The Government of Rwanda will launch a $27 million free trade zone at the end of this year in an attempt to diversify exports and redress its widening trade deficit, authorities said on Tuesday 10th November 2009.

The 100 hectare zone will be funded by a public-private partnership and will be the first of its kind in Africa's Great Lakes region, said Alex Ruzibukira, head of the Kigali Free Trade Zone initiative at the state-run Rwanda Development Board.

"Rwanda is very dependent on imports", Ruzibukira told Reuters in an interview. "The free trade zone is part of the puzzle to ensure this imbalance is tackled." Landlocked Rwanda is a member of the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA) trade blocs, but its investment climate and export sector remain constrained by the high cost of transporting goods long distances to and from the Indian Ocean coast.

Rwanda's government hopes to complete a new rail link to Tanzania's main port Dar es Salaam by 2013, as well as building a new international airport and cut power tariffs by a third via hydropower and methane gas plants. Officials say a fibre-optic broadband link to neighbouring Uganda will also be established early next year. "The ultimate hope Rwanda wants to meet is to position this country as a hub so we see a flood of goods and businessmen in this country", Ruzibukira said.

According to a 2006 study by Dubai-based consultancy group Jafza, the free trade zone project will create 3,000-5,000 new jobs and help Rwanda capture more market share in a region that boasts a purchasing power of $1-2 billion in "fast-moving consumer goods" and another $1.5 billion in "consumer durables". Based on reforms implemented last year, Rwanda earned the top global reformer award in the World Bank's 2010 "Doing Business in Africa" report, jumping 76 places to 67th globally.

Following double-digit economic growth last year, the World Bank says the global financial crisis badly dented Rwanda's exports of goods and services. Ruzibukira said 30 companies, including tea and coffee traders, an agro-processing company and a gold smelter, have shown interest in the free trade site.

Duty will be waived on raw materials imports, and firms in the zone will enjoy zero income, corporate and value-added tax.