Kigali businesses face a major test at the end of March, when a directive requiring those in residential areas to move to commercial premises comes into force.
“It is the worst thing to happen to some of our businesses, especially startups. Most were not ready for these expenses. The other problem is scouting for a good location,” said Jefferson Rumanyika, the owner of a startup in Kigali.
The directive will affect over 900 businesses and several non-governmental organisations.
Kigali City vice mayor for economic affairs Parfait Busabizwa said failure to meet the deadline could call for forceful eviction except for a few businesses with proof that they had paid rent running beyond April.
Mr Busabizwa added that the city had engaged developers to reduce rental rates for the incoming businesses but it is still not known to which extent the reduction will be.
“The move is good in creating a vibrant central business district. But it will cost many small businesses with low operating capital and low sales volumes,” said a Gasabo-based restaurant manager only recognised as Moses.
The directive is expected to add life to Kigali CBD as small businesses mainly offices, small retailers and restaurants leave residential areas across the city’s three districts for the city centre.
Before this, developers were struggling with low occupancy rates, raising fears that they could default on their obligations to banks.
Authorities dismiss claims that the move is intended to favour the owners of new business premises, insisting that the directive is consistent with implementing the Kigali city master plan, whose provisions designate specific areas for commercial activities, office and residential purposes.
Though downtown Kigali has in the past couple of months seen huge additions to the stock of retail space, analysts suggest the only way small businesses can survive in such circumstances is finding a way to co-share space in commercial facilities to be able to cope.