???? Investing in Rwanda

Welcome to?Alts Sunday Edition ????

Today we've got something very unique for you.

Back in February, we wrote an issue on?Investing in the Philippines. Some of the most under-discussed opportunities are in investing in other?countries, and based on reader feedback, this was clearly one of the best issues we've ever done.

So today, we're continuing our?international series?with a special report on?Investing in Rwanda ????

Now, my African travels have been limited to Morocco. I've never been to Sub-Saharan Africa, and I don't know the first thing about the scene there.

But our friend?Caleb Maru?does. Caleb fonded?Proximity Ventures, an early-stage venture firm backing the best founders in Africa.

Caleb is?also?the founder of?Tech Safari: A bridge between African tech and the rest of the world. His terrific newsletter is truly the go-to source for all things African tech.

If you're interested in what's happening on the world's largest continent, Caleb and his community are all over it. Before you do anything else, I encourage you to?subcribe to Tech Safari.

Let's go ????

Rwanda's dark past

When you think about Rwanda, what probably comes to mind is the Genocide against the Tutsi.

In one of the worst humanitarian disasters in world history, the 1994 Genocide against the Tutsis saw the rapid and brutal murder of over?800,000 people?from the Tutsi ethnic groups by Hutu militias.

It ended when the Rwandan Patriotic Front forces, led by?Paul Kagame, took back the country.

But In the last 30 years, Rwanda has made an incredible turnaround from this horrific humanitarian disaster, and has become one of the most stable and rapidly developing countries in Africa.

In fact, Rwanda’s turnaround has seen it dubbed the?Singapore of Africa. And it’s the best place to start our journey on investing in Africa.

And after the brutal humanitarian disaster in 1994, the country has been committed to recovering and rebuilding a stronger nation.

It’s come together under the leadership of one man: Paul Kagame.

Kagame is credited with leading Rwanda's remarkable transformation since the Genocide. He's brought transformative economic growth, stability, and improvements in education and healthcare.

Rwanda is?East Africa’s gem, with a government and a population working together for better outcomes. That sense of community, respect and national pride is evident when you’re over there.

But the best example of it in practice is a tradition called?Umuganda.

What is Umuganda?

Rwanda has been voted the cleanest country in Africa, with its capital Kigali dubbed the?cleanest city on the planet.

Surprised? It’s all because of a holiday called?Umuganda.

Umuganda is a monthly holiday that takes place on the last Saturday of each month. It's all about?mandatory nationwide community work.

Basically, all Rwandans (even expats!) get out onto the street and clean up together for three hours.

And when I say all Rwandans, I mean?all?of them. Remember Paul Kagame (Rwanda’s President)? Yup, that's him here, working the fields.

This perfectly embodies the spirit of Rwanda — a country that has come together to push itself forward and see better outcomes.

And this spirit of togetherness means more than just clean streets; it’s helping propel the entire economy.

Economy

Rwanda’s economy has grown an astounding?7%?each year since 1994. According to Africa Development Bank, Rwanda is?Africa’s top-performing economy.

The foundation of Rwanda’s economic growth is its investment in?infrastructure. Roads, bridges, airports, and energy and water supply expansion and modernization.

They've also invested heavily in developing ICT infrastructure (information and communications), including 2,300 km of fiber-optic cables. This is what has fueled the growth of Rwandan technology companies. (We'll get to the tech scene a bit later)

Rwanda’s economy is a mix of the usual suspects:?gold,?coffee?and?tea. Rwanda is nicknamed the "Land of a Thousand Hills" because of its mountainous landscape. Coffee farming requires hills, so this, in combination with Rwanda's positioning smack in the middle of the "Coffee Belt" makes it the perfect place to grow beans.

Rwanda's economy is still largely agricultural. Most of the population engaged in subsistence farming and other rural livelihoods. But things are shifting. The country is now seeing the most growth in?services,?tourism?and?technology.

Tourism is booming. In 2019 it was the largest source of foreign exchange earnings, and even after Covid it still constitutes?8% of GDP. (To put that in comparison, that's nearly twice as high as the Philippines, a country that's world-famous for tourism.)

Rwanda's investments in?MICE?(Meetings, Incentives, Conferences and Exhibitions) have played a huge factor here. It has invested in building conference centers like the Kigali Convention Center, and sponsoring Arsenal and Paris Saint-Germain football clubs under its?Visit Rwanda campaign.

Gorilla trekking?is a popular tourist activity in Rwanda. The Virunga Mountains, which border The Congo, are home to the world's most majestic and endangered mountain gorillas.?Volcanoes National Park?has grown in popularity since the release of?Virunga, the 2015 true story film produced by Leonardo Di Caprio.

On the east side of Rwanda is?Akagera National Park, with all sorts of big game animals.?I visited in October last year. And while I didn’t see any gorillas, I did spot a lion, many giraffes, zebras, a rhino and even a few hippos.

But Rwanda knows it can’t rely on tourism and commodities forever. This is why the country is seriously investing in its economic growth.

And this is where we can turn our eyes to Singapore’s playbook.

The Singapore Playbook

Singapore, with a small population, small country size, and (also) very clean streets, is the?finance and tech center of Southeast Asia. (Sorry Hong Kong)

Singapore has come a long way. Fifty years ago, it was a poor country with a small population of around 2 million. The majority of the population lived in overcrowded, low-quality public housing estates. Unemployment was high, and there were few opportunities for economic growth.

Their "economic miracle" has centered around three things:

1. Ease of doing business
2. Foreign investment
3. Emphasizing innovation and technology

Rwanda is following the same exact playbook.

Paul Kagame has openly shared his intention of turning Rwanda into the Singapore of Africa, a stable gateway of technology and trade for the entire continent.

Let’s dive into how Rwanda is becoming Africa’s hub for technology and innovation.

1) Ease of doing business

Guess how long it takes you to set up a business in Rwanda?

6 hours. (Compare that to several?weeks?in the US!)

Fast enough for you? Well, it's still not fast enough for the Rwanda Development Board, who is aiming to get that down to 2 hours.

So it’s not surprising that Rwanda ranks?2nd in Africa?(and 38th overall) on the?World Bank’s Ease of Doing Business Report. (Singapore is #2, and New Zealand is #1)

Rwanda is also positioning itself as a startup?launchpad.?The best example of this is?Zipline.

We talked about Zipline in our most issue on?airspace rights. Zipline is a drone company whose objective is to provide every human on the planet with immediate access to critical medical supplies. It's a US company, but thanks to government incentives, Rwanda is where it started drone design and testing.

In 2016 Zipline?piloted blood delivery in Rwanda, signing a deal to build two huge distribution centers in the country. The company has since expanded to Ghana, Nigeria and will eventually test in Japan and the United States.

75%?of medical drone deliveries are powered by Zipline which has improved in-hospital maternal fatalities by 88%.

Mark Rober’s video gives a run down on Zipline, which he thinks is the future of drone delivery. Watch for some insights into his experience in Rwanda, which he is (unsurprisingly) blown away by.

Rwanda Development Board CEO,?Clare Akamanzi, wants Rwanda to become a ‘testing ground’ for ideas and innovation.

Bring your innovation or idea, and we shall give you the environment to succeed with you. Once you succeed, go to the bigger markets and scale up there.

- Clare Akamanzi

And startups across the country are doing just that.

Payday?is another great example.

One of the hardest problems in Africa is receiving cross-border payments. (I’ve experienced that myself, resorting to platforms like Binance to pay employees.)

Payday is a neobank that lets users set up US Dollar and Euro accounts on their phones to receive money. Payday just closed a $3 million seed round led by?Moniepoint?(Africa’s fastest-growing payments company).

Think of them like Africa's PayPal, but with plans to offer more banking products outside of just wallets and payments.

2) Encouraging foreign investment

Rwanda has been busy bringing global investment into the country.

Perhaps most noticeable is?Norrsken?— a non-profit focused on supporting global entrepreneurs, founded by Nilkas Adalberth, the co-founder of Swedish fintech giant Klarna.

Norrsken has set up shop in Rwanda with its?Norrsken Kigali House. This 4,400 sq meter space in downtown Kigali has become the hub of Rwanda’s tech ecosystem.

It’s a self-described ‘hub of hubs’, with startup hubs like?Katapult VC?— an ag-tech accelerator — and the?Novartis Foundation Healthtech Accelerator?(the pharma behemoth's non-profit arm)

In January 2022, Norrsken announced a?$200 million fund for African startups, and they've already made investments in two Rwandan companies:

1. Viebeg Technology, an AI-powered procurement platform for medical companies, and
2. PesaChoice, a fintech that does salary advances for employees.

This is great news! However, despite the push for more investment, Rwanda’s startup funding in 2022 was a paltry?$4 million. (That's just?$3.25 per citizen, compared to $4.58 in the Philippines, and $725 in the US!)

And while startups like Payday and Zipline have raised large rounds, we have yet to see a?Rwandan?founder raise more than a million. Ouch.

That's it for this preview!

Read the rest at alts.co/techsafari