General Rwanda’s economic structure is characterized by an overwhelming majority of population being employed in agriculture. The scarcity of land brings Rwanda to ask for policies that would reduce, over the coming years, the number of people depending on agricultural activities. Policies that promote education for all and especially professional trainings will help in shifting population from agricultural sector to any other sector in industry or services.
Friendly industrial policy has contributed to the general improvement of Rwanda’s economy. Privatization of former public enterprises confirms the government will of leaving economic activities to a competitive private sector.
A One Stop Board of local and especially foreign investors has been set up to shorten administrative procedures needed to start any business. Sound fiscal and monetary reforms are put in place with the aim of further improving the investment climate. The economy is opened and Rwanda is a member of COMESA’s Free Trade Area. Rwanda joined the East African Community (EAC), which regroups Kenya, Tanzania and Uganda, Rwanda and Burundi . Rwanda has now fully anchored in Central and Eastern Africa and will enjoy its strategic position of being at the centre of a market of more than 100 million people.
Rwanda has tremendous potential in tourism. With lakes, volcanic mountains, natural forests and a well looking landscape, “the country of thousand hills” is attracting more and more tourists every year, but the country can still do better. Promoting investment in tourism may reduce the gap between imports and exports values since tourism is seen as inward- exported good that enables government to get needed foreign exchange.
With an expanding financial sector, a strong investment in communication and ICT and the forthcoming EAC’s membership, Rwanda made a choice of strengthening her service sector and enlarging her market. Encouraging education for all, promoting private sector and ICT, opening the economy to a competitive world, working on sound fiscal and monetary policies and boosting the tourism is opening widely Rwanda’s economy towards sustainable development in a global market.
The current priority investment sectors in Rwanda are:
- ICT & Telecom
- Financial Services
- Real estate and Construction
- General Manufactoring
- Real Estate & Construction
RDB's CEO of Rwanda Development Board John Gara: "Rwanda is now open for business"
Monday, 27 December 2010
Over the last 16 years, Rwanda has been characterized by reforms in the social, economic and governance areas. More particularly today, Rwanda is in its 7th year of reforming the doing business environment. The main objective of these reforms is to promote the government’s vision of creating a private sector driven economy. The Rwanda Development Board (RDB) has a mandate to make this happen.
In the 2010 World Bank Doing Business report, Rwanda was ranked the top global reformer and this year, in the 2011 Report, Rwanda was again ranked in the top ten global reformers coming up with the second position out of 183 countries assessed by the World Bank. Rwanda is the 4th easiest place to do business in Sub-Saharan Africa following Mauritius, South Africa and Botswana and second after Georgia among the countries with the most cumulative number of reforms globally over the last five years. The 2010 World Economic Forum Global competitiveness report has named Rwanda the 6th most competitive economy in Sub-Saharan Africa.
The Doing Business report measures reforms that were done during a one year period in a given year. In its assessment, emphasis is given to the regulations that enhance business activity and those that constrain it across 10 stages in the life cycle of a business measured as starting a business, dealing with construction permits, employing workers, registering property, getting credit, paying taxes, trading across the borders, protecting investors, enforcing the contracts and closing a business.
RDB is proud to say that, ever since the reforms started, the Government of Rwanda has been able to implement an extensive and coordinated program that includes many new laws and amendments coming into force and several administrative procedures being streamlined. These efforts are a priority for the entire government right from the country’s leadership up to the officers at the local government. In 2009 alone the Government implemented numerous reforms, including a new and standard company law that increased investor protection, brought in immediate mandatory disclosure of personal interests by directors and simplified company registration to a limit of 2 procedures completed in 3 days. Today, you can register a company in 24 hours by going through ONLY one procedure at RDB. The process can be completed either manually at RDB offices or electronically for business men and women who might be either far away or busy in their offices. Rwanda is ranked the 9th easiest place to start a business in the world.
Considering that the construction industry is one of the major pillars in the Rwandan economy, the government has extensively reduced the number of days required to obtain the construction permits from 210 days in 2009 to less than 30 days this year. This is around an 80 percent reduction in the time it took a year ago. This has been enabled by the establishment of a one stop center for construction permits in the city of Kigali which consolidates all services required for permits at a single point.
Further reforms were made to promote our cross border trade with the introduction of 24 hours border operations at Gatuna (border with Uganda), Nemba (border with Burundi) and La CORNICHE at the Rwanda/DRC border. This process of 24 hour border operations was backed by the harmonization of Customs procedures with the EAC as per the EAC Customs Union Act. Another major reform done in respect of trading across borders is the creation of integrated border management where customs officers, immigration and officers from the Rwanda Bureau of Standards sit in one office thus saving the time spent in multiple queues and in goods clearance.
After realizing that procedures for paying taxes compromised ease of doing business, the government embarked on deepened reforms in procedures for paying taxes by extending tax advisory services at the district level. A small scale trader who wishes to understand his or her tax obligations will only need to visit the nearest Business Development Services center for tax advice. Additionally, a tax calculator was introduced by installing software at the Rwanda Revenue Authority website to ease the calculation of taxes and fines.
The introduction of quarterly filling of VAT for small and medium enterprises means that a trader with a maximum annual turnover of 200 million who used to file for tax dues 12 times in 2009 will only need to do it 4 times each year with effect from 2010 and beyond. This represents a significant saving in transaction costs and time related to filing and paying the tax.
Accessing creditor information has also been a little bit cumbersome. The government responded to this by enacting a credit information systems law that paved the way for licensing a private credit bureau (CRB Africa). This will enhance the capacity of the Rwandan private sector in accessing credit by providing timely credit reports to the financial institutions. This private credit bureau is supplementing the already existing public credit registry that is housed at the Central Bank (BNR).Â With these reforms the scope of banks to conduct credit analysis has expanded to include information from public utilities like telecommunications companies, RECO-RWASCO (electricity and water corporations) and insurance companies. Clients with a good credit history can then access loans from financial institutions without the necessity of possessing a collateral security.
In the commercial justice sector, reforms are having a real impact with significant improvement in handling commercial disputes. The government has also continued to improve the legal framework by adopting new laws and amending existing ones in order to ease company registration and corporate governance while providing the framework for lending to the housing market. It takes about three months for a commercial dispute to be heard and disposed of, making Rwanda one of the top 50 fastest commercial judicial systems in the world.
Given the current trend of events where almost everything is going electronic, the government has also brought in a new law regarding electronic messaging, signatures and transactions. Another new legislation is a Condominium law to enhance real estate and property markets development. It is aimed at attracting investors and enabling people to purchase property of their own preferred size.
Benefits from the reforms.
The ongoing reforms are significantly contributing to the ease of doing business. For example, company registration has risen by registering 5808 new companies in 2009 alone compared to a total of 7081 companies from 2003 to 2008. The simplification of registration procedures has significantly helped special interest groups like small and medium enterprises, women and youth, to begin and operate their own business.
We have a modern legal framework in place that can help commercial banks to expand their scope of financial lending with the new secured transactions law. Commercial banks can now lend to even clients with movable property like accounts receivables, checks, inventory, crops, etc. Moreover the establishment of the private credit bureau has expanded the scope for credit analysis..
It is now easy to file and pay taxes because of streamlining the requirements for paying taxes. The average time to file and pay tax now (2010) has reduced 148 hours per year compared with 168 hours in 2008
Also the average time to import or export a standard container has reduced to 34 days in 2010 compared to 69 days in 2008
The average time to obtain construction permits has reduced from 210 number of days in 2009 to 30 in 2010.
The Doing Business reforms have set a momentum for doing things better and efficiently. The government has set the precedent and we are confident that the private sector will take advantage of these reforms to make more money and innovate. Rwanda is determined to be a center of excellence in doing business efficiently.
Our main challenge is that reform is a process and not a one-off approach. We need to ensure that the reform momentum is sustained, forward looking and responds to the needs of the private sector.
Given the fact that some reforms are very new in the country, especially from the legal field, the government has got a challenge in carrying out a comprehensive awareness and capacity building exercise. This includes training of lawyers, judges in commercial courts and other relevant legal staff. Besides that, we need to sensitize the business community to fully understand these reforms and utilize them.
Further, some reforms require regional efforts like in trading across borders. There is therefore need for a coordinated regional approach in implementing some of these reforms.
Another big challenge to our doing business reform program is that some areas require massive investment and some time to materialize. For instance area of energy and labor productivity requires heavy investment and time.
Our vision is to continuously develop Rwanda into a very competitive economy that compares with some of the best in the world. We recognize how tough a job this is, but are determined to make steps in this direction just like we have done in the past.