] Ibid. ↩
6. ^[6] Republic of Rwanda. Project of the Republic of Rwanda/ United Nations World Tourism Organization. Sustainable Tourism Development Master Plan for Rwanda–Final Report. May 2009. Print. ↩
7. ^[7] Republic of Rwanda. Rwanda Development Board. Tourism and Conservation. Highlights on National Parks Visitation in Rwanda-2009. Kigali, 2009. Web. 09 Feb. 2011. There were 228,099 park visits from ’74-’89 and 167,559 were to Akagera. ↩
8. ^[8] Nielsen and Spenceley. ↩
9. ^[9] Information courtesy of Sarah Hall, Marketing and Tourism Development Manager for Akagera Management Company. ↩
10. ^[10] Wildlife Conservation Society. “Albertine Rift Programme.” Home. Web. 15 Feb. 2011. ↩
11. ^[11] Nyungwe National Park – Nyungwe Forest – Antioch University New England. Web. 17 Feb. 2011. ↩
12. ^[12] “Quest for the Source of the Nile : Image of the Day.” NASA Earth Observatory : Home. Web. 17 Feb. 2011. ↩

“The Backbone of a New Rwanda”

Read President Paul Kagame’s ”The Backbone of a New Rwanda” published in Michael Fairbank’s In the River They Swim:

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And Fairbank’s article published by the The Washington Post, ”Rwanda’s president leads an inspiring turn-around” :

Click to read...

Murdock is a syndicated columnist who visited Rwanda and The Isoko Institute in December of 2010, and has subsequently published a few pieces of his observations. Murdock’s columns commonly appear in The New York Post, The Boston Herald, The Washington Times, National Review, The Orange County Register and many other newspapers and magazines in the United States and abroad. His political commentary has aired on ABC’s Nightline, NBC’s Nightly News, CNN, Fox News Channel, MSNBC, PBS, and other television and radio news outlets.

Deroy is a hard-hitting political observer who pulls no punches.

Watch Part 1: Rwanda’s Free Market

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View ISOKO's gallery of the Nyungwe Forest Tea Plantation

If private enterprise, rather than charity, is the sustainable solution to poverty in Africa, then how do Americans help? One innovative idea taking root in Rwanda is to draw faith-motivated U.S. businesspeople to the country to lend their talent and invest their resources to promote entrepreneurship and private sector growth. This essay journals the transformation of one boomer-age American entrepreneur as he reignites his passion, redefines success in business into a divine calling and encourages the next generation to fuse a social mission into their careers.

My granddad was a cowboy preacher that dedicated his life to God and to ministering to the hardscrabble working poor of the Texas Panhandle. My dad was a milkman and my parents were small family entrepreneurs. I grew up thinking that I could choose one life or the other. I chose business.

Today, I get to do both. Seven years ago, I decided to set aside my comfortable position at a private investment firm to devote myself to building businesses and supporting education in Rwanda – a tiny, poor and inspiring country in the heart of Africa. While faith calls and challenges me to do what I do, no one confuses me with a pastor.

Halftime

I always wanted to be a “deal” man and entrepreneur. For 22 years after college, I worked as a corporate tax consultant, investment banker, entrepreneur and finally, as the CEO of a private company that distributed truck and trailer parts. I sold the business when I was 46 years old; inexplicably lost my passion to do another big deal; and entered a season of life called “halftime”.

Bob Buford, a successful businessman and protégé of the management guru, Peter Drucker, coined the term “halftime” to describe the common experience of thousands of successful business people when they reach middle age–and get the surprise of their life. They look around and instead of savoring their success, they wonder what it all means. In his books, Halftime and Finishing Well, Buford advises: “For ‘Halftimers’ to reignite their passion and to finish life well, they must move from success to significance…in their second half, they will need to find a mission that allows them to use their time and talent in service to others.” For people of faith, it often means finding God’s call on their lives.

In his book, The Call, Os Guinness asks the question,

“God’s calling is the key to igniting a passion for the deepest growth and highest heroism in life. Do you want to accept a challenge that will be the integrating dynamic of your whole life? One that will engage your loftiest thoughts, your most dedicated exertions, your deepest emotions, and all your abilities and resources, the last step you take and the last breath you breathe? Listen to Jesus of Nazareth; answer his call.”

During my personal “halftime” experience, I began to realize that passion is not self-inspired, but actually a gift from God–a mysterious divine gift of consuming purpose and energy–that seems to come and go of its own accord. I also became convinced that to get my passion back, I would need to redefine my idea of success and align my priorities with what God valued.

My dilemma: Does God really care about business? I was willing to change my life to get my passion back. But I loved being an investment banker and entrepreneur – it’s what I do and who I am. For me, the critical question became, “If I make myself available to work full-time for God, how will He use me? Can building businesses be Kingdom work?”

Business as a Kingdom Venture

Business as a vocation for the followers of Jesus has always been a subject of considerable reflection, even for the leaders of the early Christian church. St Augustine of Hippo, the influential fourth century African bishop, offered support for believers working in the marketplace. He taught that sinfulness is not inherent to any occupation, including commerce, but it is up to the individual to live righteously. Augustine regarded private property as a natural condition and approved of “profit” because it is natural and lawful for “you wish to buy cheap, and sell dear.”

Over the centuries, trade, commerce and private enterprise have had a massive impact on transforming the world. Europe’s ability to explore and dominate the globe beginning in the sixteenth century is often attributed to the rise of capitalism – the economic system that originated in Europe which significantly increased human productivity, investment capital and technical and organizational innovation. What is less well known is the important role the medieval Christian church played in capitalism’s birth.

In The Victory of Reason, author Rodney Stark contends that Catholic monks in the early ninth century were responsible for developing the earliest forms of the modern commercial enterprise. Despite having forsaken worldliness, these entrepreneurial monastic estates were vitally intent on creating wealth to ensure their own long-term financial sustainability. Motivated, disciplined and literate, the estates flourished by introducing productivity gains, new technology, merit-based management, specialization and trade. Led by men who had surrendered their lives to God, the monasteries grew prosperous and became the early entrepreneurial engines that raised the economic tide for their communities and Europe.

In the documentary, Call of the Entrepreneur by the Acton Institute, Rev. Robert Sirico expresses the view that entrepreneurship is a divine vocation reflecting God’s creative image:

“When God fashioned man from the dust of the earth and breathed into him the breath of life and spoke those first words of vocation to the human family, He invited us to be co-creators with  Him…working with Him in the continuation of the creation of the world. What an awesome vocation that is.”

Classic entrepreneurs are visionary, driven individuals – motivated by the desire to create something where nothing exists. True entrepreneurship is not a zero-sum game that requires someone to lose, but rather a way of orchestrating the talent and energy of others to create something of value – new wealth. Entrepreneurs create products, services, jobs and expand economies. They improve people’s lives. To compete, entrepreneurs must focus on satisfying the needs and desires of others. They are tested by the marketplace, and they are rewarded for how well they serve their fellow human beings.

I had the answer to my question: Of course God cares about business…He cares about every aspect of our lives. The more important question is “will entrepreneurs – who organize, manage and assume the risks and challenges of creating businesses and private enterprises – accept the divine call to be a driving force in God’s transforming work on earth?”

God Lives with the Poor

When I began searching for what God wanted of me, I received some unsettling counsel from a Rwandan bishop: “Our country needs jobs and a vibrant economy or our best and brightest will leave. You’re a businessman. You’ve spent your whole life buying, financing, building and selling businesses. Why don’t you spend the rest of your life building businesses in Rwanda?” Having never been to Africa, I was intimidated by the challenge but curious about what kind of business would make a difference to a significant number of people in a poor African country.

A few months later, I was introduced to Opportunity International, the world’s largest faith-motivated microfinance organization and a pioneer in the industry. Through Opportunity, I got a crash course in world poverty; entrepreneurship at the bottom of the economic pyramid; and the transforming power of capital, training and group guaranteed lending. I learned that the world’s poor aren’t poor because they make bad choices or are lazy. In fact, they work much harder than I ever did – they just don’t have the opportunities they need.

I learned that poor people in poor countries are more like me and my family than I ever imagined. All around the world, parents simply want to feed, care for and educate their children. They’re not looking for a handout. They want a job or any opportunity to work hard and earn what their family needs. Poverty steals people’s dignity and hope. Business and entrepreneurship create the opportunity for people everywhere to support their families and earn back their dignity. When I finally understood this global reality, God whispered, “Serving the poor is what I value. All your life, I’ve prepared you to help create the opportunity they need.” At that moment, a door opened for me. I grasped the call and my passion returned.

Bridge2Rwanda

Today, I serve as the CEO of Bridge2Rwanda, an enterprise born with the mission “to build a bridge from our world to Rwanda and transform lives at both ends.” We connect, encourage and create opportunities for those called to invest their talent and resources in Rwanda. Over the last ten years, Rwanda has called to invest their talent and resources in Rwanda. Over the last ten years, Rwanda has transition from one of the world’s most failed states to an admired model of results-driven nation-building. Many see God’s divine hand at work in Rwanda and its rebirth as a powerful demonstration to the rest of Africa and the world.

Rwandans dream big and have adopted a strategy of “borrowing talent” from friends around the world to help them accomplish their goals. Bridge2Rwanda mobilizes hundreds of friends from developed countries to visit, invest and lend their talent in Rwanda. Inevitably, the borrowed talent comes away inspired, humbled and transformed.

Preparing the Next Generation

In the early seventeenth century, the island-nation of Great Britain began exporting thousands of its young people in small wooden ships to the four corners of the earth. Their global impact was enormous and enduring. The British Empire and the world’s most successful language, culture, economic system and form of government are a testament to their influence. Is it possible that God is planning a similar global movement to grow and unite His Kingdom?

Over the last sixty years, the private sector in the world’s developed countries has brought about the greatest creation of wealth and improved living standards in human history. This is a magnificent accomplishment that sets up an unprecedented challenge for those of us born and educated in affluent countries. Given what we have, there is growing evidence that God is stirring the hearts of thousands with the call to join with Africa’s leaders and its promising young people to tackle the issues of poverty – with solutions driven by entrepreneurship and private enterprise.

At Bridge2Rwanda, we mobilize people of all ages to go to Rwanda. However, the group most passionate about investing their lives is Millennials, young people 18 to 32 years of age. Motivated by faith, compassion, adventure and the desire to live a life of meaning, today’s daring young people, like the world changers of the British Empire, are willing to move beyond their comfort zones to find significance. They are determined to become excellent professionals, to learn how to create wealth anywhere in the world and to fuse a social mission into their lives and careers.

As an American boomer-age businessman riding the wave of this divine movement, how do I best contribute? What role do I play? Following the advice of my friend, Bob Buford, I have set out to be an encourager…”In this season of life, your job is to release and direct energy, not to supply it. Like the catapult on an aircraft carrier, you are the force of encouragement needed to get the talent airborne and on their mission.”

The Second Half

My “second half” began with a hunger to rediscover my passion. I took the plunge – made myself available to God and received much more than I expected. Nothing is quite as energizing as a divine challenge that integrates every aspect of your life into a tailor-made mission. I charge ahead everyday believing that the most significant work of my life is still ahead and that my calling is as authentic and significant to the Kingdom as preaching and leading a church.

As I move further into my “second half”, I think a lot about the two men who most inspired my journey: my dad – the joyful entrepreneur, independent and hard-charging; and my granddad – the rugged man of God, surrendered and serving the poor. While they’ve both been gone for years, it lifts my spirit and makes the “impossible” seem possible when I imagine them watching me run this race – both cheering me on.

Dale Dawson is an investment banker and entrepreneur. He serves on Rwanda President Paul Kagame’s Presidential Advisory Council and is the founder of Bridge2Rwanda and Isoko Institute for Entrepreneurship and Strong Societies in Africa. Dale also serves on the boards of Urwego Opportunity Bank of Rwanda and OneHundredX. He is a graduate of the University of Texas and lives in Little Rock.