MR 94 - Rwanda Tourism Value Chain Case Study

RWANDA TOURISM VALUE CHAIN
CASE STUDY
GUIDED CASE STUDIES IN VALUE CHAIN DEVELOPMENT FOR
CONFLICT-AFFECTED ENVIRONMENTS
microREPORT #94
January 2008
This publication was produced for review by the United States Agency for International Development. It was
prepared by Rob Henning, Manager; Neal Donahue, Director and Eric Kacou, Managing Director of the OTF
Group, under the Accelerated Microenterprise Advancement Project Small Grant Facility administered by Pact, Inc.,
sub-contractor to Weidemann & Associates, Inc.

RWANDA TOURISM VALUE CHAIN
CASE STUDY
GUIDED CASE STUDIES IN VALUE CHAIN DEVELOPMENT FOR
CONFLICT-AFFECTED ENVIRONMENTS

microREPORT #94

DISCLAIMER
The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for
International Development or the United States Government.

CONTENTS
EXECUTIVE SUMMARY ........................................................................................................1

I. INTRODUCTION ...............................................................................................................3

II. CONFLICT AND POST-CONFLICT ASSESSMENT.................................................5

III. RWANDA TOURISM VALUE CHAIN ANALYSIS ................................................ 12

IV. VALUE CHAIN FINDINGS.......................................................................................... 29

V. STATEMENT AND ANALYSIS OF THE RESEARCH QUESTIONS .................. 33

VI. RECOMMENDATIONS................................................................................................ 51

VII. CONCLUSION.............................................................................................................. 54
RWANDA TOURISM CASE STUDY ii

ACRONYMS
ADAR Assistance à la Dynamisation de l’Agribusiness au Rwanda
AMAP Accelerated Microenterprise Advancement Program
BDS Business Development Services
BEE Business Enabling Environment
BLCF Business Linkages Challenge Fund (a Volcanoes Safaris project)
BNR National Bank of Rwanda
CMM USAID Conflict Management and Mitigation Office
DFID UK Department for International Development
DRC Democratic Republic of Congo
EE Enabling Environment
FL Firm-level
GDP Gross Domestic Product
GoR Government of Rwanda
IFC International Finance Corporation
IT Information Technology
ITB ITB Berlin International Tourism Fair
MDGs U.N. Millennium Development Goals
MIJESPOC Ministry of Culture
MINICOM Ministry of Commerce
MSE(s) Micro and Small Enterprise(s)
NDA New Dawn Associates
NGO Non-governmental Organization
OTF OTF Group, Inc. A US-based emerging market advisory services firm
ORTPN Rwandan Office of Tourism and National Parks
PEARL Partnership to Enhance Agriculture in Rwanda through Linkages Project
PNN Parc National de Nyungwe (Nyungwe National Park)
PNV Parc National des Volcanoes (Volcanoes National Park)
PR Public Relations
PSF Private Sector Federation (apex organization)
RACE Rwanda Accelerated Competitiveness and Execution Project
RBS Rwanda Bureau of Standards
RIEPA Rwanda Investment and Export Promotion Agency
RMC Radio Milles Collines
RNIC Rwanda National Innovation and Competitiveness Project (OTF project)
RPF Rwandan Patriotic Front
SNV Stichting Nederlandse Vrijwilligers (Foundation of Netherlands Volunteers)
SPREAD Sustaining Partnerships to enhance Rural Enterprise and Agribusiness Development
TWG Rwanda Tourism Workgroup
UK United Kingdom
USAID United States Agency for International Development
UN United Nations
VCA Value Chain Approach
VEM Visitor Experience Model
RWANDA TOURISM CASE STUDY iii

KEY DEFINITIONS
OTF Group 5-Step Process: This is OTF’s standardized approach to value chain interventions. There are a few key
differences between this approach and USAID’s value chain approach. One is the significant focus on the process in
terms of forming industry workgroups and facilitating dialogue between various stakeholders in the sector and
another is the emphasis on industry-level versus firm-level assistance or general business enabling environment (BEE)
interventions. In the OTF project design and overall approach, business development services (BDS) are assumed to
be handled by partners. In the case of BEE, OTF intervenes on industry-specific BEE issues, but does not tackle
general issues such as financial sector reform or reducing the cost of doing business.
Experiential Tourism: In this model, visitors are exposed to and have an opportunity to interact with a wide variety
of enterprises. There are both pros and cons to this model. The positive impact is that tourism spending is more
broadly distributed throughout the economy, but the negative impact is that quality standards and experiences can
vary widely. This is in sharp contrast to enclave tourism, whereby visitors are largely sequestered within the confines of a
particular resort. The total economic impact of enclave tourism is substantially less than experiential tourism for two
reasons: first, visitors are dissuaded from engaging the local culture and therefore do not have the opportunity to
transact with local merchants or service providers and second, the enclaves are typically developed by, or in
partnership with, foreign investors who tend to direct as much revenue as possible to their home country rather than
the destination. OTF strives to develop experiential tourism strategies for its clients to maximize local impact and
profitability.
Rwanda Tourism Workgroup (TWG): The TWG is an industry group, facilitated by OTF Group, whose members
are tourism professionals from the public and private sectors.
Micro and Small Scale Enterprises (MSEs) in Rwanda: A recent World Bank report on Rwanda defines an MSE
as any firm with 30 or fewer employees. This covers an estimated 95 percent of the firms that participate in the TWG
and in Rwanda’s tourism sector, in general.
Enabling Environment Approach (EE): EE is an initiative or project that attempts to address large systemic
problems in a country business enabling environment (BEE). Examples of such projects might be focused on
property rights, financial sector reform, customs modernization, or tax code streamlining.
Value Chain Approach (VCA): For the purposes of this document, VCA applies to OTF’s version of the Value
Chain Approach—the 5-Step Process.
Firm-Level Approach (FL): Traditional BDS projects deliver direct assistance to companies with project resources
or through intermediaries.
RWANDA TOURISM CASE STUDY iv

EXECUTIVE SUMMARY
In 2001, skeptics thought that the notion of building the competitiveness of Rwanda’s tourism industry was laughable.
Handicapped by a legacy of genocide and its isolated location in the heart of Africa, most assumed that the country
was too dangerous, too far away and too expensive to attract tourists. To overcome the serious constraints facing the
tourism sector, OTF Group implemented its 5-Step Process for Industry Development, a participatory and data-
driven value chain approach. Six years later, Rwanda’s tourism sector has had a renaissance. Receipts are surging, the
mountain gorilla is a world-renowned attraction and the country won first prize at a major international tourism fair
for “Best African Exhibitor” in 2007. This case study delves into the details OTF’s use of the value chain approach
(VCA) to mobilize the tourism sector and transform it into a cornerstone of Rwanda’s post-conflict reconstruction
and reconciliation process.
OTF has a long and ongoing relationship advising the government and private sector of Rwanda on the
competitiveness of three key export sectors: coffee, tea and tourism. This case study draws on the direct experience of
two OTF research team members facilitating the tourism workgroup (TWG), an informal body composed of public
and private sector tourism professionals, and the research and analysis the OTF team conducted. While writing the
case study, the team also interviewed TWG members to pinpoint areas of relative strength and weakness in OTF’s
application of the value chain approach. Both the experience and analysis were customized to address the research
questions, which the technical team asked OTF to explore in order to better understand the impact of upgrading
Rwanda’s tourism sector in rebuilding its overall economy.
• Research Question 1: How can value chain analysis and the value chain framework help us identify and
understand the major opportunities for upgrading and the driving constraints to market growth exacerbated
by, or resulting from, conflict?
• Research Question 2: How can stakeholders be encouraged to adopt longer range “win-win” rather than
short term “win-lose” strategies, particularly in shortened decision-making time horizons?
The overarching conclusion from Research Question 1 is that the value chain approach helps identify both
opportunities for and constraints to upgrading by taking a holistic view of an industry. In the case of Rwanda tourism,
this is particularly true because of the complex set of actions and relationships required to move from a stagnant to a
competitive position in the global tourism market. To create maximum value at the national, industry and firm level,
OTF needed to ensure that the strategy generated by the approach simultaneously created significant overall receipts
and had a positive impact on the profitability of the full range of businesses that comprise the tourism value chain. As
noted above, there has been progress in Rwanda’s tourism sector, but the approach did have its shortcomings.
Despite the dramatic turnaround of the sector, failure to implement standards and training programs threaten the
long-term growth of the industry. OTF believes that this lack of progress is due to the absence of dedicated tourism
business services providers. Progress on the enabling environment has also been limited. Although OTF has had
some limited success in improving access to finance, Rwanda is considered a difficult place to do business due to
elevated interest rates, high tax rates compared regional competitors and the astronomical costs of starting a business.
Again, OTF did not budget sufficient resources to address these “big” BEE issues in the original project design.
In response to Research Question 2, Rwanda tourism provides a clear picture of how a participatory VCA can help
create a common vision and productive relationships that promote competitiveness among specific value chain actors.
Examples include improved public-private dialogue, collaborative product development, mechanisms for validating
high-impact decisions and a value chain-wide ability to choose the segment best suited to build sector
competitiveness. Early success in a post-conflict situation relies on quick-wins such as attendance at a major tourism
trade fair and rapid restructuring of the tourism board to provide support and public sector leadership to the sector.
RWANDA TOURISM CASE STUDY 1

The shortcomings of OTF’s value chain approach became apparent when implementing initiatives related to cross-
cutting issues such as training and building collaborative relationships across ethnicities.
There are several overarching insights stemming from this analysis. One is that to rebuild the trust and relationships
required for competitiveness in post-conflict economies, programs that adopt a VCA should create and regularly
convene industry workgroups. Additionally, to engage and motivate the workgroup, implementers must carefully
analyze the sector to identify quick-win activities that can solve value chain-level constraints or generate higher profits
for a broad range of stakeholders. Based on the Rwanda tourism case, the sector can be an excellent one to target for
post-conflict development because low economies of scale permit broad participation of MSEs, and there is potential
to generate rural off-farm employment. However, it could be difficult to duplicate Rwanda’s tourism success in other
post-conflict environments due to a lack of security and stability and/or of the existence of a world-class tourism asset
like mountain gorillas.
This case study clearly shows that, in the context of post-conflict Rwanda, a VCA to support the growth of the
tourism industry was instrumental to its success. It also shows the critical need to tie value chain activities to technical
and financial assistance at the firm-level (FL) and at efforts to improve the BEE. In the end, OTF learned that there
are never enough resources to solve all the problems of a post-conflict society as quickly as people would like and that
when resources are scarce, using a VCA and allowing it to drive FL and EE efforts can be both rapid and cost
effective.
Hard work by a broad range of stakeholders and good analysis have transformed Rwanda’s tourism sector over the
past six years. Going forward, success at alleviating structural constraints at the industry level must be complemented
by the upgrading of firm-level skills and general improvements in the business environment. If the synergy of these
interventions can transform Rwanda’s tourism sector, the industry could become a global model for the strategic
repositioning of the country and provide tangible economic benefits for stakeholders at all levels—from large
companies and government agencies to MSEs and rural tourism workers and their families.

I. INTRODUCTION
Rwanda conjures up gruesome images of genocide due to the events of 1994. Although the genocide officially lasted
only 100 days, the damage done to the country’s physical and social fabric was enormous. As OTF began its
engagement with Rwanda’s tourism sector in 2001, seven years after the genocide, reconstruction was well underway,
but the conflict continued to adversely affect the country and the industry. Details of these lingering effects are below,
but the main incentives to violence encountered then, and still present today, are increasing population density and
growing income inequality.
In 2001, tourism was not an obvious choice for a value chain intervention by government and donors. Never a major
foreign exchange earner compared to coffee and tea, tourism was treated as a secondary activity by conservation
NGOs during most of Rwanda’s recent history. When OTF began its project in 2001, there was little or no interest on
the part of international donors to support development of the sector. Given the country’s recent history and the
almost constant security risk postings issued by the diplomatic community in Rwanda, many considered it almost
laughable to view tourism as a serious industry to develop. However, by 2007 this attitude and support for the tourism
industry had changed completely as the private sector and government-driven re-launch of the industry sparked the
interest of numerous international donors, including USAID, DFID, SNV and the World Bank. The latest and most
hands-on of these efforts is a multi-year USAID effort to upgrade tourism in Nyungwe Forest, an important
component of Rwanda’s overall primate experience.
In the relief to development continuum, OTF’s project should be considered almost purely development. Although
certain adjustments were made to address the post-conflict situation, the overarching focus of the value chain
intervention was to build the long-term competitiveness of Rwanda’s tourism industry. Although the project team did
engage in short-term “quick win” activities, no typical basic needs/relief activities were built into the project.
OTF Group has been implementing a competitiveness project in Rwanda since 2001 with the Government of
Rwanda (GoR) as the direct client. The primary focus of two projects, the Rwanda National Innovation and
Competitiveness Project (RNIC) and the follow-on Rwanda Accelerated Competitiveness and Execution Project
(RACE), has been to build the competitiveness of three priority export sectors (coffee, tea and tourism) and to instill a
culture of competitiveness at the national and industry levels. The genocide impacted OTF’s project in both
profoundly positive and negative ways. On the positive side, the genocide and its economic impact created a useful
tension at all levels of the economy that made value chain actors very receptive to change and new ideas. This made it
easy for OTF to engage and mobilize stakeholders. Second, relevant private and public sector stakeholders at all levels
created a focused leadership team committed to the reconstruction of the country and willing and able to facilitate
acceptance of the project and its recommendations. Negative impacts of the conflict were partially destroyed
infrastructure, a crippled financial system, weak institutions, lack of skilled human resources, limited knowledge of
international markets and a survival culture focused on short-term gain over long-term competitiveness.
This case study focuses exclusively on Rwanda’s tourism value chain and OTF’s six years of past and ongoing
experience in implementing its version of the value chain approach, the 5-Step Process. At project inception, the
tourism industry was in shambles. International tourists were repulsed by the country’s recent, violent past and the
few travelers who came only to see mountain gorillas avoided spending even one night in-country. OTF addressed
industry challenges using its 5-Step Process to conduct sorely needed research and analysis for the sector and to create
the Tourism Workgroup, an informal body consisting of tourism professionals from the public and private sectors.
Together with OTF, the TWG articulated a vision of high value and environmentally friendly tourism in Rwanda
based on two products, eco- and cultural-tourism. Implementation began in 2002, after the TWG and Rwanda’s
cabinet validated the vision and strategy for the tourism sector. Since then, the sector has enjoyed considerable
success in developing its mountain gorilla product and improving its image in the international marketplace. Overall,

major issues such as training and product diversification have lagged, putting in jeopardy the long-term sustainability
of the industry. These challenges and potential solutions are detailed later in the study.
This case study draws on OTF’s six years of experience in Rwanda’s tourism sector, including desk research, end
market surveys, dozens of TWG meetings and hundreds of individual meetings with tourism stakeholders. The study
team comprises Eric Kacou and Rob Henning, both with direct experience in Rwanda tourism; Neal Donahue, a
tourism strategy expert; and Ruth Ishimwe who provided in-country administrative and analytical support.

II. CONFLICT AND POST-CONFLICT

ASSESSMENT
THE RWANDAN GENOCIDE IS INFAMOUS; THE FACTORS THAT
CAUSED IT ARE LESS OBVIOUS
The horror of the Rwandan Genocide is infamous, with the massacre of approximately 800,000 Tutsis and moderate
Hutus (or 11 percent of the total population) over the course of 100 days from April to July 1994. Less well-known
and understood is the nearly “perfect storm” of incentives for violence, conflict mobilization and expansion dynamics
that was present at the time and the fact that state and non-state institutions played a role in fostering and contributing
to the violence. Using the USAID Conflict Management and Mitigation Office (CMM) 1 framework, this section
provides a brief overview of the factors that contributed to the 1994 genocide and a glimpse of how these underlying
factors have changed (or not changed) in post-genocide Rwanda.
THE FOUR P’S OF RWANDA’S GENOCIDE

A combination of long-term and proximate causes triggered the genocide. Based on a selective review of available
studies, these factors can be classified as poverty, population, politics and propaganda—the four P’s.
POVERTY
The 1970s and most of the 1980s were good economic times for Rwanda. Following the bloodless coup that brought
Juvenal Habyarimana to power in 1973, the country became a magnet for foreign assistance. For the most part, the
government invested this money wisely in agricultural infrastructure such as terraces, critical infrastructure such as
roads and electricity and, most importantly, in education. This investment led to a short spurt of agricultural
productivity increases in the early 1980s. 2 Despite these relatively good times, high population growth meant that per
capita GDP growth was marginal, with consistent declines beginning in the late ’80s. This poor performance was
driven by the lack of an effective economic growth strategy that emphasized reducing poverty more than increasing
growth and a government focused on social equity (dividing what could be considered a fixed pie) over economic
growth (growing the pie). Ideally, any government finds a balance in its policies between enabling the growth of MSEs
and ensuring that the largest possible swath of the population benefits from this growth. Global commodity markets
determined Rwanda’s fate rather than the country implementing an assertive strategy to make choices about what
customers to serve and how to configure its industries to win in these market segments. In the case of coffee (and to a
lesser extent other commoditized agricultural products), traders in faraway places such as New York, Chicago and
Mombasa set a price for Rwandan products completely outside the control of Rwandan firms and the government.
Starting in 1986, Rwanda’s economic boom times came to an abrupt halt when world coffee prices crashed,
devastating export revenues for the country’s largest foreign exchange earner. In addition, coffee was (and remains)
the largest employment sector, with 400,000 families (roughly 2 million people) dependent on the success or failure of
the coffee industry for their livelihoods. This meant that any downturn in the price of coffee created major economic
and social impacts on the country. Coupled with the drought of 1988-89, this slowed agricultural even more output
and impacted nearly all Rwandans. In response to the continued slump in coffee prices, the government cut spending

1 The guide to this analysis can be found at: http://www.usaid.gov/our_work/cross-
cutting_programs/conflict/publications/docs/CMM_ConflAssessFrmwrk_8-17-04.pdf
2 “In the Kingdom of the Gorillas,” pg 314, Bill Weber and Amy Vedder, Simon and Schuster, 2001.

by 40 percent, which further aggravated the economic crisis. The devaluation of the Rwandan Franc by 40 percent
(and even higher on the black market) as part of an IMF structural program increased inflation, the cost of food and
hardship, especially for the poor, who suffered disproportionately, 3 and led to deprivation for the most other
Rwandans.
POPULATION
Rwanda’s high altitude, temperate climate and fertile soils have attracted three different populations over the
centuries. Beginning about 2,000 years ago, Bantu farmers from West Africa arrived in what is now Rwanda. Mainly
agriculturalists, these immigrants became the modern day Hutus. Their most important contribution to the country
was the domesticated banana, a perennial crop well suited to Rwanda’s climate that remains a staple in modern times.
The Twa, a hunter-gatherer race most likely preceded the arrival of the Bantus by 1,000 years. Although they entered
into barter arrangements with the new arrivals, the Hutu’s agricultural background quickly began to marginalize the
Twa and pushed them into less favorable, mainly mountainous regions of the country. The final major migratory
event for Rwanda was the arrival of the pastoralist Tutsis. They entered into a symbiotic relationship with the Hutus
whereby their cattle grazed on agricultural waste and fertilized the fields thereby enhancing yields. Currently the ethnic
breakdown is 85 percent Hutu, 15 percent Tutsi and less than 1 percent Twa 4 , and these breakdowns remain roughly
the same for pre- and post-genocide Rwanda.
Figure 1. Population Density (People per Square Kilometer) 1973 - 2005
600
500
Post-genocide growth and security

push population density to 366 / sq
400 km
Pre-genocide: refugee flows and
1973 – 1989: historical peak the genocide reduce population
Population 300 reached at 288 people / sq km density.
density
(people /
square km)
200
100
0
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Source: World Bank Development Indicators Online
Population pressure on the environment already existed when the Germans arrived in Rwanda in 1894 with an
estimated 75 percent of arable land having already been cleared by Hutu farmers. 5 After World War II, the peace
accord process ceded Rwanda to Belgium. Some aspects of Belgian rule also contributed to an increasing appetite for
land with cash crops such as coffee, tea and pyrethrum planted on over 120,000 acres in the mid-1900s in an effort to
provide higher incomes for Rwandans and enhance export revenues. Also contributing to the pressure on the
environment was the introduction of the potato as a food staple, replacing bananas, whose productivity in terms of

3 Ibid, pg 314.
4 “In the Kingdom of the Gorillas,” pg 123, Bill Weber and Amy Vedder, Simon and Schuster, 2001.
5 Ibid, pg. 124.

calories per hectare was far higher. Throughout the post-World War II period, per capita food production in Rwanda
remained stable mainly as a function of land clearing accompanied by investments in agricultural productivity. A major
warning sign of population pressure on the environment came in 1958 when the Belgians removed 20,000 acres of
Virunga National Park and converted it to farmland. By the 1970s, the population growth rate reached 3.7 percent as
fertility rates approached the biological maximum and population density increased to some of the highest in the
world at 500 people per square mile or 1,300 people per square mile of agricultural land. 6 The dual trends of high
population growth coupled with scarce investment in agricultural productivity led to more people competing for a
finite quantity of land. As populations increased, communes ran out of land to allocate and young people found it
difficult to marry, leave home, acquire a farm and set up their own households. Intergenerational conflicts occurred
between children and parents over how to divide scarce resources among family members. Economic pressures also
tested the historic communal support provided by more prosperous members to those doing less well—people
considered prosperous no longer had anything to spare. 7 This decline of resources tore at the social fabric of
communities and created a generation of poor, disaffected and disconnected youth ripe for political indoctrination. 8
POLITICS
Political control of this mountainous nation generated the final long-term factor that contributed to the violence and
genocide. Belgian rule generally maintained control over the country indirectly through the Tutsi. Just before
independence, however, the Belgians encouraged a coalition of northern Hutus to revolt against the Tutsi leadership,
which led to a violent confrontation in 1959. At independence in 1962, a coalition of southern Hutus under the
leadership of Gregoire Kayibanda implemented a policy of systematic discrimination against the Tutsi. Perceived
regional favoritism and national economic decline led to a coup by northern Hutus, led by Juvenal Habyarimana,
whose regime instituted a system of quotas giving Tutsis 10 percent of all government jobs, roughly based on their
percentage of the population. Despite this obvious ethnic discrimination, this regime was generally well liked by the
international community and benefited from significant foreign aid throughout the 1970s and 1980s. When single
party rule began to wear on Western backers, they pressured the Habyarimana government to begin instituting a
process of multi-party democracy. Although the government complied with these demands, the late start and slow
pace of change caused foreign assistance to begin drying up, and parallel economic misfortunes forced many of the
elite to engage in even more corrupt practices to maintain their wealth and lifestyles. Following a Tutsi-led invasion by
the Uganda-based Rwandan Patriotic Front 9 (RPF) in 1990, ethnically motivated killings increased markedly on both
sides, and ethnic divisions emerged as a significant political factor. In addition, the 1993 Arusha Peace Accord
requirements for power sharing increased tensions among Hutu extremists.
PROPAGANDA
The previous three factors contributed to growing tension in Rwanda, and Hutu extremists began to portray the Tutsi
and their moderate Hutu allies as the ones responsible for the problems facing Rwanda. Hate media played a major
role in exacerbating tensions and inciting people to violence, and in 1993, soon after the Arusha Accords were signed,
Radio Milles Collines (RMC) began transmitting its messages of support for the Habyarimana government and
pandering to Hutu extremist groups. RMC portrayed the Tutsi as the root of all evil in the country, a message that

6 Ibid, pg. 130
7 The structure of these social safety nets was generally the same across ethnicities as was the problem of population pressure in
terms of creating more potential recipients of a fixed resource—land. Ethnicity played a role once more as conflict drivers which
encouraged Hutu attacks on Tutsis came into play. At this time, the rural–urban divide was relatively unimportant as the vast
majority of Rwandans lived in rural areas with the major cities comprising less than 10 percent of the population.
8 “Collapse” Jared Diamond, Chapter 10, Penguin, 2005.
9 The RPF rebel force was based in Uganda and comprised both Rwandans from the diaspora and Tutsi who fled Rwanda to join
the force.

played well with a generation of disenfranchised males with no real prospects for success or marriage. Though a
privately-owned radio station, RMC became the de facto mouthpiece of the government and even began broadcasting
the names of Tutsi and Hutu targeted for ethnically based killing. The downing of Habyarimana’s plane as it
approached Kigali on April 6, 1994 was the spark needed to ignite the conflict. Within hours of the incident, the radio
station began actively inciting Hutu extremist groups to exterminate their Tutsi neighbors and moderate Hutu
protectors.
CONFLICT CAPITAL
The organizers and implementers of the genocide had access to sophisticated forms of “conflict capital” to achieve
their goals. Once initiated, the genocide proceeded rapidly because of the emergence of sophisticated assets such as
human resources and traditional organizational structures. Although carried out by mobs with crude weapons, months
of training and zealotry fueled by RMC created a killing machine well suited to the environment.
ORGANIZATIONAL FACTORS
The communal work structures or umuganda 10 in Rwanda provided the perfect cover for concealing the training of the
Interhamwe and other militias who would carry out the genocide. Colonel Theoneste Bagosera, a confidante of the
president’s wife, was heavily involved with coordinating the recruitment of former soldiers and young, discontented
males into the militias. 11
HUMAN RESOURCES
As noted above, increasing population pressure, economic crisis, the AIDS epidemic 12 and the RPF threat created a
cadre of angry young male Hutus who were receptive to the idea of a final solution to the Tutsi problem. Inspired by
RMC and Hutu Power media, this group was a perfect foil for the political ambitions of Hutu extremist groups.
FINANCIAL FACTORS
Rich Hutu businessmen provided enough capital to import one machete for every third Rwandan male. In the
absence of a ready supply of guns and ammunition, these machetes and homemade pangas, or nail studded clubs,
became the weapons of choice for the Interhamwe and other militias. RMC, the private radio station and mouthpiece
of Hutu extremists, was owned by sympathetic Hutu businessmen.
THE STATE’S INVOLVEMENT IN ENCOURAGING CONFLICT RATHER

THAN PROTECTING CITIZENS
In terms of incentives, the inner circle of Habyramina’s regime, including his wife, began a campaign of corruption
and resource grabbing that left the poor worse off than ever before. Their actions included appropriating already
scarce land and donor resources for their personal use, which stoked the anger of, and tension between, the intended
beneficiaries—rural Hutu and Tutsi. 13 Although not targeted specifically at the Tutsi, the propaganda generated in the

10 Although Tutsis were also incorporated into the umuganda structure and were aware of the training that was occurring around
them, their political disenfranchisement meant that they were powerless to stop the organization and training of the Interhamwe.
11 Weber & Vedder, pg. 312
12 Early HIV surveillance in Rwanda documented high HIV prevalence in urban areas with HIV widely disseminated into rural
areas by 1986. Between 1988 and 1996, HIV prevalence among pregnant women ranged from 21 percent to 33 percent in Kigali,
from 8 percent to 22 percent in other urban settings, and from 2 percent to 12 percent in rural settings. Source: “Current Trends
in Rwanda’s HIV/AIDS Epidemic”, Sexually Transmitted Infections 2006; 82(Supplement 1 ):i27-i31
13 Ibid, pg. 315

months preceding the genocide assigned blame to this group. The close collaboration between the government and
RMC is a clear example of the state’s active encouragement of conflict before and during the genocide.
In addition to the existence of incentives for conflict and sophisticated conflict assets, the state and related institutions
created an environment in which violence was encouraged and fostered—not discouraged. As the third leg of the
stool, actions undertaken by the state created tailor-made conditions for the ensuing violence and mayhem.
The state also facilitated access to several forms of conflict capital. While the private sector contributed financial
resources for weapons, the government provided the organizational resources in terms of existing structures like
umuganda, funneling former military into the militias, and training for masses of Hutu youth seeking a purpose in life.
THE ROLE OF INTERNATIONAL SECURITY FORCES AND GLOBAL

ECONOMICS
Outside forces also had a role in the factors leading up to the genocide and the unfolding of events in 1994. Global
commodity markets, international intervention, and trans-border ethnic movement all contributed in positive and
negative ways to the evolution of the conflict.
ECONOMIC
The slump in global coffee prices created a crisis for hundreds of thousands of coffee farmers. Although commodity
prices are cyclical, the timing of this crisis coupled with the IMF-driven devaluation of the Rwandan franc increased
poverty levels and competition for scarce resources.
INTERNATIONAL INTERVENTION
The Western powers have been criticized in hindsight for their lack of appropriate intervention in the genocide.
Although the UN did have a peacekeeping force deployed in Rwanda, the lack of a robust mandate and insufficient
numbers combined to ensure the UN did not help prevent the slaughter. The only major power to intervene in
Rwanda was France, which is accused of providing cover for the Hutu extremists to flee to eastern Congo in the face
of the advancing RPF.
TRANSBORDER ETHNIC MOVEMENTS

The invasion of the Tutsi-dominated RPF in the early 1990s facilitated much of the hate propaganda generated by
Hutu Power media. The presence of a well-trained and aggressive rebel force in-country gave Habyramina’s regime
significant leeway with both Rwandans and the international community to blame the Tutsi for a wide range of
problems. However, once the genocide began, the presence of the RPF ended the killing within three months.
Without the involvement of this force, the genocide most likely would have lasted longer and taken far more lives.
DESPITE PROGRESS, INCENTIVES FOR CONFLICT STILL EXIST IN

POST-GENOCIDE RWANDA
On July 17, 1994, the RPF published a declaration concerning the establishment of new state institutions. In this
declaration, the RPF affirmed its commitment to the basic principles and outline of the previously negotiated Arusha
Accords. In particular they pledged commitment to the rule of law, the construction of a national army open to all
Rwandans, and the sitting of a government of national unity based on an inclusive coalition of political forces. They
also affirmed the legitimacy of the Constitution of 1991 and the Arusha Accords as the fundamental rules for

governing the nation. 14 Since 1994, Rwanda has enjoyed a period of relative peace and stability, especially in the
context of its neighbors, the DRC and Burundi. Although Rwanda has become a model of development and security
in the region, a comparison of the factors that triggered the genocide and their current status suggests that some of
the underlying incentives for the original conflict do exist, although they are mitigated by progress on the other
factors.
The table and analysis below highlight incentives for violence as the main risk of another outbreak of violence in the
post-genocide environment. The purpose of this case study is to show how OTF’s value chain approach to
developing Rwanda’s tourism sector can help reduce the risk of recurring violence. Tourism has the potential to
accomplish this by generating off-farm employment that can alleviate the effects of population pressure on the land
and create income-generating opportunities for a broad segment of Rwandan society. In addition, further
development of the sector will better insulate the country’s economy from the inevitable swings in global commodity
markets.

14 Rwanda Democracy and Governance Assessment, 2002, page 19

Figure 2. Comparison of Pre- and Post-Genocide Factors

Current
Factor Pre-Genocide Post-Genocide (2007)
Risk
• Current government has policy of pushing ethnic tensions
The “4 Ps” were all in place, under the surface. 15
Incentives
High creating the long-term • Population density is higher than pre-genocide and growth
tension and short-term rates are still high.
trigger for the genocide. • Good overall economic growth, but the Gini coefficient is
increasing, indicating growing income inequality. 16
• Organizational: the umuganda structure is still in place with
the ability to quickly organize and mobilize the population
Conflict Resources
down to the 10 household-level.

All, including the more • Human: lack of broad-based prosperity indicates that
sophisticated resources, there is still an “underclass” that may be willing to engage
Low
were in place to enable in violence. A rising Gini coefficient and the anecdotal gap
conflict. between wealth in Kigali and lack of progress in rural areas
may further exacerbate the problem.
• Financial: wealth seems to be concentrated in the hands of
returnees who have no interest in conflict.
Institutions
• The government has put in a place strong security

The state and civil society
Low institutions that render genocide extremely unlikely.
were aligned to encourage
• Local civil society and international NGOs preach
and foster genocide.
reconciliation and the mantra “never again.”
The RPF created an excuse

for the genocide (but also • Remnants of the Interhamwe still exist in Eastern Congo
but are not a serious threat to Rwanda’s security.
Regional & Global
ended it). Unwillingness of

international forces to • General instability in DRC and Burundi could spill over
intervene (except for the into Rwanda.
Forces
Medium French on the side of • International forces are very likely to intervene in Rwanda
genocidaires) allowed the if genocide re-occurs.
genocide to begin and • Major sectors are shifting from simple commodity
continue. The economy was production to differentiated goods. Tourism is booming
also over-reliant on with a focus on high-value segments of the market.
commodity coffee.

15 Ethnicity and its discussion have been outlawed in Rwanda to promote a culture of healing and unity.
16 Rwanda’s Economic Development and Poverty Reduction Strategy. Government of Rwanda. Draft July 2007.

III. RWANDA TOURISM VALUE

CHAIN ANALYSIS
OTF’S PARTICIPATORY 5-STEP PROCESS FOR FORMULATING A NEW
STRATEGY FOR RWANDA’S TOURISM VALUE CHAIN
In order to mobilize and engage Rwanda’s tourism industry, OTF Group used its proprietary 5-Step Process to
develop a national strategy jointly with the Tourism Workgroup of private and public sector leaders in most levels of
the value chain. Analytical and process activities were conducted at each stage of the 5-Step VCA. The analytical
agenda comprised research and surveys conducted by OTF staff and selected TWG members and the process agenda
engaged them in developing a coherent vision for the tourism cluster, providing the requisite knowledge to inform the
strategic planning process. Process details are presented in the graphic below. The culmination of the strategy
formulation exercise was a comprehensive document with a detailed investment and action plan, the timely execution
of which would transform the strategy from document to reality.
From the beginning, OTF included all viable tourism firms in its participatory approach. The size and structure of
these firms closely matched that of the Rwandan economy as a whole, meaning it was dominated by MSEs employing
30 or fewer people. Although these firms were established and based mainly in Kigali, they faced serious challenges in
terms of access to finance, trained staff, and inter-firm cooperation. The obvious exceptions to the micro and small
category were the two large hotels, the Milles Collines and Novotel, both of which had international investors and the
government as backers. Although representatives from these large businesses attended the TWG meetings, the agenda
was driven by smaller players like tour operators, travel agents and small hotels that needed to collaborate to access
critical market information and successfully develop and market Rwanda’s tourism products.

Figure 3. The OTF Group 5-Step Process for Rwanda’s Tourism Industry
Step 1 Step 2 Step 3 Step 4 Step 5
Set Industry Understand Target Articulate Sector Develop

Situation Analysis
Goals Customer Needs Positioning Action Guidelines
Assess capital base of the Reach agreement on Understand Analyze Identify investment,
industry (7 forms of aggressive but information needs of competitors/substitutes regulatory and
capital)
Analytical Agenda
realistic growth each component of the and industry’s relative institutional priorities
targets based on value chain position (high value vs. required to serve
Map value chain and ID
yield and arrivals. mass tourism) target segments
gaps in the industry Collect relevant
Review potential information on needs Develop overall value Develop priority
Understand distribution
channels and current economic impact of (i.e., surveys and chain strategy aligned guidelines for each
market segments tourism objectives secondary sources) with target customer target customer
needs segments
Analyze industry trends Segment the market
Develop branding
Form and engage the Build a sense of Form a research Use findings to Communicate
Process Agenda
Tourism Workgroup shared vision within plan based on initial stimulate discussion action and
(TWG) the TWG hypotheses around priority investment plans to
areas within TWG relevant
Agree on a working Identify core Use ICT to facilitate
stakeholders
schedule with the members of the research (OTF Involve all subject
TWG. TWG as well as Insight) matter experts in Formalize industry
subject matter clarifying potential partnerships to
experts issues ensure sustainability
This process is standard in all tourism engagements that OTF has undertaken around the world. It is, however, self-
correcting to the environment. By avoiding a rigid and time-bound process, the 5-Step Process allows the workgroup
to move at a measured and self-guided pace that enables it to focus on the specific challenges of the environment.
Compared to other countries, implementing the 5-Step Process in Rwanda was analytically more difficult due to the
paucity of available data, but easier when it came to the process agenda because of the useful tension in the industry
and the receptivity of a wide range of actors to consider, debate and accept new ideas. Although the challenges of
rebuilding Rwanda’s tourism sector were enormous at the beginning of the process, the enthusiasm of the TWG to
engage in the strategy formulation process and the move into the early phases of implementation made the process
more pleasant and gratifying when compared to countries where there is more resistance to change. The TWG did
lose some of its early momentum once the sector began to enjoy a measure of success and this is discussed in further
detail in the analysis of the research questions.
CONFLICT DESTROYS THE ECONOMIC CAPITAL FIRMS AND

INDUSTRIES NEED TO COMPETE IN THE GLOBAL ECONOMY,
RWANDA TOURISM INCLUDED
Engaging in value chain analysis in post-conflict situations is challenging for many reasons. OTF has found the most
challenging issue in these fragile states to be the destruction of the basic and sophisticated assets that industries
require to compete. A useful framework for comprehensively assessing—and diagnosing gaps in—country or industry
prosperity is given in Figure 4, the 7 Forms of Capital for a Post-Conflict Economy 17 . In this conceptualization, we
see all forms of prosperity: the bottom three or lower forms of capital include natural endowments, financial resources

17Michael Fairbanks, “Changing The Mind of a Nation: Elements in a Process for Creating Prosperity,” in Lawrence Harrison
and Samuel Huntington, eds., Culture Matters: How Values Shape Human Progress, (New York: Basic Books, 2000), Pages 268-
281.

and man-made capital. The four higher or social forms of capital are institutional capital, knowledge resources, human
capital and cultural capital. When applied to a post-conflict economy or industry such as tourism in Rwanda, the
framework highlights some basic truths about the sector that must be accepted as a base to begin building its
competitiveness.
Figure 4. The 7 Forms of Capital for a Post-Conflict Economy

Representative Elements What is Different in Post–Conflict Economies
Tangible Articulations Low trust which limits “distant” business relationships
Cultural
Cultural Norms Semi-formal institutions (such as the TWG) need significant
Mental Models facilitation and investment to succeed.
High population displacement means gaps in education

Health and Population
and skills.
Human
Human Education and Training
Returnees from developed countries may bring new
Attitudes and Motivation
skills to the economy.
Social
“Survival” mode means that most firms have lost
Qualitative, Quantitative Data
contact with markets.
Knowledge
Knowledge Frameworks and Concepts
Extended conflict may lead to a loss of local best
Knowledge Generation
practices.
Usually ineffective for years as they are rebuilt

“Good, Clean Governance”
and restaffed.
Institutional
Institutional Justice System
Property rights may be in question because of
Connective Organizations
displacement.
Financial Systems Local banks are normally risk averse and charge high interest
Financial Private Wealth rates.
Financial
Public Wealth Foreign investors are hesitant to re-enter conflict zones.
Transportation, Communication Depending on the intensity & duration of the conflict,

Physical Man-Made
Man-Made Power infrastructure may be destroyed or at least unsuitable to
Water and Sewerage support efficient economic activity.
Agricultural assets normally suffer because of lack

Environmental Issues
of upkeep.
Natural
NaturalEndowments
Endowments Raw Materials
Tourism areas may be destroyed by direct
Climate and Location
conflict and population pressures.
IN 2001, RWANDA’S TOURISM INDUSTRY WAS IN SHAMBLES

At the beginning of OTF’s work with Rwanda’s tourism industry it faced serious challenges. International arrivals
were estimated at less than 3,000 per year versus 39,000 in 1984. Perception of the security situation was such that the
typical tourist who visited the gorillas usually crossed the border from Uganda for just a few hours to visit Rwanda’s
gorilla families and drove back to the relative safety of Uganda to spend the night. The country was capturing very
little value from these tourists outside of the relatively low price of the gorilla permit.
In addition to the visitor experience, the tourism industry was disorganized and suffered from a lack of the sector-
specific assets required to succeed in the highly competitive global tourism industry. With the exception of the world-
class tourism asset of the mountain gorillas, key success factors such as international standard hotels and restaurants, a
functioning financial system, knowledge of markets, institutions and well-trained tourism industry professionals who
could support the sector were entirely lacking. In particular, the limited knowledge of markets left the industry
without a solid roadmap for how to configure its tourism assets and operations to serve the most attractive market
segments for Rwanda’s tourism experiences. Although this lack of sophisticated assets was an issue before the
genocide, the global tourism industry, particularly high value eco-tourism, had changed during Rwanda’s absence from

the marketplace. In response to market demand, competitors had begun investing in upgrading their experiences while
Rwanda was sliding backwards.
TO ADDRESS THESE PROBLEMS, THE PUBLIC AND PRIVATE SECTORS ENGAGED IN A

COLLABORATIVE VALUE CHAIN DEVELOPMENT PROCESS
To address these problems, in 2001 the TWG engaged in a
nine-month process to develop a bold new vision and BOX 1: A KEY STRATEGIC CHOICE –
strategy of high-value, environmentally-friendly and HIGH VALUE VS. MASS MARKET
diversified tourism in Rwanda. Concrete targets for 2010 TOURISM
included 70,000 visitors, US $100 million in receipts, visitor The key metric to watch in tourism is yield or the
spending per day of US $200, and a seven-day length of amount of money each tourist spends (calculated as
stay. To achieve these targets, the strategy and action plan number of visitors times length of stay times amount
foresaw large-scale investment into product development, spent per day). Rwanda’s choice to target tourists
marketing and institutions. Since then, significant progress willing to pay high prices to experience the country’s
has been made towards achieving the goals laid out in the tourism experiences will allow the country to
strategy. 2006 receipts were ahead of targets at US $33 minimize environmental and community impact
million versus US $31 million forecast in the original while achieving its revenue goals.
strategy. Investment numbers are also strong with US $53 million versus $62 million in planned investment over five
years.
RWANDA TOURISM HAS STAGED A DRAMATIC TURNAROUND

In 2007, after five years of strategy implementation and the obvious success of the gorilla product and general image-
building, the TWG saw a need to revisit the original strategy to confirm that the industry was on the right track and to
look at new opportunities for growth in the sector. Beginning with an evaluation of the 2002 strategy, TWG then took
a blank-slate approach to looking at available options.
One key component of the evaluation was the visitor experience. Although Rwanda made amazing progress in
improving its image with tourists in terms of key attributes such as safety and distinctiveness, channel partners do not
share these positive feelings. Major complaints are a continued perception of a lack of safety, the lack of product
diversification, and a nearly non-existent service culture. The difference in opinion between channel partners with a
high familiarity with Rwanda and those who do not have firsthand experience with the country shows the potential
the country can leverage to market its tourist destinations.

Figure 5. Rwanda Tourism Receipts & Investments
Rwanda Tourism Receipts

Targets vs. Performance 2003-2008 ($MM)
$60
Target Actual $42 $55
$40 $33 $31
$26
$22
$20 $14 $13
$9
$0
2003 2004 2005 2006 2007 2008
Rwanda Tourism Investments

Targets vs. Performance 2003-2008 ($MM)
$30
Target Actual
$19 $18 $20
$20 $18
$13 $13 $13
$12
$10 $7 $7
$0
2003 2004 2005 2006 2007 2008
Source: Tourism Workgroup, National Tourism Strategy, OTF Group Analysis
Note: Receipt numbers are estimates from ORTPN. Investment figures: RIEPA
The institutional framework remains an overarching concern in the tourism sector. Although new institutions were
created or existing ones restructured to help implement the tourism strategy, they are uniformly weak with the
exception of Rwandan Office of Tourism and National Parks (ORTPN), the government tourism board. ORTPN’s
leadership is responsible for much of the success that the sector has enjoyed, but despite its commendable
performance, an over-reliance on ORTPN to drive change in the industry is putting strains on its limited human and
financial resources. In order to sustain growth, the private sector—through the Private Sector Federation’s Tourism
Chamber—needs to quickly strengthen its capacity to take a co-leadership role in the tourism industry to create a true
public-private partnership.
RWANDA TOURISM’S VALUE CHAIN IS PRIMARILY FOCUSED ON THE HIGH-VALUE

INTERNATIONAL TOURIST SEGMENT
Below is a basic value chain map of Rwanda’s tourism industry. Although the primary focus of this case study is the
emphasis on the international tourism market, the domestic tourist channel is also included in the map so as not to
exclude this market segment. Tourism is a domestically consumed export and physical goods do not flow past service
providers such as hotels and restaurants because tourists spend money in-country, which benefits a wide range of
firms and individuals.

Figure 6. Rwanda Tourism Value Chain Map
Domestic Channel International Channel Supporting Institutions
International Tourists ORTPN

End Markets Domestic Tourists (Tourism
(n=12,500)
Board)
International Channel
Partners (n=20) Rwanda
Tourism
Chamber
Travel Agents &

Tour Operators Travel Agents Service Providers
Wholesalers
Financial
Services
Handicraft Producers Restaurants Hotels
Service Providers
Transport: taxis, buses, BDS & Training

Other attractions
car hire, airlines Providers
Inputs Other inputs: toiletries,

Food
textiles, etc.
DESCRIPTION OF VALUE CHAIN ACTORS

Profiles of the value chain actors, the enabling environment, and the relationships and dynamics between all players
are discussed below.
END MARKET
Rwanda’s tourism industry emphasizes high-value international tourists with a specific focus on attracting eco-tourists
interested in the country’s mountain gorillas and other primates. It has tried to target and activate other segments of
the market and needs to diversify its product offerings away from the primate product, but for now the main focus of
private and public sector tourism value chain actors remains on primates and the tourists who can pay the highest
price possible for the experience. The requirements of both the eco-traveler and the channel partners who are the
intermediaries for this and other segments the industry could potentially target are described below.
ECO-TRAVELERS: THE CORE CLIENTS OF RWANDA

Eco-travelers are estimated to comprise over 80 percent of Rwanda’s current tourism revenues and are expected to
continue to account for the majority of its revenues through 2010. In targeting this group, it is critical that the tourism
industry understand two categories of needs—those of both the visitors themselves and of the channel partners who
act as the gatekeepers to these valuable customers. As part of OTF’s facilitation of the original tourism strategy in
2002 and the tourism strategy revision in 2007, the team conducted extensive market research of these two groups to
understand their needs. OTF structured this research using a customer needs assessment and the Target Visitor’s

Experience, 18 an approach that encompasses the visitor experience from the pre-selection stage through post-trip
interactions.
Figure 7. Overall Expectations from the Destination, Visitor to East Africa
Importance Ranking of Product Attributes for Tourism Destinations
Could be explored 5.6
Offered wildlife and natural attractions 5.5
Was safe 5.1
Allowed to rest 5.0
Not very touristic 4.9
Able to do unique activities 4.7
Lots of different activities 4.6
Reliable medical system 4.1
Adequate telecommunication services 3.7
Being pampered 3.3
0 1 2 3 4 5 6 7
Source: OTF Group 2002 Tourism Visitor Quantitative Survey n=225
As shown in Figure 7, the third most important expectation from a destination for a traveler 19 to East Africa is safety.
In the case of a post-conflict country, especially one with such a recent and brutal history, safety was an issue of the
Rwanda tourism strategy development process from the outset. Fortunately for the industry, the in-country reality was
far different from that perceived by the international market.
As part of the original strategy formulation process in 2002 and the revision in 2007, visitors to East Africa were
asked about their perceptions of safety of Rwanda compared to its regional competitors. 20 The results of this
comparison are shown in Figure 8. What is most striking is Rwanda’s reversal in the rankings— it went from being
last in 2002 to first in 2007 and is now seen as the safest destination in East Africa according to respondents.
Much of the rapid change in the safety perception of Rwanda can be traced to two issues. First, the post-conflict
status carried forward until a measurable number of tourists visited the destination and gave confidence to the
industry that the destination was safe. Second, the post-conflict political solution created a slowly democratizing,
benevolent authoritarian government of Paul Kagame. One of Kagame’s primary efforts to quell the resumption of
conflict was to forcefully crack down on petty crime. As a result, the country has enjoyed a much lower level of
corruption, petty crime and violent crime than the regional average.

18 The Target Visitor’s Experience is an OTF Group framework used to structure customer research. This research takes the form
of quantitative surveys, focus group guides and interview forms.
19 The primary research consisted of two different segments, Individual Travelers and Channel Partners. OTF surveyed 225
visitors to East Africa and 23 channel partners.

20 This was a follow-up survey to the original 2002 survey. It did not differentiate between high value and other tourists.

Figure 8. Rwanda and Competitors Visitor Safety Ratings—2002 and 2007
2002
Visitor Agreement Ratings:
2007
"Is safe"
5.5
Tanzania 4.9
5.1
Kenya 4.0
4.0
Rwanda
5.6
4.7
Uganda 4.4
1 2 3 4 5 6 7
Agreement rating
Source: OTF Group Tourism Channel Partner Survey, January 2007, n=90
OTF Group Tourist Survey, January 2007 n=176
Channel Partners. 21 As noted above, channel partners serve as gatekeepers—a critical source of clients for tourism
destinations. For high value and non-price sensitive tourists, these individuals and companies market new
destinations, organize tours and guarantee that their clients partake in a superior experience. As for the visitors
themselves, security remains one of the most important factors in their decision-making process. In addition to safety,
unique nature and products rank highly for this group. To remain competitive in an increasingly crowded marketplace,
channel partners have to offer clients progressively sophisticated experiences—the one they sold last year likely has
been commoditized and now must be replaced by something new and unique for which their discerning customers are
willing to pay a premium. The importance of constant innovation and upgrading is true for channel partners
marketing all destinations and it has to inform Rwanda’s approach to marketing and relationship management.
Other segments. The original TWG strategy took a portfolio approach to targeting visitor segments. In addition to
the eco-travelers, the industry also sought to engage explorers (cultural travelers), individual business travelers and a
grouping of other visitors including visiting friends and relatives and conference travelers. Figure 10 illustrates these
segments, proposed experiences, and estimated yield and receipts.
As noted above, except for eco-travelers, Rwanda met with limited success in creating experiences to serve all of these
customer segments. This failure stems mainly from the lack of institutional and human capacity in the sector to design
and execute a full tourism strategy. A key component of the 2007 Strategy Revision is the focus and cross-sell
approach, which makes the primate product the core offering and adds other experiences once a visitor is in Rwanda
to visit the gorillas. The TWG and OTF also intend to revisit ways to effectively activate the explorer segment and
mobilize the industry to fully exploit the emerging international conference market.

21 Channel partners include international tour operators, travel agencies, wholesalers and destination management companies.

Figure 9. Channel Partner Selection Criteria for African Destinations 22
How important was it for you that the

What were the top three reasons that made you consider
destination…
this country [Top 1]
30% 27% 27%
Unique Nature 6.4
20% 18%
Great Reputation 6.0
9% 9% 10%
10% Innovative Product 6.0
0%
Customer Demand 5.7
Security Nature Product InfrastructuresExperience Other
Expert recs 5.6
What were the top three reasons that made you consider
this country [Top 3] Travel mags and medias 5.4
80%
Friend or Competitor Ref 4.5
60%
Part of a Larger Deal 4.4
40%
27%
22% Great incentive 4.0
17% 15%
20% 12%
7%
Approached by Officials 4.0
0%
Infrastructures Nature Security Product Experience Other
0 1 2 3 4 5 6 7
Figure 10. Rwanda Projected Tourism Portfolio (2010)
2010 Receipts
Segment Experiences Visitor Spend per Length of Segment
Number Day Stay Receipts
• Primates—“Introductory Primate Certification”

Eco-travellers • Ornithology—“Nyungwe Name Your Bird” 24,500 $320 7.0 $55
• Other—“Butterflies and Flowers Discovery”
• Culture—“Five Centuries of East African Civilization”

Explorers • Education— “Intore Dance Workshops” 17,500 $220 8.0 $31
• Interest—“Conflict resolution and Gacaca”
Individual
• Business/leisure—“Safe Haven in East Africa”
Business 14,000 $140 5.0 $10
• Relaxation—“Kivu Riviera Excursion”
Travelers
4 Other • Visiting Friends & Relatives (VFR), Meetings, Incentives &

14,000 $25 9.0 $3
Segments Conferences (MICE), other individual and group travelers
Total Average Average Total
Overall Metrics (2002 – 2010) 70,000 $200 7.0 99.0

22Incentives include benefits to the channel partner and its clients. These include bulk discounts, familiarization (FAM) trips,
exclusive services to clients.

RWANDAN TOUR OPERATORS: A SMALL BUT DYNAMIC FORCE IN THE INDUSTRY

This group has shown remarkable progress in the past six years. In 2001, the typical Rwandan tour operator was a
relatively unsophisticated player selling access to gorilla permits with limited add-ons or selection in terms of other
experiences, accommodations, or dining. The TWG understood the important role local tour operators could play in
overcoming the perception that Rwanda was unsafe for tourism because they could influence tourists’ movements and
experiences to ensure they would have a safe and unique experience.
With the explosion of activity in the tourism sector, this segment of the value chain has seen tremendous growth and
the range of products and levels of service have expanded to encompass all of Rwanda’s tourism product offerings.
Today, the number of high-end tour operators has grown to about 15 from approximately 6 in 2001. These firms still
tend to be small, usually fewer than ten employees including booking agents, drivers and guides.
Barriers to entry into this segment of the market are

quite low with minimum requirements a 4-wheel drive BOX 2: PRIMATE SAFARIS – A RWANDAN
SUCCESS STORY
vehicle, a small office, access to gorilla permits and, Primate Safaris, a high-end tour operator has been an
perhaps, relationships with regional or international active member of the Tourism Workgroup since its
channel partners. These low entry barriers have inception in 2001. The benefits of the value chain
created problems of professionalism in the sector and approach to tourism for this firm have been enormous.
despite the great strides made by many tour operators, Starting with a one-room office in a hotel, the company
complaints still exist about professionalism and has expanded to become one of the largest tour
training for tour operators and their employees. (To operators in Rwanda with multiple customized vehicles
date, there are no plans to provide training for this and strong relationships with international tour
group.) An excellent example of a tour operator who operators.
provides a high-quality experience for Rwanda’s core
eco-traveler tourists is Primate Safaris, profiled in Box 2.
TRAVEL AGENTS’ LIMITED ROLE

Travel agents currently play a limited role in Rwanda’s tourism sector, as their main function is the booking of
international and domestic airline tickets. Domestic travel agents play a limited role in the international tourism
market as most international visitors make their travel arrangements through channel partners located abroad. Usually,
it is left to local agents to make last minute ticket changes.
THE REVIVAL OF TOURISM HAS CREATED A BOOM IN HIGH-END HOTEL CONSTRUCTION

In 2001, the hotel industry in Rwanda was optimized to serve the business and NGO market. Rwanda’s post-conflict
economic environment meant that there was little or no foreign direct investment and expensive capital. Although
two hotels operated under foreign ownership, upgrades were long overdue and the few international tourists who
came complained regularly about the quality of the rooms and service. Since then, nearly 350 high-end hotel rooms
have been built or renovated all over Rwanda and in 2007 the hotel industry was booming. To overcome the early
reticence of private investors to build new high-standard hotels, the government stepped in to finance the
construction of the Serena Hotel in Kigali and began the design phase of a lodge in Nyungwe Forest. Although hotels
should be financed and built by the private sector, the government initiated filled they gap left by a market failure, The
rapid privatization of these state-owned assets validates the government’s original intervention while putting
responsibility for the hotels back in the hands of private firms. Of particular interest is the handful of high-end
regional tour operators who have built or plan to build boutique eco-lodges that accommodate 8 to 12 people, but
charge from US $350 to US $600 per person per night. These hotels are making a significant positive contribution to
the tourism industry’s yield targets.

Although these hotels are high-end, most have only about 30 employees, a significant percentage of who are hired
locally. The main opportunity for MSEs to benefit from the start-up and success of these hotels is through integration
into the value chains in the form of input supplies such as food, handicrafts, community tours and other goods and
services necessary to create an experience that meets the expectations of Rwanda’s targeted tourist segments.
Figure 11. High-end Hotel Construction Since 2002

Name Location Star Rating Number of Rooms
Kigali Serena Kigali 5 104
Kivu Serena Gisenyi 4 105
Akagera Lodge PNN 4 58
Virunga Lodge PNV 5 8
Gorillas Hotel Kigali 3-4 31
Gorillas Nest PNV 4 40
Total Rooms 346
RESTAURANTS STILL FACE SERIOUS HEALTH AND HYGIENE CHALLENGES

Although there are numerous local restaurants located in Kigali, the options decline quickly outside the capital, and
very few anywhere in the country meet international standards for health and hygiene. Most international tourists eat
the majority of their meals either in their hotels or lodges or as picnics supervised by the tour operator. There are
exceptions to this rule. Although relatively few, some enterprising Rwandans, members of the diaspora and even
foreign investors have begun to invest in restaurants that target primarily the local expatriate crowd, but are also
popular with international tourists. These range from high-end African, Indian, and continental cuisine restaurants to
coffee and sandwich shops. For entrepreneurs willing to take the risk, the payoffs can be attractive—a recent US
$100,000 investment 23 into a restaurant is likely to return a multiple of this investment in just one year. An emerging
issue for restaurants and hotels is local procurement of food supplies. For the moment, the majority of food and
beverages is imported because of Rwandan firms’ inability to comply with the stringent food safety standards
enforced at high-standard establishments. An excellent example of this is the use of imported tea bags at the Kigali
Serena because Rwandan suppliers are unable to provide the tea bags in sealed plastic sachets. In a country where tea
is one of the top exports, this seems inexplicable.
HANDICRAFT PRODUCERS’ DIFFICULTY IN PRODUCING TO INTERNATIONAL SPECIFICATIONS

Local artisans are important value chain participants. They have the potential to increase the yield of tourists and
much of the income from handicrafts goes to the poor. Despite this potential, the handicrafts sector is
underdeveloped in Rwanda. With the exception of a few groups that have developed linkages with dynamic
entrepreneurs, some local artists and the ubiquitous traders who sell Congolese art, the selection of handicraft
products is limited and quality is variable. Various NGOs and the GoR are making efforts to mobilize this sector to
better serve international tourists and export markets for products like traditional sisal baskets, where Rwanda has a
competitive advantage. To date, the most successful model for quality control and business success in handicrafts is
one in which savvy exporters actively manage the quality of large numbers of producers. What is critical here is that

23 Business 2.0 Online, August 1, 2007

the exporters reject sub-standard products and pay a premium for high quality work, in effect using cash to transmit
market signals.
IMPROVEMENT IN TRANSPORT OPTIONS FROM THE MEDIUM TO HIGH-END

Once in Rwanda, tourists must rely on local transport. For the core market segment, most tour operators have
purchased specialized safari vehicles from Kenya that can move their clients in comfort and safety. Taxi drivers are
often the country’s first tourism ambassadors when someone arrives in Rwanda. The past five years have seen a
dramatic improvement in the quality of vehicles and service thanks to the entry of professional taxi fleets established
by private operators. Taxis that operate as part of these companies are new, dispatched by mobile phone and normally
have English and French speaking drivers. For the independent traveler, hiring a car remains a challenge. There is
currently no reliable car rental service that meets the convenience and durability needs of international tourists.
BUSINESS ENABLING ENVIRONMENT
POOR BUSINESS ADMINISTRATIVE ENVIRONMENT

Although improving, the poor business administrative environment keeps most firms in the informal sector.
According to an International Finance Corporation (IFC) study, the majority of micro and small, as well as some
medium-sized businesses in Rwanda—an estimated 900,000 firms—are unregistered and operate in the informal
sector. Although business registration procedures are well-designed and continually improving—the time required to
register a business recently fell to 16 from 21 days—the requisite capital for registration and licensing fees is
prohibitively high; estimated at 315 percent of per capita income. 24 Additionally, although the GoR lowered its
corporate income tax rate to 30 from 35 percent, small businesses find the tax regime to be overly burdensome.
Finally, many MSEs have difficulty accessing information on licensing requirements and meeting those requirements.
When coupled with weak government enforcement, these factors provide disincentives for many firms to enter the
formal market.
The pervasiveness of informal market activity in Rwanda has diverted resources from the official sector, contributing
to a loss of revenue for government and, ultimately, impeding economic growth. Because the business practices of
these firms have adapted to an unregulated environment, their potential for scaling up remains limited. Stuck in the
informal sector, many enterprises lack access to finance, because most financial institutions are hesitant to lend to
unregistered businesses that don’t have clear performance histories. Thus, the legal and regulatory framework in
Rwanda has undermined the growth of a large proportion of MSEs operating in the country.
INTRODUCTION OF COMMERCIAL COURTS

Rwanda’s lack of specialized commercial courts results in an inability to enforce property and contractual rights or to
process credit-related litigation. On a positive note, the government approved the creation of commercial courts in
December 2006, which should build investor confidence in the business environment and encourage growth.
Unfortunately, this court system is not yet operational and the justice system suffers from a lack of magistrates
qualified in commercial and financial matters. The absence of functioning commercial courts has caused serious
frustration for private sector actors and created additional costs of doing business.

24This figure is relatively low for the region; Burundi stands at nearly 10,000 percent of GDP according to recent World Bank
Doing Business Surveys. Despite this strong performance, even this level of fees (approximately US $600) is prohibitive for
smaller MSEs.

RECENT PROPERTY RIGHT REFORMS

There has been much ambiguity concerning land rights, which have been governed under the dual legislation of
customary and written law. All land has been state-owned, which individuals and firms have leased from the
government, a significant obstacle to potential investors wanting to acquire land and develop sites. Additionally,
occupants cannot use land as collateral, because they do not own title. To remedy this situation, the Ministry of Lands,
Human Resettlement and Environmental Protection initiated a revised land-use bill in May 2005 that establishes a
single law to govern land rights that protects property rights, formalizes the process of collateralizing through a titling
system and cadastres registry, and encourages private investment.
IMPROVING MARKETS AND SERVICES THAT SUPPORT TOURISM
FINANCIAL INSTITUTION REGULATION IMPROVEMENT THROUGH INCREASING INDEPENDENCE FROM THE

GOVERNMENT
There have been significant improvements in the regulation and supervision of bank and non-bank financial
institutions in the post-genocide period. Policies have been crafted to mobilize savings and enhance investment,
including ensuring the independence of the National Bank of Rwanda (BNR) from government interference. In
addition, non-performing banks recently have been re-capitalized or liquidated, and a competitive commercial banking
system has been fostered by allowing the entry of many regional banks into the market. Although banking regulations
are now in line with international standards, BNR supervision and enforcement still needs to be strengthened as
governance, risk management, and internal controls remain weak in most financial institutions.
SHIFT FROM COLLATERAL-BASED LENDING TO MORE FLEXIBLE METHODS IN THE FINANCIAL SECTOR
Rwanda’s financial services system is shallow and dominated by six commercial banks, a credit cooperative network
(Union des Banques Populaires du Rwanda), a few independent microfinance institutions, a state-owned bank
(Banque Rwandaise de Développement) and a mortgage bank (Caisse Hypothécaire du Rwanda). The provision of
credit is concentrated in Kigali and primarily channeled towards trade, regional business tourism, property
development and manufacturing. Banking systems are highly collateralized and as such, smaller firms are more credit-
constrained than larger firms. Financial institutions offer mostly only basic savings and loan products, and maturities
tend to be short, generally not exceeding three months for savings and one year for loans. The IFC is developing
leasing windows in two commercial banks, which have yet to become operational. This is a positive development and
will be attractive for tour operators and transport companies seeking to upgrade their vehicle fleets and perhaps
purchase boats.
About 30 percent of bank deposits are from aid agencies, so the financial system is vulnerable to a decline in aid
flows. The commercial banking sector is also burdened by non-performing loans, which constitute 34 percent of
outstanding debt and result mainly from losses incurred during the genocide and through imprudent investment in
new sectors. The high non-performing loan rate has increased risk-aversion in Rwanda’s banks and forced them to
increase interest rates to cover these non-productive assets. Studies show that clients need long-term loans and equity
finance, lower-cost financing, a wider range of financial services, and more relaxed collateral requirements.
LACK OF BDS, A CRITICAL NEED FOR PRIVATE SECTOR DEVELOPMENT

The BDS industry in Rwanda is generally under-developed and the problem is even more acute for tourism-focused
enterprises. OTF conducted both a survey to assess MSE training needs 25 and an audit of Rwandan BDS providers. A

25 “Rwanda SME Portrait”, January 2002, OTF Group.

comparison of the BDS audit and SME portraits suggests that there is a mismatch between provider offerings and
MSE needs.
26
Figure 12. BDS Mismatch
SMEs
• SMEs BDS Providers
• BDS Providers
• SMEs are getting some • Training is main assistance being provided

Current training, assistance and through existing projects
Offering financing help
• Focus on rural associations and
• Offering is often concentrated in cooperatives
Kigali
• Information is really scarce and
a few players “double-dip”
• SMEs are often not aware of • BDS providers lack resources to

Unmet existing initiatives satisfy demand
Needs
• SMEs struggle to find • BDS providers are often project
answers to all questions funded and limited in time
with one provider
• BDS providers lack coordination
• SMEs want competent business among themselves
advisors going the extra mile at
provincial level
The main issue here is that the vast majority of BDS providers in Rwanda are fully or partially supported by
government or donor funding, which reduces their responsiveness to the market. Given the preponderance of donor
activity in the sector, few MSEs have developed a willingness to pay full price for key business services with the
exception of access to finance (business plan writing) and specific IT training. In the case of tourism, the problem is
even more acute with only a handful of tourism and hospitality training institutes providing training that corresponds
to the domestic and regional market and not necessarily the needs of the high-value international tourist market.
THE TOURISM BOARD’S KEY ROLE IN BUILDING THE COMPETITIVENESS OF THE SECTOR
As illustrated in the graphic below, ORTPN, the Tourism Board, has dominated the ownership and implementation
of the Rwanda tourism strategy. In order to create a more sustainable leadership base for the sector, other institutions
should accept key roles and responsibilities critical to the success of the sector. These roles are described below.
Moving forward, this revised tourism strategy should serve as the inspiration for those involved in the tourism sector
to design their initiatives. The strategy should promote coordination and focus and encourage innovation and
creativity to improve sector performance.

26 “Rwanda BDS Industry Audit”, September 2005, OTF Group.

Figure 13. Mapping and Gap Analysis of Rwanda Tourism Institutions 27
Private Sector Public Sector
MINICOM
MINICOM
Hotels
Hotels &&
Restaurants
Restaurants
Public Private Partnership
(PPP) •• Rwanda
Rwanda
Bureau
Bureau of
of
Standards
Standards
Travel
Travel •• RIEPA
RIEPA
Agents
Agents && Tourism
Tourism Tourism
TourismWorking
Working ORTPN
ORTPN
Tour
Tour Chamber
Chamber Group
Group
Operators
Operators
MIJESPOC
MIJESPOC
ORTPN is currently
The Tourism
the public sector
Chamber is the
“guardian” of the
Taxi private sector apex National
National
Taxi body for Rwanda’s
tourism strategy.
Association
Association Leadership will Museum
Museum
tourism sector.
hopefully begin to be
Although new, the
For the past 5 years, OTF shared with the
Chamber is eager to
Group under the aegis of the private sector via the
partner with ORTPN International
International
RNIC has acted as the Tourism Chamber.
and other partners NGOs
Legend to upgrade the facilitator of the Rwanda NGOs
tourism industry. Tourism Working Group.
Weak Although the TWG is a useful
forum, it may need to become
Effective more formalized to facilitate a
transition to local leadership.
Too strong
Rwanda’s Office of Tourism and National Parks (ORTPN). Since 2002, ORTPN has been the guardian of the
tourism strategy and taken the lead in activities ranging from investment to marketing. Much of this involvement has
been because of a shortage of private sector leadership to take on essential tasks such as investment in key hotels, 28
targeted joint marketing campaigns and active public-private dialog, and problem solving around critical issues. The
desired result is that ORTPN should take a less active role in activities that should clearly be private sector-driven and
at same time remain actively involved in issues such as conservation, the environment, adherence to high value
standards and linkages to local communities that could suffer if purely market forces were left to run the sector.
National Tourism Chamber of Rwanda. Until very recently, tourism’s private sector was relatively disorganized.
However, with the creation of the National Tourism Chamber of Rwanda (Tourism Chamber) in 2006 with the
support of the Private Sector Federation (PSF), 29 this situation is improving. The creation of this body should provide
tourism’s private sector with a unified voice to engage the public sector in productive debate and enable the industry
to plan and implement activities that benefit the entire sector—targeted training programs for members, an issue-
specific seminar series, and targeted policy reform proposals to improve the tourism business environment. The
Tourism Chamber is broadly representative of the tourism industry because of mandatory membership and dues
requirements. Owing to the nascent nature of the institution, it is still seeking ways to create value for members and
stakeholders.

27 Acronyms: RNIC – Rwanda National Innovation & Competitiveness Project (OTF’s project name); MINICOM – Ministry of
Commerce; MIJESPOC – Ministry of Culture

28 As noted above, the government became an investor of last resort in the Kigali Serena, Kivu Serena and an eco-lodge at
Nyungwe. These properties have since been privatized, per the original plan.
29 The Private Sector Federation (PSF) is an apex organization for Rwanda’s private sector. It is comprised of nine industry
chambers with various sub-associations. It currently receives funding from member dues, the government and international
donors.

Rwanda Investment and Export Promotion Agency (RIEPA). The line between the role RIEPA and ORTPN
play in the development of the sector has been unclear to date. Although RIEPA has a clear mandate to intervene in
the sector when it concerns exports and attracting investment, in practice both institutions are actively involved in
promoting the sector. Clearly defined roles and responsibilities would help create a broader leadership base for the
sector and allow institutions to focus on their strengths rather than over-extending their limited human, institutional
and financial resources.
Rwanda Bureau of Standards (RBS). Tourism standards for all sector players are a critical first step in developing
targeted and rational training programs for the industry. Given its technical expertise in the field, the RBS should take
a lead role in creating these standards in consultation with the Tourism Chamber. Ideally, the RBS should ensure that
the standards are technically sound and conform with best practice elsewhere in the region and the world, while the
private sector should have a say in how well the standards apply to the Rwandan context and the agreed upon high-
value strategy.
Partner institutions. ORTPN will continue to play a coordinating role for government and donor institutions such
as MINICOM, MIJESPOC, international NGOs and the National Museum as the ability of these institutions to take a
leadership role in the sector in the short- to medium-term is doubtful.
BUILDING PRODUCTIVE HORIZONTAL AND VERTICAL RELATIONSHIPS

The success of Rwanda’s tourism industry depends on the horizontal and vertical collaboration of all industry
participants; rebuilding trust between these actors is a key component of the reconciliation process. No single firm or
group firms has the skills or resources required to continue driving the transformation of the sector from international
pariah to emerging high-value primate destination in Africa. Examples of collaborative efforts to date are detailed
below.
Tourism Workgroup. A critical piece of the OTF Group approach to upgrading the competitiveness of the tourism
sector was has been the creation of the public-private sector Tourism Workgroup to serve as a forum for debate,
information sharing and vertical and horizontal collaboration. Initially, TWG’s primary role was as a sounding board
for the development of the original tourism strategy. Group members provided the OTF tourism advisors with a rich
source of information about the realities of doing business in Rwanda and they also validated the market research and
benchmarking data that came out of OTF’s analysis of the global tourism industry. The TWG also supported the
entire strategy, which was easy for them to do given that they had been intimately involved in the process from the
beginning.
ITB Attendance. ITB is one of the world’s largest tourism fairs. Starting in 2003, the TWG facilitated the
collaboration of representatives of the public and private sectors and most value chain functional areas to ensure an
effective presence at ITB. Progress has been astounding. Beginning with an exploratory mission in 2003, Rwanda
successfully upgraded its performance over the next four years and won the coveted honor of Best African Exhibitor
in 2007; beating out regional tourism heavyweights such as Kenya and South Africa. This success and the broad-based
collaboration that made it possible has catalyzed the sector to ensure that its marketing success is matched in-country
by a world class product. The vast majority of the “Rwanda Tourism” stand and PR expenses for ITB attendance
have been paid by the Rwandan government. Private operators pay their own expenses and those for their individual
stands if they choose to invest beyond the general Rwanda stand. As the country has built its profile, more and more
local tourism professionals have made the decision to attend ITB, creating a virtuous circle of active participation and
“buzz” around Rwanda’s offerings.
Tour operators have developed good relationships with local hotels to offer attractive packages. Tour
operators in Rwanda have focused on one product only: the mountain gorillas. The gorilla trekking experience is
rather standardized as ORTPN controls this crucial part of the event and essential to success has been the ability of

most tour operators to arrange flawless and seamless local logistics for visiting gorilla trekkers—they have become
masters at negotiating rates with local hotels.
Rwanda’s tourism private sector has come together to provide their perspective on decisions affecting the
overall direction of tourism in Rwanda. In positioning itself on the world stage, the Rwanda tourism industry has
made several choices about not only what to do but also what not to do. This is illustrated by ORTPN’s decision to
raise gorilla permit prices and the refusal by industry players to allow the charter line, Point d’Afrique, to bring masses
of tourists to Rwanda. In both cases, the tourism private sector came together to articulate a common position and
express it to the Tourism Board and government. While much of this activity has happened informally in the past, the
creation of the Rwanda Tourism Chamber has formalized this form of collaboration and it has vowed to address the
capacity gap by facilitating a common solution to training issues.

IV. VALUE CHAIN FINDINGS

FROM SUCCESS TO SUSTAINABILITY
The renaissance of Rwanda tourism appears to be a success to date, although steps need to be taken to ensure its
sustainability. Many of these gaps are captured in the graphic below. Most stakeholders agree that the choice to pursue
high-value tourists (versus a mass-market strategy) is the correct choice for Rwanda given the limitations of its tourism
destinations to accommodate large numbers of low-yield tourists. To date, the strategy is on target in terms of overall
receipts, but this early performance is driven almost exclusively by gorilla tourism; the overall improvement in the
perception of Rwanda by the international marketplace; and not by the development of new experiences that would
entice high-value tourists to spend more time and money in the country.
Figure 14. Gap Analysis of Rwanda Tourism’s 7 Forms of Capital 30
Ratin
gGood
Medium
Needs
Improvement Rating Accomplishments Critical Gaps
Cultural • A long-term vision for the tourism sector • Public recognition of tourism professionals.
is in place. • Enrich national appreciation for eco-tourism, especially
through local linkages to local communities.
• A few small, privately-funded trading • Standards for hotels, restaurants and other tourism
Human institutes have been created. service providers
• Large-scale efforts to achieve standards.
Higher
• The tourism sector has accumulated

excellent primary knowledge of • Disseminate knowledge to new entrants in the tourism
Knowledg customers through research, trade fair sector.
e
F
attendance and interaction with

customers.
• ORTPN has taken a strong leadership • Capacity of the Tourism Chamber to effectively respond
Institution to, act upon the needs of the private sector.
role in the sector.
al • Rwanda Tourism Chamber formed to
• Widespread lending to tourism SMEs and micro-
organize the private sector.
Financial enterprises such as tour operators and handicraft
• Financing of large, relatively well producers.
established hotels
• Government investment into hotels (i.e.
Serena and Nyungwe)
Man- • Reliable boat transport on Lake Kivu
made • High-end hotels have been completed in • Upgrade Lake Kivu road
Lower
Kigali and the PNV are under

construction in PNN.
Natural
Natural • Conservation programs have succeeded in
Endowments
Endowments protecting the gorillas and other primates.
• Awareness-raising for Nyungwe and its natural assets.

• Awareness of the gorillas is high in the
international community.
There has been progress, but critical gaps remain in training and financing of the sector.
A second factor that may likely contribute to a drop in performance is the lack of training. Although there has been
significant investment in the sector, almost all of it has been focused on hard assets such as hotels, restaurants and
vehicles. To deliver a high quality experience, investment in training, especially in the area of customer service is

30Abbreviations: PNV – Parc National des Volcanoes or Volcanoes National Park, home to the mountain gorillas. PNN – Parc
National de Nyungwe or Nyungwe National Park, an afro-montane forest in south-west Rwanda that is home to 13 species of
primates, numerous birds and orchids.

required to justify Rwanda’s relatively high price point in the international tourism marketplace. Attempts to address
this issue and the associated challenges are discussed below.
A third concern is the lack of private sector participation and leadership. Although the Rwanda Tourism Strategy has
had the unfailing support of the Government of Rwanda and ORTPN, it is now time for the private sector to play an
equally important role in developing the sector. Concrete examples include private sector investing in key components
of the strategy, engaging in joint marketing of Rwanda and working with ORTPN on developing new tourism
experiences, both to defray costs and send a unified message concerning Rwanda’s tourism offerings.
A final emerging concern in the tourism sector is the issue of linkages with the local communities. Various parties
from the public, NGO and private sectors have expressed concern about the impact of tourism on communities
surrounding the national parks that are directly impacted by tourism and should share in its benefits. As explained at
the end of this section, a recent study did find that some income is flowing to local communities, but not as the result
of an informed strategy to enhance the well-being of the poor.
To address these gaps and allow the sector to realize its full potential, the TWG developed a revised 2007-2012 action
plan. This plan is divided into two major categories: products and cross-cutting areas. The estimated cost for
implementing the entire plan is US $9.7 million in public, private and donor funds over five years. Key initiatives
include building a Discovery Center and eco-lodges in select areas to complete the primate product, defining “add-
on” products such as birding and orchids, and a targeted marketing campaign toward channel partners to improve the
relationship between Rwanda’s tourism industry and these important gatekeepers of international tourists.
Figure 15. Action Plan for Rwanda Tourism’s Strategy Revision
Rwanda Tourism Revision – Preliminary Action Plan
Primate
Primate Add-
Add-ons
Add-ons
•• Build
BuildPNV
PNVDiscovery
Discovery Center
Center •• Eco-tourism
Eco-tourismadd-ons:
add-ons:conduct
conductmarket
marketresearch
researchto
to
•• Complete
CompletePNN PNNeco-lodge
eco-lodgeand
andupgrade
upgradeGisakora
Gisakora identify
identifyattractive
attractivesegments
segmentsforfor Rwanda’s
Rwanda’spotential
potential
accommodations.
accommodations. birding
birdingand
andorchid
orchidproducts.
products.
Products
•• Engage
Engageinintargeted
targetedmarketing
marketingcampaign
campaigntotoselect
select •• Conference
ConferenceProduct
Product
channel
channelpartners
partners –– Define
DefineRwanda’s
Rwanda’sconference
conferencetourism
tourismproduct
product and
and
•• Upgrade
Upgradecapabilities
capabilitiesof
ofPNN
PNNguides
guides its
itspositioning
positioningininthe
themarket.
market.
•• Develop
DevelopthetheLake
LakeKivu
Kivuexperience
experiencewith
withinvestment
investmentininaa –– Facilitate
Facilitatethe
thecreation
creationofof high
highstandard
standardprofessional
professional
small
smalllodge
lodgeininKibuye
Kibuyeand
andprivately
privatelyowned
ownedboats.
boats. conference
conferenceorganizers
organizerstotoprovide
provideturnkey
turnkey
conference
conferencesolutions.
solutions.
•• Develop
Developclear
clearset
setof
ofstandards
standardsforfortourism
tourism actors
actors(hotels,
(hotels,restaurants,
restaurants, tour
touroperators,
operators, etc)
etc)
Training
Training •• Engage
Engageshort-term
short-termtraining
trainingconsultants
consultantstotomove
movetowards
towardsstandards
standards
•• Accelerate
Accelerate construction
constructionof
of at
atleast
leastone
onemajor
majortourism
tourismtraining
trainingschool
school
Crosscutting Areas
•• Awareness
Awarenessraising
raisingand
andtrust
trust building
buildingevents
eventsbetween
betweenTourism
Tourism Chamber
Chamber&&Banking
BankingAssoc.
Assoc.
Private
PrivateSector
Sector •• Enforce
Enforceexisting
existingimport
importtax
taxregulations
regulationsfor
forthe
theimport
importof
oftourism
tourismrelated
relatedequipment
equipment
Participation
Participation •• Develop
Developjoint
jointmarketing
marketingprograms
programsand andmaterials
materialsbetween
betweenORTPN
ORTPNandandTourism
TourismChamber
Chamber
•• Create
Createdestination
destinationlevel
levelpartnerships
partnershipsto
toencourage
encouragelocal
localcommunity
communityparticipation
participationinintourism
tourism
Pro-
Pro -Poor Linkages
Pro-Poor Linkages •• Integrate
Integratelocal
localfirms
firms&&producers
producersinto
intohotel
hoteland
andrestaurant
restaurantsupply
supplychains
chains
•• Provide
ProvideBDS
BDSsupport
supportand
andfinancing
financingto
tohandicrafts
handicraftsproducer
producer

VISION AND STRATEGY CONSTRAINED BY LOW INSTITUTIONAL

AND HUMAN CAPACITY
Almost all stakeholders in the tourism industry believe that the high-value vision and strategy for Rwanda is the
correct one. The incentives for all actors in the value chain are clear. For the moment, the gorillas are the country’s
most valuable tourism asset. With only 14,000 permits, 31 the sector must maximize yield from each tourist who comes
to Rwanda. Hotel owners, tour operators, ORTPN and other value chain actors are, for the most part, convinced that
they can make more money, build Rwanda’s standing in the global tourism market and minimize environmental
impact by targeting visitors who are able and willing to pay up to $600 per day for a unique primate experience in
Rwanda rather than backpackers who are trying to get by on $20 per day. Those who may be opposed to this model
are normally those who do not understand the yield equation and believe that simply higher visitor arrivals equates
with success in the industry or do not have the capacity to cater to high-value tourists. Currently, few people fall into
this category and those who do are usually new entrants to the sector.
Achieving agreement on the problems and potential solutions does not seem to be difficult in the tourism industry,
but mobilizing these stakeholders to action is a challenge. Those in the tourism sector clearly have moral grounds for
recognizing that the success of their industry can contribute to the continuing reconstruction of Rwanda’s economy.
Obstacles do not appear to be linked to the root causes of the genocide (i.e., ethnicity), but to a generic mistrust
among competing firms unwilling to share non-critical information and the lack of capacity in existing institutions
such as the Tourism Chamber, private associations and ORTPN to execute existing plans. The good news is that the
Tourism Chamber was formed in 2006; it is a young organization with the potential to mobilize the private sector in
the next phase of Rwanda tourism’s upgrade.
TOURISM’S POTENTIAL TO DEFUSE RESIDUAL CONFLICT

INCENTIVES
As an important source of economic growth and diversification away from a purely agrarian economy, tourism is
considered an important element in the ongoing campaign to address the incentives that led to the genocide and to
help insulate Rwanda’s economy from commodity shocks. Lingering effects of the genocide remain, even after years
of peace and stability in Rwanda, and tourism is particularly vulnerable to public perceptions of safety and security.
These elements are briefly described below and further explored in the research and analysis sections.
Public perception of the destination. Although perception of Rwanda as a safe destination is improving, top of
mind associations with the country are still of violence and genocide. This image is reinforced by the popular press,
media and recurrent security warnings by diplomatic missions in Rwanda. In reality, the security situation is among the
best in the region. Visitors to the country experience few problems walking the streets and exploring the country, even
in the capital, an increasingly rare phenomenon in Africa.
Economic diversification. As noted in the incentives for conflict, high population density led to less land per capita.
In an economy completely reliant on agriculture, this created tension and hostility between haves and have-nots. With
the correct vision, strategy and incentives, tourism can create off-farm employment and mitigate some of the effects
of population pressure on the environment and avoid enclave tourism situations in which the benefits of tourism for
the local population are limited to a few low-paying jobs.

31This number is currently up to 18,000 because of migration of a few gorilla families from DRC to Rwanda. It is expected that
these families will return across the border and leave Rwanda bringing total annual gorilla permits back down to 14,000. This
obviously has an impact on the goal of 24,500 tourists which the industry is addressing through product diversification into
birding and orchids. Early research shows that these products could attract visitors that stay up to 12 days, so the 2010 target
arrivals could be revised downwards because of higher yields stemming from a longer stay in country.

Income inequality. At the macro level, income inequality in Rwanda as measured by the Gini coefficient has risen
from 0.47 to 0.51, 32 high compared to other countries in the region. This trend indicates that the rich are getting
richer, while the poor are getting poorer. 33 In the context of the root causes of conflict, more focus should be put on
pro-poor growth in tourism by creating more opportunities for direct employment, improving the quality of souvenirs
to enhance incomes, harnessing ad hoc charitable gifts and integrating farmers into the supply chains of local
restaurants and hotels. Recent research highlighted in Figure 16 shows how this income currently reaches the poor
and could be the basis for developing strategies to enhance the their participation in the sector and further reduce
incentives for violence.
Figure 16. Tourist Daily Spending by Segment and Recipient

$450
Public Private Less Advantaged General Society
$400 All other
16%
Holiday, Up-market spend
$75 to less advantaged
$350 Taxi populations
6%
$18
$300
Drivers
Daily spend, US $
Souvenirs
19% 59%
$250
$186 $25
$200
$11
$150
$19
$100 $152 $12
$18
$7 $19
$56 $11
$120 $42
$50
$44
$30 $44 $37
$0 $14
Holiday, Business Holiday, Other VFR
Upmarket Budget
% of total to less
4.5% 5.2% 8.9% 8.8% 11.9%
advantaged
*Source: “Maximizing Tourism’s Contribution to Poverty Reduction”, Michael Grosspietsch, 2007.

13

32 Rwanda’s Economic Development and Poverty Reduction Strategy (EDPRS), draft July 2007, Ministry of Finance.
33 Agricultural value-added, per worker growth rates equaled or exceeded overall per capita growth rates until the early 2000s,
indicating that wealth was relatively well distributed. Beginning in 2003, this same figure began to lag per capita GDP growth rates
(Source: World Bank WDI database). Along with the population density figures cited above, this may indicate that land in Rwanda
is approaching maximum productivity without significant investment into modernization. One rationale for an intervention in
tourism is to create opportunities for off-farm rural employment to reduce dependence on agriculture to create jobs, wealth and
prosperity.

V. STATEMENT AND ANALYSIS OF

THE RESEARCH QUESTIONS
This case study focuses on testing two of eight possible research questions stipulated as part of a series of AMAP-
funded case studies concerned with accelerating the transition from conflict to growth in post-conflict settings:
• How can value chain analysis and the value chain framework help us identify and understand the major
opportunities for upgrading and the driving constraints to market growth exacerbated by or resulting from
conflict?
• How can stakeholders be encouraged to adopt longer-range “win-win” rather than short-term “win-lose”
strategies, particularly in shortened decision-making time horizons?
To facilitate the research, the team disaggregated the two main research questions into sub-questions to facilitate the
research. They are explored in-depth below.
RESEARCH QUESTION 1
How can the VCA and value chain framework help us identify and understand the major opportunities for upgrading
and the driving constraints to market growth exacerbated by or resulting from conflict?
SUB-QUESTION 1A
Is a VCA the best tool for identifying structural constraints in post-conflict environments?
Post-conflict environments present at least three simultaneous challenges.
• First, if the population is not actively participating in the economy, a key conflict driver often remains. This
argues for a grass-roots focus on employment and MSE support.
• Second, there is a need to rebuild or create the enabling environment necessary for a society and economy to
function—behavioral norms, transparent policies, and consistent enforcement are the glue that binds a
society.
• Finally, the success of either of the first two challenges depends on the support of the other—societies
cannot exist without engaged participation and citizens will not commit to the social contract without trust in
the systems that provide the benefits of participation.
VCA offers the best opportunity to simultaneously address these three fundamental challenges. This statement does
not discount the incredible value that can be generated by either FL or EE interventions; it merely argues that VCA is
the more holistic solution and it can generate sustainable results and contribute to more effective firm level or
enabling environment designs.

Figure 17. Relative Merits of FL, VCA and EE interventions in a Post-Conflict Environment 34
Direct Impact on Poor/MSEs
Qualified TA with expertise and access

Firm to resources can create substantial “Quick
No improvement at the firm and community
Level scale Wins”
level
A VC-level approach pushes the Supports rapid

Industry synergies
larger firms to support restart of industries,
Value increase impact
rapid restart of MSME trust building and
Chain across wide range
feeder firms by prioritization of interventions
of firms
creating demand using actual operations
None in
Ability to affect regulatory and Institutions and Rule of Law build
Enabling short term
confidence through precedent. The
Environment policy change that impacts entire
economy inability to accelerate this trust building
argues for early EE effort.
Return on Donor Investment Post-Conflict Importance

Sub-point 1A.i: The VCA provides a holistic view of structural constraints facing an industry by mapping the
entire industry and its stakeholders.
A significant value of the VCA is that it looks holistically at the “range of activities and services required to bring a
product or service from its conception to its end use…” 35 This approach casts a substantially wider net than either a
FL or EE approach. In the context of Rwanda tourism, the VCA, identified and addressed at least three factors that
would have been missed with either an FL or EE focus alone.
1) The VCA clearly identified the level of inter-firm cooperation and coordination that existed in the
industry to set a baseline for improvement. The creation of the TWG at the inception of the process brought
together a wide range of vested interests in the industry that represented the full range of domestic value
chain partners (hotels, guest houses, restaurants, transport, activity providers) as well as vested parties from
government, community representatives interested in increasing access to the tourism industry, and NGOs
and donors providing funds and technical assistance. This initial group created three cooperation and
coordination outcomes that would have been either more difficult or not addressed by a FL or EE approach.
A. The TWG reflected a broad range of voices that represented the greatest knowledge base of historical
tourism activities and data existing in post-conflict Rwanda.
B. The group represented a broad spectrum of, and outreach to, all Rwandans interested in rebuilding the
tourism industry. It brought together individuals who had formerly not self-identified as entities that
could coordinate for mutual advantage and it augmented the capabilities of ORTPN, an institution that
was ill-equipped to take a full leadership role in the strategy formulation process due to a lack of
knowledge and institutional capacity.
C. Finally, this group allowed the project implementing the VCA with the tourism industry to
simultaneously engage the broadest possible constituency, while also allowing focused project efforts and
participant self-selection to create a powerful, and driven cluster workgroup that could study and begin to

34 Although EE interventions may have a high return on donor dollars invested, the impact on MSEs is limited in the short-term.
Value chain specific EE interventions can help an industry succeed, but it must be linked to actions at the value chain and firm
level as well.
35 USAID – Value Chain Approach to Poverty Reduction

solve complex problems by creating partnerships (government/private sector and national/international

partners) that would lead to new and productive relationships to build a competitive and equitable model
of tourism for all stakeholders.
2) The TWG became the de facto trusted information repository and clearing house able to quickly
achieve a baseline of data which could help justify all positions, decisions and actions. This “democratization
of data” was a key component in the effort to overcome a lack of trust that existed not only as a result of the
recent conflict, but because of a longer history of controlled and asynchronous information within the
industry and society at large. While the information gathered during the secondary research stage of the value
chain study could easily have been replicated as part of a robust FL- or EE-based effort, the sharing of the
data and the period of open debate and dispute leading to a dataset everyone committed to accepting as
accurately reflecting reality would not have been completed. This agreement on the underlying data was
critical to the later stages of the value chain effort, which required commitment and investment based on the
group’s decisions.
Ever since the strategy was developed and ratified by the Cabinet to ensure government support, the TWG
has played an important role in implementation. All industry strategic plans emphasize the importance of
collaboration between the private sector, development partners and government and the quarterly meetings
allow the group to steer implementation of the National Tourism Strategy and identify solutions to upcoming
problems. These meetings focus on five main elements: performance monitoring, resource mobilization,
action planning, issue troubleshooting and information sharing. TWG deliberations often have help inform
government positions on tourism related issues. 36
3) The TWG allowed all self-interested actors in the industry to understand that the industry thrived or
failed based on the success or failure of the most tenuous link in the value chain. It is human nature to
be self-interested, and in the environment of the TWG, it was natural for individuals to be most interested in
the outcome that benefited that individual the most. A key value of the broadly participatory VCA was that it
created an environment in which the questions of “what is best for the industry” and “what is best for me”
could be considered at both the individual and system-wide level.
This is important because all participants must balance dual objectives: 1) the value chain must be sustainable
(i.e., everyone must generate positive results), and 2) individual profitability should be maximized so long as
the first objective holds true.
Balancing these two objectives is generally easy in a pair-based transaction—both parties must benefit. But
once the system includes three or more participants and once the objectives of those participants differ (e.g.,
maximize financial returns for the private sector versus a stable and prosperous social system for the public
sector), it can be extremely difficult for individuals to understand if their solution is positively or negatively
impacting another actor. By bringing together the full range of interested parties and providing a basic
framework for how the actions of one actor might impact another, the TWG was able to identify strategic
options that satisfied the dual objectives of everyone.
BEST PRACTICE 1A.I

Facilitators should create an industry workgroup that represents the broadest possible interests of all value chain
components. To keep the group engaged, the facilitator must provoke data- driven debate that leads to concrete
actions benefiting individual firms and the entire value chain. In addition, action should be driven by
committees focused on specific issues such as marketing or product development.

36 Some of these high impact decisions are highlighted in the analysis of Hypothesis 2.

Sub-question 1A.ii: How can the VCA effectively balance national and sector goals through specific
measurable results?
In its Vision 2020 plan, Rwanda has set ambitious goals for its development. Between 2000 and 2020, the country
aims to grow its per capita GDP from $US 250 to $US 900 and halve the incidence of poverty from 60 percent to 30
percent. 37 Coupled with population growth averaging 2-3 percent, this target implies Rwanda’s economy needs to
expand by over 600 percent, requiring an annual growth rate of at least 7 percent. At the beginning of OTF’s
engagement in Rwanda, the first task was to help the GoR reflect on how it could achieve these goals. The team
responded that a rigourous and participatory VCA could help develop actionable sector strategies that would allow the
nation to achieve its growth and poverty reduction goals.
TOURISM ACTION PLAN: REQUIRED INVESTMENTS AND RESPONSIBILITIES

The Rwanda Tourism VCA was a comprehensive and participatory action and investment plan that clearly defined
actions to be taken, timelines and responsibilities. As with the overall process, the investment plan for the tourism
sector clearly shared responsibility for investment and implementation among the private sector, government and
international donors. This action plan was predicted to generate approximately US $100 million in annual receipts by
2010, an important figure since coffee, the largest export sector, was only US $25–30 million per annum at the time.
Complemented by similar plans formulated by OTF for coffee and tea, these value chain strategies sketched out a
roadmap for how Rwanda could achieve its national objectives. A summary of the original tourism action plan
appears in Figure 18. In addition to this information, activities were phased in for quick wins that could sustain
industry momentum. Examples are attendance to several key trade fairs and the restructuring of ORTPN to better
support the implementation of the high-value tourism strategy.
It is unlikely that an EE or FL intervention could deliver an action plan that balances concrete actions with shared
responsibility. An FL intervention would deliver customized recommendations, but at a level where national impact
would be limited; and an EE intervention would improve the overall business environment, but it would not create
real competitive advantage for the sector.
In both FL and EE efforts, there is a critical lack of organic consensus-building as part of the analysis and strategy
development effort and this deficiency must be overcome through a parallel outreach, awareness and promotion
effort. While such an effort can be effective in creating broad support, it is suboptimal compared to a consensus-
building VCA for two reasons. First, VCA establishes a clear delineation between those performing the analysis and
those reviewing/accepting it. Second, it creates longer feedback loops that can substantially extend the time required
to move from analysis to implementation if there is an unexpected negative reaction to a core component of the
analysis or emerging strategy.
A VCA using an industry working group provides this organic feedback system that ensures that as the standard
process evolves, consensus and support exists prior to further action. There still exists the potential for an initiative to
slow or stall due to lack of agreement, but this approach identifies that issue as it emerges and creates the opportunity
for correction before any effort is wasted.
Beyond the value of shared baseline data and objectives, the diverse industry workgroup also created the appropriate
conditions for widely distributed actions and investments in support of the emerging industry strategy. While there are
examples of either FL- or EE-based approaches generating grassroots support and a diversified pool of investors, the
general trend with these activities is that FL-based efforts tend to drive investment within a given firm using
traditional sources of capital, while EE-based approaches are apt to coordinate and unlock government and donor-

37 Rwanda’s Vision 2020, MINECOFIN

driven investments. For the OTF project in Rwanda, the VCA proved to be a very effective mechanism to use with
the tourism, coffee and tea industries.
Figure 18. Action Plan Example—Overarching Marketing Activities 38
Key Partners Estimated

Key Areas Detailed Activities Responsible
Involved Total Budget
Advertising and Promotion
Enhance Increase Private Sector participation in fairs through education of tour operators, hotels and restaurants Tourism Promotion Body Tourism Private Sector, 200
Rwanda’s MINICOM
presence at Create a detailed calendar including preparation and training for fair participants Tourism Promotion Body Tourism Private Sector, 0
international MINICOM
fairs Prepare official launch of Rwanda Tourism Tourism Promotion Body Tourism Private Sector, 400
MINICOM
Invite high level Rwandese officials and icons to participate in international fairs MINICOM New Tourism Promotion 0
Body
Develop Establish a list of natural and cultural attractions consistent with Rwanda’s new image Tourism Promotion Body Tourism Private Sector, 170
tourism MINICOM
catalogs and Set up or up-date an information resource center Tourism Promotion Body Tourism Private Sector 10
virtual tours Distribute catalogs and virtual tours on targeted websites including Rwanda’s own Tourism Promotion Body Tourism Private Sector 40
Cultivate a Prepare information package and contact information of other experts on Rwanda to facilitate the work of travel MINICOM Private Sector, MINICOM 20
network of writers
“friendly” travel Rwandese Embassies in such countries to identify such travel writers and keep them informed about Rwanda, Commercial Attaches ORTPN, MINAFET, 0
MINICOM
writers in main
markets Organize two familiarization trips a year to help travel writers get a first hand experience of Rwanda and its high Tourism Promotion Body Private Sector, MINICOM, 60
quality experiences MINAFET
Internet
Develop a Propose a structure for website based on Rwanda’s tourism overall strategy Tourism Promotion Body MINICOM, Tourism 10
comprehensive Private Sector
website Mobilize fund to develop Rwanda’s tourism website MINICOM New Tourism Promotion 150
Body, MINICOM
Propose content for website especially attractions and editorial materials Tourism Promotion Body MINICOM, Tourism 10
Private Sector
Create e-mail Create e-mail based loyalty programs to reach the visitors back home and learn about their previous Tourism Promotion Body Tourism Private Sector 10
based loyalty experience in Rwanda
programs To develop a comprehensive data-base that is up-dated regularly Tourism Promotion Body Tourism Private Sector 20
To keep regular contact with the “ former” visitors and posting them with the current information Tourism Promotion Body Tourism Private Sector 10
TOTAL BUDGET 1.110
BEST PRACTICE 1A.II

To create maximum value for all stakeholders, the VCA must have impact at the national, industry, and firm
levels. To accomplish this, the action plan resulting from the VCA must be actionable and it must demonstrate
that is can visibly affect national economic performance while generating high and rising profits for the
broadest possible number of value chain actors.
SUB-QUESTION 1B
Is the VCA sufficient to promote growth in post-conflict economies?
Sub-point 1B.i: VCA does not provide the firm level skills required for businesses to implement good
strategy.
MSE ASSISTANCE NEEDS VERSUS VCA OUTPUTS

The VCA does not provide the firm-level skills businesses need to implement good strategy. However, some VCA
attributes can be effective in ensuring that the strategy emerging from the effort recognizes and respects existing skills,
identifies those that are missing, and recommends ways to fill the gaps. In tourism, these skill gaps exist mainly in
hospitality and include customer service, guiding, international-standard cooking and general management. Some of

38 The marketing component shown here is only one component of a comprehensive plan that covered product development and
the development of strong institutions.


these gaps have been addressed by larger firms bringing in regional expertise from South Africa and East Africa
(notably graduates of Utali College in Kenya). Although importing skills has partially closed the gap, smaller firms that
do not have the resources to recruit, hire and retain expensive, imported labor need access to a well-trained local labor
pool.
By following a participatory approach that engages representatives at each level in the domestic value chain, 39 barriers
to implementation can be identified and discussed to ensure that efforts and investments do not exceed industry
capacity.
In Rwanda, the tourism VCA occurred in parallel with other industry VCAs, including coffee. Given the range of
other donor-funded programs in the coffee industry (notably USAID’s ADAR, PEARL and SPREAD programs),
OTF fully expected that direct support in business services, access to finance, and training would give the coffee
industry a substantial advantage over the tourism industry in terms of promoting rapid and sustainable growth.
Figure 19 provides a basic overview of the firm-level assistance that was available to these two industries during the
VCA.
Figure 19. Summary of Firm-Level Support Available Through Parallel Donor-Funded Programs
Coffee Tourism
Business plan writing for washing stations (ADAR) Limited interventions from
Direct
Management training (short-term experts and expatriate poorly-focused donor and
BDS
managers for washing stations) government BDS programs.
Marketing Study tours/buyer meets (ADAR) Government support for trade
Support Trade Show participation (ADAR/PEARL) fair attendance.
Development Credit Authority

Access to Agricultural Guarantee Fund
40 percent investment subsidy to agricultural investments None
Finance
(RSSP/World Bank)
Formal banking initiative at the farmer level (PEARL)
While the table clearly shows a more active support network of donor activities for the coffee industry, the results of
the implementation of the strategic plans demonstrates that the tourism effort now exceeds expectations, while coffee
is lagging in some important areas.
Though coffee results are generally excellent—Rwanda moved into a fully-washed coffee product and has made
headway into the fine and specialty coffee market with a high-quality product that commands price premiums—
success is coming at different rates in various levels of the chain. At the micro-enterprise level, there is much to
celebrate. Farmers have seen cherry prices increase from RwF 60 (US $0.11) in 2003 to RwF 130 (US $0.24) in 2006.
However, at the processing/export level, less than 10 percent of Rwanda’s coffee is fully washed (against an
admittedly unreasonable target of 100 percent fully washed) and most coffee washing stations are struggling to make a
profit. Rwanda also remains a relative unknown among coffee-supplying countries.
On the other hand, tourism efforts have exceeded objectives, with receipts exceeding the strategic plan each year since
2003. However, these results obscure some tactical implementation problems within the industry. While results have

39 The domestic value chain refers to all actors physically present in Rwanda. This excludes channel partners and, in the case of
tourism, international visitors.


been excellent, progress on key initiatives has been well below expectation. Figure 21 provides an assessment of
implementation versus the TWG strategic plan.
Available data prevents us from drawing any conclusions about the cause of the relative performance of coffee and
tourism. The sheer number of variables present in a comparison of parallel VCA efforts across various industries
makes it unlikely that this is an appropriate approach for future efforts.
And yet, anecdotally, we know that there is benefit to be derived from involving relevant parties from the
government, NGO and donor communities. When actors with money to invest in for-profit activities coordinate with
private sector participants, it drives closer coordination of donor dollars to address market failures that the private
sector alone won’t take on. Concerning training in support of MSE participation in the VCA, research indicates that in
Rwanda there is a clear need for coordination among donors, government and the private sector to better understand
MSE needs and deliver affordable and targeted training through appropriate channels.
To answer the question of the impact and scalability of firm-level assistance, future VCA comparison exercises should
measure the qualitative economic impact of direct assistance at the MSME-level of a given value chain. The nature of
value chains tends toward broad-based MSME feeder firms serving a smaller and smaller number of larger firms as
the product moves toward the final consumer. This structure would allow the establishment of control groups to test
the impact of parallel donor support of direct assistance provision by measuring the growth of supported firms
against those in the same industry who are in the control group.
BEST PRACTICE 1B.I

In post-conflict environments, BDS should be integrated into VCA project design as it is almost always
necessary. Given the low skill base in fragile economies, a good strategy would be to migrate from direct
provision of BDS services to the facilitation of BDS markets with local providers.
Sub-question 1B.ii: Does VCA reliance on facilitators rather than implementation staff leave a gap between
plans and performance?
The Rwanda Tourism Strategy laid out a comprehensive ten-year action plan in order to achieve the vision. Over the
past five years, the TWG and OTF have monitored the implementation status of this action plan, breaking the items
down by category (Product Development, Marketing & Distribution and Institutions) and by status
(Planned/Complete, Planned/Incomplete and Unplanned/Complete). The news on this front is not encouraging. At
best, only one-third of planned action items have been completed for “Marketing and Institutions” and just 29
percent of planned items for “Product Development” have been completed. The good news is that for the country’s
core “Primate Product,” the percentage is at 70 percent. 40 These implementation shortfalls leave large gaps in
Rwanda’s tourism product such as the lack of boats on Lake Kivu and a lodge in Nyungwe as well as insufficient
training resources. Although the sector has sustained strong growth to date, these gaps likely render this growth
unsustainable in the medium- to long-term and limit spending opportunities available to tourists and, therefore, the
overall pro-poor impact of the sector. The implementation status of the action items and a representative list of these
items are shown in Figure 20.

40 OTF Group analysis

Figure 20. Rwanda Tourism Strategy Action Plan Implementation

Product Development Marketing & Distribution Institutions
Unplanned, Unplanned,
complete complete
9% Planned,
14%
complete Planned, Planned,
29% complete complete
Unplanned,
36% 37%
complete
36%
Planned,
Planned, Planned,
incomplete
incomplete incomplete
50%
62% 27%
Guiding and interpretation services in National Enhanced presence at international tourism fairs ORTPN restructuring 2002
Parks
Completed
Planned &
Cultivate network of “friendly” travel writers Develop national tourism website

Develop selected lodges in Rwanda’s main Establish relationship with high-end international tour
tourst areas--PNV, PNA and PNN Tourism training curriculum at KIST (2002)
operators
Upgrade existing tourism policy document
Develop 8 revenue sharing projects Familiarization trips
Tourism catalogs and virtual tours, segment

PNV Discovery Center
specific experiences National tourism training institution
Incomplete
Planned &
Customer facing training for all types of

E-mail based loyalty programs Tourism donor partner session to
tourism businesses
determine donor contributions
Create multiple “Traveler’s-Huts” programs
Lake Kivu boat investments
Statistics development
Equip RIEPA with investment collateral Create 5 new local selling points
Hire local PR firm to promote domestic tourism Creation of Tourism Chamber

& Complete
Organize conservation day

Unplanned
Community-based tourism workshop Target Asian market--Japan trade fair Develop community-based tourism
(ORTPN with SNV, ODI) guidelines and directives
Representation at annual Rwanda Diaspora Convention
Development of Cave Tourism, community- Kitabi conservation training center (In
Facilitation of Rwanda-based documentaries, high-profile
based tourism initiatives progress)
visits
Source: Rwanda National Tourism Strategy (2002), Rwanda Tourism Working Group Experience 16 Sacola Community Lodge
Based on interviews 41 with tourism industry stakeholders, the reason that implementation progress has been so slow is
likely the complexity of the original strategy regarding creation of a portfolio of products. This underscores the
challenges of working in post-conflict economies where the institutional capacity to assume responsibility for the
execution of a value chain strategy is limited. As noted in the comparison with coffee, the absence of a dedicated
support institution (like the ADAR coffee project) that could build tourism firm skills and capacity to carry out the
strategy contributed to the implementation gap.
BEST PRACTICE 1B.I

In post-conflict environments, BDS should be integrated into VCA project design as it is almost always
necessary. Given the low skill base in fragile economies, a good strategy would be to migrate from direct
provision of BDS services to the facilitation of BDS markets with local providers.
Sub-question 1B.iii: Is VCA the best tool for leveling the playing field by addressing general business
environment issues?
The VCA is highly effective at identifying structural constraints, building competitive advantage, productive
relationships and trust for Rwanda’s tourism sector. OTF’s approach to value chain strengthening has allowed
industry actors to identify the most attractive customer segments and begin to design tourism experiences for these
potential clients. Despite the success of the tourism sector, Rwandan firms and tourism sector face serious challenges
in their business enabling environment—high transport costs, the difficulty of starting a business, an inflexible
financial system and an unskilled labor pool, all of which usually are not the focus of a VCA. The OTF project
addressed these issues solely in an industry-specific manner. For example, OTF worked with tour operators to

41 OTF Group stakeholder interviews, August 2007.

benchmark regional import taxes in order to lower tariffs on imported vehicles and addressed access to finance issues
by facilitating discussions on tourism financing. What has not been done is to engage in wholesale reform of the tax
system or comprehensive overhaul of the financial sector; these fall far outside the mandate of the project.
Although firms of all sizes suffer from deficiencies in the BEE, the problem is most acute for the roughly 70,000
MSEs in all sectors of the economy. 42 Figure 21 shows the breakdown of firms. In OTF’s experience in Rwanda, the
size allocation roughly follows that of the tourism sector.
Figure 21. Types of Private Sector Entities in Rwanda 43
PRODUCTION SYSTEM
Home-based
Dispersed production – small scale Factory type – organized & structured
production
Informal/Formal Enterprises – units in
Informal Formal – organized enterprises
transition to small and medium
Family production Microenterprises Small enterprises Medium Large enterprises
enterprises
Approx. 70,000 MSEs Approx. 200 SMEs 30-50 large firms
Artisans; home-based Organized artisans; Organized Organized- Organized-
food; preparation/ formal & informal operations in a structured formal structured formal
processing; banana; units; production – specific building- enterprises; enterprises; modern;
sorghum beer; basket open air market- factory type; modern; registered registered
weaving; etc. place; retail shops associations, etc companies companies
Less than 10 30-100 100 or more
Family labour 10-30 employees
employees employees employees
The World Bank survey identified a wide range of constraints to developing enterprises including 1) difficulty
accessing financing (working capital), finding required equipment locally, and obtaining raw materials and other inputs
at reasonable cost; 2) limited markets, access to electricity, and resources to own building space; 3) lack of technical
and management training for owners/skilled workers, transport and packing facilities, and diversification; 4) taxes and
poor infrastructure; and 5) dependence on subsidies and low profitability. 44 Although these findings are for firms in
general, they represent major constraints to the tourism sector, which OTF addressed in a very targeted way, as noted
in Figure 20.
As noted in Figure 21, in addition to their small size, most MSEs also are informal. A recent FIAS report 45 noted the
numerous reasons why Rwandan firms stay in the informal sector and the consequences of this choice. Entrepreneurs
decide to stay informal because the total costs of entry, operation and exit associated with joining the formal sector
are greater than the potential benefits. These expenses include the transactions costs of finding the information and
undergoing all the necessary registration and compliance processes. Businesses are willing to forgo the benefits of
better protection of property rights and to bear the expense of extra-legality (penalties, expensive finance, etc.)
because they see more benefit in remaining informal.

42 P. Nugawela (May 2004), Review and Assessment of Micro and Small Scale Enterprises (MSSEs) in Rwanda, World Bank.
43 Ibid.
44 Source: Review and Assessment of Micro and Small Scale Enterprises (MSSEs) in Rwanda, World Bank, May 2004.
45 Sources of Economic Activity in Rwanda, FIAS, November 2006.

BEST PRACTICE 1B.III

VCA practitioners should not divert valuable resources trying to fix big BEE problems. Instead, they should
focus on enabling environment issues that are pertinent to the competitiveness of the specific value chain with
which they work. This narrow focus has two benefits; 1) it is achievable and 2) it most likely can provide tangible
bottom-line benefits to value chain actors.
RESEARCH QUESTION 2
How can stakeholders be encouraged to adopt longer range “win-win” rather than short term “win-lose” strategies,
particularly in shortened decision-making time horizons?
SUB-QUESTION 2A
Was the VCA the most effective way to create a common and inclusive vision for tourism in Rwanda?
Sub-point 2A.i: In tourism, the VCA is the most effective way to foster the horizontal and vertical linkages
necessary to create a sophisticated tourism experience.
As noted in the value chain summary, since 2002 Rwanda has pursued a high-value tourism strategy that targets eco-
tourists with an experience that meets or exceeds their expectations at a price point that supports the sector’s yield
targets. To create this experience, a broad range of actors, both in-country and internationally, created a complex web
of relationships to deliver the product the market required. As an example of this collaborative approach, OTF and
the TWG used the “Visitor Experience Model” (VEM) and worked together to design the “Primate Certification
Experience,” a high-value product that sought to maximize yield by extending visitor “stay and spend” by utilizing all
of Rwanda’s primate tourism assets. The VEM has four components: Planning, Selection, On-Trip and Post-Trip.
Different firms and institutions play key roles in each area.
Figure 22 provides details of how the VEM works in the context of a VCA. The TWG envisioned a successful
primate experience beginning in the “Planning” stage of a trip with the creation of a pre-trip course website and the
recruitment of friendly travel and scientific writers to author and publish positive press about Rwanda’s natural
tourism assets and experiences. Success also relied on establishing vertical linkages with potential visitors and channel
partners (travel agents, wholesalers, etc.) in the “Selection” phase to ensure that both intermediaries and end-
consumers were fully aware of Rwanda’s superior primate experience, safety and security, and long history of
conservation. “On-Trip” is where complex horizontal relationships among tour operators, hotels, restaurants,
community groups and NGOs provide a world-class experience and the VEM finishes with the “Post-Trip” phase in
which tour operators and ORTPN create loyalty programs to “tie” visitors to the country and encourage repeat
business.

Figure 22. The Visitor Experience Model: Primate Certification Experience
The “Primate Certification” Experience
Planning
Planning Selection
Selection On-Trip
On-Trip Post-Trip
Post-Trip
Create a pre-trip course Educate travelers and Educate travelers on Rwanda’s Develop a gorilla adoption
preparation section on website travel agents on the fact safety program where Eco-
with: that Rwanda has better Train and certify educated Travelers get to learn
— Endangered species access to primates than guides able and equipped to about specific members of
Uganda interpret experiences a gorilla family
— Travel clothing and gear
Educate travelers and Propose flexible Collect information on Eco-
— Menu of unique activities
travel agents about experiences with core Travelers’ satisfaction and
— Interpretive services conservation efforts (since provide Rwandan primates bi-
“must-do” experiences such
— Lodging and equipment 1969) and community as “Gorillas in the Mist” monthly e-mail
— Banking services based programs with a multitude of cultural Offer special rates for
Invite travel and scientific Equip travel agents with activities such as Intore booking “Advanced Primate
writers to write stories about information package dancers Certification” class or other
Rwanda’s natural heritage in including a CD virtual tour Operate ecologically experiences
targeted magazines to handle detailed sensitive, partly community
questions owned lodges
Work with scientists such
as those with the Dian
Fossey Gorilla Fund to
Why Rwanda Wins promote primate courses
Rwanda wins by safety, delivering a participative and culturally sensitive experience carrying a theme that helps build and layer the activities
being offered, quality of interpretation from guides to scientists, and honesty
Note: Items marked in Italics represent marketing and distribution activities

Source: OTF Tourism Visitor Quantitative Survey n=225, OTF Analysis, Tourism 17 Marketing and Distribution Seminar
Successful implementation of the VEM would not have been possible with a firm-level or enabling environment
engagement. If OTF’s engagement had begun by trying to assist individual firms, it is doubtful that this approach
would have created the required sophisticated experience based on so many components (hotels, restaurants, tour
operators, handicrafts). The time and transaction costs associated with coordinating all of these enterprises and
bringing each one to a level where they could provide a world-class experience would have been prohibitive. Although
EE interventions are cost effective, they tend to allow countries to “keep up” with competitors rather than “surging
ahead” by creating competitive advantage.
BEST PRACTICE 2A.I

The absence of productive relationships and the capabilities to deliver high-quality tourism experiences often
found in post-conflict environments require that all players in the tourism sector must collaborate to build
world class products. The VCA can act as the vehicle for generating the “value net” of cooperation and
customer insights necessary to target, activate and retain premium customer segments.
Sub-question 2A.ii: Is the VCA the best method to create a base of collaboration and common vision?
To build its competitiveness, Rwanda’s tourism industry needed to build an industry that was collaborative and led
jointly by the public and private sectors. 46 A survey of the TWG in 2001 found that there was good and bad news.
Surprisingly, although there were high levels of trust and a belief in the concept of competition by private sector firms,
stakeholders believed natural assets to be the key to competitiveness and had an unfavorable view of the role and
ability of government to effectively support and lead development of the sector.

46Public sector involvement was especially critical in the segments that Rwanda chose to target because of the key role the
government has to play in conservation and protection of national parks and wildlife, the foundation of the primate product.

Figure 23. Tourism Stakeholder Survey: Trust and Collaboration
Mean
In order to be successful firms in Rwanda must compete and

cooperate at the same time
100% 0% 2.2
There is a high level of trust within the Rwanda Tourism sector 83% 0% 17% 1.6
The level of cooperation between the private and public sector is low 50% 30% 20% 0.7
Tourism will succeed because of mountain gorillas and landscape 50% 7% 43% -0.1
It is possible for all players of the Tourism sector to make profits at

54% 15% 31% 0.8
the same time
My government's policies should subsidize where necessary to be

46% 8% 46% 0.4
competitive
Agree (1,2,3) Neutral (0) Disagree (-1,-2,-3)
Source: OTF Group Tourism Working Group Member Survey (n=15)
The OTF 5-Step Process is designed to address these issues. A key component of the process is to bring all players to
the table, including government, donors and NGOs—effectively anyone who might be able to contribute to the
development of the sector. Although the gathering of these diverse groups often sparked fierce arguments and some
counter-productive workgroup meetings 47 during the initial nine months, the group evolved and came to understand
the data and analysis that OTF brought to the table and how to adapt it to the unique opportunities and constraints of
Rwanda’s tourism sector. The VCA process allowed skeptics to voice their concerns in an open forum where other
members of the workgroup could agree with, or refute what was said. This type of dialogue created true buy-in and
validation of the strategy in a way that could not have been achieved with the one-on-one meetings and customized
technical assistance that are the core of a firm-level intervention.
Sub-point 2A.iii: The VCA shifts power dynamics to give voice to “minority” stakeholders.
BEST PRACTICE 2.A.II

Attitudes around trust and collaboration should be measured and the results used to drive the VCA process
component. Facilitators should receive training in productive communication techniques and be seen as honest
brokers by industry and not politically motivated. This neutral role in combination with the power of data allow
the facilitator to “lead from behind”
As noted in the conflict section, Rwanda’s genocide was the result of many factors including a growing gap between
the haves and have-nots. The OTF 5-Step Process was designed expressly to promote the broadest participation
possible and give marginalized 48 groups an opportunity to voice their concerns and balance the views of ORTPN and
the small firms owned and operated mainly by Rwandan returnees with close ties to government.

47 In OTF’s experience, although not every workgroup meeting can be full of tension, it is productive for industry and
government to publicly air differences to show where they stand. The 5-Step Process per se does not provide any guidance on
this, but all of our consultants receive training on productive communications and meeting facilitation.
48 Marginalized firms are those owned by the majority of Rwandans without close ties to government. Many firms in tourism,
though struggling, tend to be owned by relatively well-connected individuals.


Thanks to this early dialogue and debate, MSEs situated around tourism destinations, particularly the Volcanoes
National Park, are integrated into the tourism value chain in two different ways. First, ORTPN instituted a revenue-
sharing program with local communities whereby they receive 10 percent of all government tourism revenues—nearly
US $80,000 49 in 2005. Although not tied directly to MSE development, the funds are invested in infrastructure as
decided by community councils, which improves local business enabling environments. A program such as this in
which government actually follows through with its proposal is rare in the world—many countries are still in the
concept stage.
Second, as noted in the value chain summary, 6.9 percent of all tourism revenues reach the poor through direct
employment, transport services, food, handicrafts and other micro and small business activities. Although this money
does provide a living for many Rwandans, the industry does feel that with targeted BDS interventions in agriculture
and handicrafts, there are huge opportunities for MSEs to become more fully integrated into these supply chains and
improve their share of tourists’ daily spend.
The final and most interesting way in which minority voices could shift power dynamics is by harnessing the 16.9
percent of revenues in the form of donations from tourists to local NGOs or charities highlighted in a recent
survey. 50 This money most likely goes to good causes, but if it were harnessed to create a local microenterprise
investment fund or went to supplement the capital base of local microfinance providers rather than being spent on
everyday necessities, these funds could become the basis for financing groups of firms that could tap into Rwanda’s
highly lucrative tourism industry.
BEST PRACTICE 2A.III

The VCA can shift power dynamics by creating a “line of sight” through a value chain from MSEs to end markets.
This data allows these small firms to better serve these segments, earn higher profits and improve their negotiating
position vis-à-vis larger and better-resourced firms. With this in mind, market intelligence should be shared as
broadly as possible to encourage the maximum participation of MSEs in the chain.
Sub-question 2A.iv: Can the VCA provide a framework for action that creates positive, peer pressure strategy
implementation?
A guiding principle behind OTF’s 5-Step Process was that Rwanda’s tourism sector needed to collaborate to compete
in the global marketplace. In the early stages of the process and the formation of the TWG, activities mainly focused
on debate and consensus building, which culminated in validation of the National Tourism Strategy. Once the strategy
had been approved, OTF attempted to use the TWG as a forum for driving its implementation. Many of the action
items agreed to in the 2002 action and investment plan required close coordination among two or more stakeholders.
The success of the TWG in pushing implementation over the past five years has been mixed. Implementation of
tourism strategy action items has been just 30 percent of total items—a somewhat weak execution rate. What are the
causes of this low rate? OTF hypothesizes that for activities where there is a clear, short-term return on implementing
a given activity such as ITB attendance or working with hotels to negotiate competitive rates and add-on services,
motivation is high. On the less positive side, training is a high priority area where there has been limited progress. This
may indicate that TWG members see this as an important issue, but not their responsibility to address. To justify its
high price point, Rwanda’s tourism industry must upgrade its services to exceed the levels of regional and global
competitors. Despite numerous meetings and acknowledgement of the issue by leaders at all levels of the public and

49 ORTPN website: www.rwandatourism.com. $80,000 represents 10 percent of total government revenues from the parks or
$800,000.
50 Ibid.

private sectors, no one has taken the lead and concretely addressed this challenge. The implementation problems are
likely three-fold: 1) a common complaint in the private sector is that once employees receive training they defect to
competitors; 2) training is a soft investment that is not currently well-received by banks and is often eliminated in
negotiations for the financing of business plans; and 3) the long-term solution 51 is so complex that without full time
resources tasked with the problem, it is difficult to gather momentum.
In conclusion, the VCA has had mixed results creating positive peer pressure for tourism sector players to collaborate.
Although there has been some success, the approach may have to be reinforced with strategic subsidies to “prime the
pump” or the allocation of a facilitator who could more actively coordinate some of these activities. In OTF’s view,
the main issue here is not interest or recognition of the need by stakeholders, but rather the capacity to carry out
activities themselves or a strong enough connective organization (i.e., the Tourism Chamber) to coordinate group
action on key action items.
BEST PRACTICE 2A.IV

For value chain members to continue collaborating, momentum around a strategy should be maintained
through series of “quick wins” and the creation of useful tension. In the case of Rwanda tourism, there were
early quick wins that enabled many players to succeed just enough that they became less willing to engage in
collaborative activities.
SUB-QUESTION 2B
The VCA promotes productive relationships among stakeholders.
Sub-point 2B.i: The VCA promotes industry sustainability and validates high-impact decisions more
effectively than an EE or FL approach.
The private sector must serve as the engine of growth for Rwanda tourism (and other sectors, as well). In post-
conflict situations businessmen often are motivated more by short-term profit than in taking a long-term view of
industry sustainability and profitability. As a decision-making mechanism for the sector, OTF found the TWG to be
an excellent forum for discussing and validating high-impact decisions where there were clear trade-offs between
short-term profitability and the long-term vision of Rwanda’s tourism sector. In many cases, if there had not been a
clear strategy and dialogue mechanism in place, Rwanda’s brand and positioning could have been irreparably damaged
or left much worse off. Examples of the informed decision-making the TWG engaged in follow.
Charter Flights. In March 2004, the charter tour company Point d’Afrique approached a few private travel agents
and ORTPN to test the idea of beginning charter package tours from Europe to Rwanda. The company planned to fly
in 130 people every 2 weeks at a per person price of 550 Euros (US $605 at the time) for a 2-week stay, airfare
included. The same company offered an 8-day package to Mauritania for 348 Euros (US $380). Obviously this was far
below Rwanda’s yield targets, but certain tourism professionals and senior government officials found the proposition
very attractive on the basis of the boost in arrival numbers and the money that a small handful of private operators
might make from the new business.
In a situation where there had been no high-value vision or strategy, Pointe d’Afrique most likely would have begun
operating in Rwanda with serious negative consequences to the long-term viability of the industry. In addition to the
overall degradation of the destination image, the arrival of charter tourists would have minimal economic impact on
the country because charter companies engage in a form of enclave tourism known for revenue leaks, minimal

51 The long-term solution to the tourism training problem most likely includes creating standards, identifying short-
term emergency training programs and finally, the establishment of a high-quality training school. The implementation
of these activities will most likely take a small team for which resources have yet to be made available.

linkages, and no benefits for local communities. At this point in the implementation of the tourism strategy, everyone
involved wanted to provide opportunities to small firms and individuals to profit from the tourism trade. And, given
the fragile state of Rwanda’s environment, high volumes of tourists could irreparably damage the tourism assets that
the country relied on to attract high-value primate tourists. The EE and FL approaches could not have generated the
same kind of informed, unified response from the tourism industry core players.
Gorilla permit price increases. ORTPN sparked a massive debate within the industry when it proposed a gorilla
permit price increase. The reason for the price increase was three-fold. First, ORTPN predicted that the permits
would sell out within the next year to 18 months, so this was simply respecting the laws of supply and demand.
Second, ORTPN saw the price increase as a critical component of their marketing strategy to signal quality with a high
price point. Third, the gorilla permit comprises such a small component of the overall price of a tourist’s package to
see the gorillas that a price increase would not affect sales. Most private firms were furious with the proposed
decision. Although they were in agreement with the principle of charging a high price for a premium product, they
thought they needed at least a year of warning to allow channel partners to raise the price of their packages and move
the international tourists to more expensive packages.
Numerous TWG meetings were held to discuss this issue and ORTPN finally decided that it would raise prices on
June 1, 2007. Much to the surprise of everyone involved, neither channel partners nor international tourists reacted in
an overly negative manner to the price increase. In an interesting turn of events, Uganda also raised its permit price to
keep pace with Rwanda, creating positive price competition for the regional gorilla product and an additional $1.8
million per year that ORTPN could invest in its tourism promotion and conservation activities. The lesson here is
clear. Although ORTPN did not in the end comply completely with the interests of the workgroup, there was a
productive consultation with the private sector, and ORTPN was flexible on the phase-in date of the price increase
and was following the group-defined strategy of targeting high-value clients. A few months into the price increase,
growth in the sector is unaffected, but the high price point does put additional pressure on the industry to raise service
levels to deliver an experience that matches the higher price.
BEST PRACTICE 2B.I

Once approved, strategies that result from a VCA should be used not only to guide implementation, but also as
a lens for evaluating high impact decisions. The guiding principle here is that strategy is often choosing what
NOT to do.
Sub-point 2B.ii: The VCA fosters collaborative relationships across ethnicities.
During the research, explicit conversations about ethnicity were difficult to have given the Rwandan government’s
current policy of suppressing ethnic identities. As a rough proxy for ethnicity, the team used the integration of the
poor 52 into the product development process of tourism experiences to respond to this research question.
Based on interviews with TWG members and data they provided, OTF concluded that, although there had been some
progress toward integrating MSEs into the tourism value chain, there was much more work to be done. Furthermore,
the most progress was made by companies that included expatriate business owners and managers who seemed,
perhaps, to have a longer-term view and could more easily disregard ethnic tensions. Two examples of this integration

52Rwanda’s ethnic breakdown is 15 percent Tutsi, 85 percent Hutu and less than 1 percent Twa. The focus here is on relatively
wealthy returnees (often Tutsi) making attempts to integrate the poor as MSEs to create sustained competitive advantage. Taken
in isolation, this is a risky strategy as it could reinforce existing tensions. However, given limited project resources (i.e., limited
ability to provide firm-level assistance), OTF had to work with the most viable firms in the sector. To be clear, these choices
WERE NOT based on ethnicity, but on the level of TWG participation by business owners.

are the New Dawn Associates (NDA) community-based tourism products and the Volcanoes Safaris Business
Linkages Challenge Fund (BLCF) project in the Ruhengeri area (home to the mountain gorillas).
NDA is a Rwandan-European partnership that seeks to provide high-quality and intellectually challenging tourism
experiences. Its owners have deep experience in tourism operations, academic research and sustainable development.
Although NDA sells the typical gorilla packages for which Rwanda has become famous, its most innovative activities
are centered on creating high-value, community-based tourism products that allow NDA to maximize yield from its
tourists by extending their length of stay. An excellent example of a unique NDA product that commands a premium
price and also benefits the local community, is the Millennium Village Tour, an economic development project that
seeks to achieve the U.N. Millennium Development Goals (MDGs) in five years through targeted interventions in a
wide range of areas. NDA has entered into an exclusive partnership with the project to market the destination and
manage all logistics. Although the Millennium Village Tour was launched only in June 2007, initial indications from
the market and integration of the poor into the product are encouraging. Small groups of tourists pay $90–$120 per
person for a full day tour with approximately 40 percent of this amount reaching the village through handicraft
purchases, food preparation, cultural shows and partnership fees. 53 NDA estimates that 360 people per month will
purchase the MVP once it is in full operation. Without the product development lead of NDA, the integration of
Mayange village (home of the MVP) would not have been possible. Tourism has the potential to allow the MVP to
achieve and maintain the MDGs through enterprise development even after support by large donors ends.
Volcanoes Safaris, a Ugandan-owned tour operator in Rwanda took a slightly different approach to integrating MSEs
into the high-value tourism chain. To defray the investment costs of Rwanda’s first high-end, community-integrated
eco-lodge, Volcanoes applied for a grant from the BLCF for a building grant and to provide training and small-scale
investments to smaller, locally-owned hotels and restaurants in the region. In 2003 Volcanoes received nearly
£420,000 (US $840,000) from DFID, 54 which it used to successfully upgrade facilities at Muharabura Hotel (a three-
star facility) and at Kinigi Guesthouse, a community-owned hotel adjacent to Volcanoes National Park. In addition,
the project provided training for locally hired staff at the Volcanoes facilities and two other hotels. The training
programs definitely created opportunities for trainees and Volcanoes reported that the biggest problem it faced with
the program was the defection of its newly-trained staff to better paying opportunities elsewhere in Ruhengeri or even
Kigali. A few even established their own businesses with the skills they learned. The Volcanoes BLCF initiative is an
excellent example of strategically-targeted donor funds used to create competitive advantage by investing in superior
facilities and service for an individual firm while promoting broader value chain upgrading by training competitors and
communities in how to better serve a new and lucrative client base.
In conclusion, the Rwanda tourism VCA has contributed to the creation of productive relationships across ethnicities.
Although the examples to date appear to be driven by expatriate managers and owners, they are role models for purely
local firms to emulate in the future.
BEST PRACTICE 2B.II

In the absence of collaboration across different ethnic groups or clans, outsiders can be a catalyst for changing
mindsets and business models. Donors and government can provide strategic subsidies to encourage foreign
investment into innovative and potentially highly profitable areas.
Sub-point 2B.iii: VCA helps horizontal partners choose their vertical partners more efficiently than an FL
approach.

53 Email exchanges with Director-General of NDA and NDA website: www.newdawnassociates.com
54 Interviews with Volcanoes Safari staff and Business Linkages Challenge Fund website: www.businesslinkageschallengefund.org

Good strategy depends on informed choice and/or the availability of data. Most firms, especially the smallest ones, do
not have the financial resources to invest in extensive market research to identify and activate new market segments.
In the case of Rwanda tourism, the VCA permitted a large number of firms to access normally unaffordable, world-
class market research that helped them choose vertical partners and configure their operations to serve up-market
customers by building the long-term relationships required to win in the high-value eco-tourism segment.
OTF provided this invaluable customer data to the industry in the form of customer portraits for both channel
partners and visitors. Figure 24 shows that the data is valuable to many members of the TWG and helps guide both
organizational and industry-level budgeting and investment decisions for nurturing these critical relationships. The
VCA not only made this data affordable for all stakeholders, it also focused the industry on key segments of the
market and what it would take to activate them.
The key findings of the research and the areas on which Rwanda’s tourism needs to focus are:
• Image and product marketing: Despite excellent security and political stability, Rwanda is still tainted by
the genocide. To begin changing these attitudes, the TWG planned and executed a US $500,000 campaign
targeting the UK market through a private PR firm.
• Safety: The best way to allay safety concerns about a country is with familiarization or “FAM” trips where
the government and local industry host key channel partners to highlight the experiences and facilities
available in-country. The TWG mobilized to bring regional channel partners first and then international
partners to Rwanda through cost-sharing.
• Creation of sophisticated experiences: High-end channel partners are always looking for non-price factors
to differentiate their products and services. As noted above, significant resources have been spent by the
public and private sectors to create the basic platform for success. Now that this platform is in place,
individual firms, especially small and start-up ones, have the opportunity to compete with larger more
established tour companies to provide new add-on experiences that are unique. Without the customer
knowledge provided by the customer portrait, small firms would be ill-prepared to compete in this segment.

Figure 24. Customer Portrait of a Channel Partner for East Africa
Purchase
Purchaseand
and Desired
Desired Beliefs
Beliefsand
and
Usage
Usage Experience
Experience Associations
Associations
Environment
Environment
Most channel partners are tour operators While business and client satisfaction are the main Rwanda is not so well perceived by travelers
sending less than 10,000 mid and up market drivers to the decision to stick with a destination, when it comes to important attributes such as
visitors to Africa for safaris, camping and security and political stability appear to be the real safety, wildlife, distinctiveness and a relaxing
adventure determinants to channel partner loyalty to a atmosphere
Channel partners perceive political unrest destination
Although almost two-thirds of respondents
and increasing client expectations as the Image and product marketing are two areas where have considered sending travelers to
most important challenge to travel in Sub- Channel Partners believe Rwanda can improve Rwanda, they do not perceive the country as
Saharan Africa. being safe
Gorillas, Lake Kivu and Culture are the top
three products that channel partners
associated with Rwanda
Purchase
Purchaseand
and
Usage
UsageBehavior
Behavior
Origination
Decision to consider a new destination is based on the breadth of the product that the destination features
Selection
Natural endowments, security and infrastructure drive the decision to choose an African destination
Products offering, reputation and an insurance policy appear to be the main determinants of the decision to

work with an African partner
Relationships
Channel partners appear to be focusing on creating more sophisticated experiences

Loyalty
As long as the business is good, the clients happy and the destination secure, channel partners stick with the
destination

BEST PRACTICE 2B.III

Data is the key to coordination among value chain actors and to targeting and activating new market segments.
Aligning all stakeholder interests around segment needs is the most efficient way to create a sophisticated tourism
experience for which visitors will pay a premium.

VI. RECOMMENDATIONS
This case study provided an excellent opportunity for OTF to take a retrospective view on its work over the past six
years in Rwanda’s tourism sector. The study provides a roadmap for its continued role as advisors to the public and
private sectors until 2010. Rwanda’s tourism industry has staged a major turnaround since 2001—receipts have
surged, public perception of the destination has been transformed, and the country has emerged as the premiere
primate destination in Africa, if not the world. Based on OTF’s experience working with Rwanda’s tourism sector and
in response to the research questions posed by this case study, the following best practices in post-conflict VCA
emerged:
• Create and engage an industry workgroup to guide and validate analysis. From the beginning of the
VCA in Rwanda tourism, the TWG served as a valuable sounding board for research and analysis. In addition
to providing invaluable technical input, TWG meetings provided a forum for tourism stakeholders to debate
issues; agree on important decisions; and build the trust and relationships required to build a competitive
tourism industry. A fully-engaged workgroup is also critical to achieve private sector buy-in to the strategy
and elicit concrete commitments and investment from both the public and private sector.
• Use the workgroup to validate high impact decisions during implementation. After the initial strategy
formulation process is completed, the vision and strategy should be used as a litmus test for major decisions
on the direction of the industry. Although infrequent, these decision points can re-vitalize workgroups
through active debate and serve to test the ongoing relevance of the strategy and vision.
• Focus on quick wins based on the higher forms of capital. In the absence of the hard assets required to
serve high-value eco-tourists, Rwanda’s tourism industry focused on items that could be fixed more quickly
and with limited investment. Two examples of this are restructuring ORTPN and organizing trade fair
attendance to begin changing customer perceptions of the country. As the sector improved its management
capacity and image, efforts were begun to upgrade hotels, roads and transport links.
• The VCA is ideally suited for upgrading the competitiveness of tourism. Given the range of firms
needed to create a complex tourism experience, intervening at the industry-level with all stakeholders was the
correct approach. A more tactical approach focused on only certain components of the chain would have left
gaps in the product that would have been unacceptable to international tourists. As noted above, the VCA is
also well-suited to identify structural constraints, but needs dedicated resources (BDS or other) to engage in
effective, firm-level assistance.
• Outsiders can drive innovation. As noted in the study, outsiders have been the first to reach across ethnic
lines to integrate the poor into tourism products. In general, foreign investors with a healthy appetite for risk
and previous experience in tourism can bring cutting edge practice and an understanding of customer needs
to new and potentially high-profit ideas.
Despite this success, there are definitely shortcomings in OTF’s approach to VCA in Rwanda tourism:
• Absence of firm-level assistance. Compared to the progress in firm-level skills that OTF witnessed in the
Rwandan coffee sector, this component has been almost completely absent in tourism. The key difference is
that OTF developed an informal relationship with the USAID ADAR project, whose mission was to enable
business people to implement the strategy by providing business planning, production and marketing
assistance. In skill areas critical for tourism such as customer service, guiding and general management, this
type of support was not provided due to lack of resources in the OTF project. In the future, the 5-Step

Process should be expanded to include both process steps and appropriate partners to integrate industry-
specific BDS into the value chain upgrading process.
• Complexity of the action plan. The output of the 5-Step Process was a comprehensive ten-year plan to
upgrade the entire tourism industry, including the development of a portfolio of experiences. Based on
implementation progress, it would have been prudent to simplify and phase in the action plan to keep the
industry focused on one product at a time. A related point is the need to constantly revisit, update and
upgrade the strategy to respond to changing domestic industry dynamics, competitor response and customer
needs.
In addition to the process learning, OTF developed useful insights into why tourism should be considered in a
portfolio of industries to rebuild in post-conflict societies:
• MSE focus. In Rwanda, over 90 percent of the firms that were members of the TWG were considered small
or micro (fewer than 10 employees). As the value chain is deepened, the tendency is to engage ever smaller
firms as input suppliers for larger, more established companies. The creation of large numbers of small
specialized firms is feasible because of the low barriers to entry in many tourism functions such as tour
operators, guiding and food provision. 55 With dedicated BDS support, information related to customer
needs, whether for end-customers or intermediaries such as restaurants and hotels, can be transmitted to
these MSEs to help them to make informed investments into improving their products.
• Country brand building. Along with general public relations campaigns and investment promotion, the re-
emergence of Rwanda’s tourism sector has accelerated the country’s re-integration into the global economy.
Given the fickle nature of the international tourism market, the impression of stability (and the reality on the
ground) must be infallible. The synergies between the success of tourism and other initiatives have created a
virtuous circle of positive press, recognition and investment into the country.
Although Rwanda and OTF had success in the tourism industry, the following caveats should be considered:
• Security and stability. Safety, security and political stability are key decision criteria for tourists and the
channel partners who send these tourists to their destinations. If these factors are questionable, the popularity
of a destination can crash overnight. In the case of Rwanda, the country has enjoyed nearly a decade of
relative peace and security, which has paid off for the tourism sector.
• Viable tourism assets and strategy. Rwanda is fortunate to be able to lay claim to a significant percentage
of the rare mountain gorilla. Using these enchanting primates as the foundation for a high-value tourism
strategy is a viable and highly lucrative path. However, not all countries need to have a world-class tourism to
consider tourism. In neighboring Burundi, tourism professionals are considering a regional R&R experience
to bring expatriates from neighboring countries to Bujumbura to enjoy the diverse cuisine and lakeside beach
resorts.
Given OTF’s ongoing role in Rwanda, many of these issues will be addressed in collaboration with the TWG, the
Tourism Chamber and ORTPN. The first step in addressing these issues is through the strategy revision process
which includes major action items around training, tourism-specific BDS providers and product diversification. The
preliminary action plan is summarized in Figure 25, below.

55 Although according to Porter’s 5 Forces, low barriers to entry also contribute to low profit levels in the absence of innovation
and upgrading of competitive advantage.


Figure 25. Preliminary Rwanda Tourism Action Plan 2007–2012

Category Item Key Programs Total Cost (US $)
2007-2012 Summary Action Plan
Upgrade Lake Kivu Road, build PNV Discovery
Primate Center, complete PNN eco-lodge, development $19,676,400
policy for lakes
Define birding product, upgrade PNA road
Birding $3,355,000
Products
network, build high-end lodge in PNA

Design and build conference center in Kigali,
create standards for conference organizers,
Conference $15,080,000
"meet & greet" sessions for providers and
funders
Add-ons (Lakes & Create lakes development plan, commercialize
$1,100,000
Others) cultural products, define orchid product
Develop standards, engage short-term training

Cross-cutting
Training $1,845,000
consultants, build tourism training school
Joint marketing campaigns, partnership with the
Private sector
Bankers' Association, capacity building to $155,000
participation
Tourism Chamber
Economic linkages with BDS support to producers, destination level
$673,000
local communities PPPs
Grand Total $41,884,400

VII. CONCLUSION
At the ITB 2007, Rwanda was named Best African Exhibitor. Taken in the context of the country’s dismal positioning
in the market in 2001, this turnaround is astounding. Reacting to this news, a long-time TWG member said “Now that
we’ve convinced the world that we are world-class, we must match the market’s expectations with an unbeatable
product.”
Over the past five years, the tourism industry has proven that it can succeed and has the potential to become a major
contributor to Rwanda’s GDP. Through a combination of political stability, industry leadership and focused product
development, Rwanda has become the country to beat in East African high-value tourism. The effects of this
transformation are astounding; dozens of new entrants into the tourism industry, new hotels cropping up around the
country and regular sighting of tourists in Kigali and the major tourist sites. Despite this early success, there is still
work to be done in the sector over the next five years. The industry must upgrade its primate product to be the best in
the world; it must invest in training to ensure that Rwanda justifies its high price point; and importantly, it needs to
guarantee that tourism becomes a source of prosperity for a broad-base of Rwandans by ensuring that local
communities benefit—this must be a priority for all stakeholders. If this can be achieved, tourism will become a life-
changing and prosperity-creating force for Rwanda as it seeks to achieve Vision 2020.

U.S. Agency for International Development

1300 Pennsylvania Avenue, NW
Washington, DC 20523
Tel: (202) 712-0000
Fax: (202) 216-3524
www.usaid.gov

MR 94 - Rwanda Tourism Value Chain Case Study

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RWANDA TOURISM VALUE CHAIN

RWANDA TOURISM CASE STUDY ii

RWANDA TOURISM CASE STUDY iii

RWANDA TOURISM CASE STUDY iv

RWANDA TOURISM CASE STUDY 1

RWANDA TOURISM CASE STUDY 2

RWANDA TOURISM CASE STUDY 3

RWANDA TOURISM CASE STUDY 4

II. CONFLICT AND POST-CONFLICT

THE FOUR P’S OF RWANDA’S GENOCIDE

RWANDA TOURISM CASE STUDY 5

Figure 1. Population Density (People per Square Kilometer) 1973 - 2005

Post-genocide growth and security

Source: World Bank Development Indicators Online

RWANDA TOURISM CASE STUDY 6

THE STATE’S INVOLVEMENT IN ENCOURAGING CONFLICT RATHER

RWANDA TOURISM CASE STUDY 8

THE ROLE OF INTERNATIONAL SECURITY FORCES AND GLOBAL

TRANSBORDER ETHNIC MOVEMENTS

DESPITE PROGRESS, INCENTIVES FOR CONFLICT STILL EXIST IN

RWANDA TOURISM CASE STUDY 9

Figure 2. Comparison of Pre- and Post-Genocide Factors

down to the 10 household-level.

• The government has put in a place strong security

The RPF created an excuse

ended it). Unwillingness of

III. RWANDA TOURISM VALUE

RWANDA TOURISM CASE STUDY 12

Step 1 Step 2 Step 3 Step 4 Step 5

Set Industry Understand Target Articulate Sector Develop

CONFLICT DESTROYS THE ECONOMIC CAPITAL FIRMS AND

Figure 4. The 7 Forms of Capital for a Post-Conflict Economy

High population displacement means gaps in education

Usually ineffective for years as they are rebuilt

Transportation, Communication Depending on the intensity & duration of the conflict,

Agricultural assets normally suffer because of lack

IN 2001, RWANDA’S TOURISM INDUSTRY WAS IN SHAMBLES

RWANDA TOURISM CASE STUDY 14

TO ADDRESS THESE PROBLEMS, THE PUBLIC AND PRIVATE SECTORS ENGAGED IN A

RWANDA TOURISM HAS STAGED A DRAMATIC TURNAROUND

RWANDA TOURISM CASE STUDY 15

Figure 5. Rwanda Tourism Receipts & Investments

Rwanda Tourism Receipts

Rwanda Tourism Investments

RWANDA TOURISM’S VALUE CHAIN IS PRIMARILY FOCUSED ON THE HIGH-VALUE

RWANDA TOURISM CASE STUDY 16

Figure 6. Rwanda Tourism Value Chain Map

Domestic Channel International Channel Supporting Institutions

International Tourists ORTPN

Travel Agents &

Transport: taxis, buses, BDS & Training

Inputs Other inputs: toiletries,

DESCRIPTION OF VALUE CHAIN ACTORS

ECO-TRAVELERS: THE CORE CLIENTS OF RWANDA

RWANDA TOURISM CASE STUDY 17

Figure 7. Overall Expectations from the Destination, Visitor to East Africa

Importance Ranking of Product Attributes for Tourism Destinations

Could be explored 5.6

Offered wildlife and natural attractions 5.5

Was safe 5.1

Allowed to rest 5.0

Not very touristic 4.9

Able to do unique activities 4.7