Contents 1 Background 2

RWANDA –
COUNTRY PROFILE
Contents
1
Background 2
6
Doing business in Rwanda
7
1.1
Background 2
6.1
Openness to, and restrictions upon,
foreign investment
7
6.2
Conversion and transfer policies
7
6.3
Expropriation and compensation
8
6.4
Dispute settlement
8
6.5
Performance requirements/incentives
8
6.6
Right to private ownership and establishment
9
6.7
Protection of property rights
9
6.8
Transparency of the regulatory system
9
6.9
Efficient capital markets and portfolio investment
9
2Population
2
2.1
Population figures
2
2.2
Population growth rate
2
2.3
Age structures (2012 estimates)
2
2.4
Gender ratios (2012 estimates)
2
2.5
Life expectancy (2011 estimates)
2
2.6
Ethnic groups 2
2.7Religion
2
2.8Language
2
2.9Education
3
2.10Health
3
3Economy
3
3.1
Latest Economic indicators
4
6.14Labour
10
3.2
Two-year forecast summary
4
6.15 Foreign trade zones/free ports
11
4
Government and Politics
5
6.16 Foreign direct investment statistics
11
4.1
Political structure
5
6.17 Starting a business in Rwanda
11
5
Transport and Communications
6
7
11
6.10 Competition from state-owned enterprises (SOEs) 10
6.11 Corporate social responsibility
10
6.12 Political violence
10
6.13Corruption
10
Country Outlook 6
7.1Overview
11
6
7.2
Domestic politics
11
6
7.3
International relations
11
5.4Railways
6
7.4
Policy trends
12
5.5Telecommunications
6
7.5
Economic growth
12
7.6
External account
12
5.1Roads
5.2
Air transport
5.3Waterways
A.1 Appendix two – sources of information
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
12
1
1Background
2.4 Gender ratios (2012 estimates)
1.1Background
In 1959, three years before
independence from Belgium,
the majority ethnic group, the
Hutus, overthrew the ruling
Tutsi king. Over the next
several years, thousands of
Tutsis were killed, and some
150,000 driven into exile in
neighbouring countries. The
children of these exiles later
formed a rebel group, the
Rwandan Patriotic Front (RPF),
and began a civil war in 1990.
Under 15 years
1.02 male / female
15 – 64 years
0.99 male / female
65 years and over
0.67 male / female
Total population
0.99 male / female
Source: CIA World Factbook
2.5 Life expectancy (2011 estimates)
The war, along with several
political and economic
upheavals, exacerbated ethnic tensions, culminating in April 1994
in a state-orchestrated genocide, in which Rwandans killed up to a
million of their fellow citizens, including approximately three-quarters
of the Tutsi population. The genocide ended later that same year
when the predominantly Tutsi RPF, operating out of Uganda and
northern Rwanda, defeated the national army and Hutu militias, and
established an RPF-led government of national unity.
Approximately 2 million Hutu refugees – many fearing Tutsi
retribution – fled to neighbouring Burundi, Tanzania, Uganda, and
Zaire. Since then, most of the refugees have returned to Rwanda, but
several thousand remained in the neighbouring Democratic Republic
of the Congo (DRC, the former Zaire) and formed an extremist
insurgency bent on retaking Rwanda, much as the RPF tried in 1990.
Rwanda held its first local elections in 1999 and its first postgenocide presidential and legislative elections in 2003.
Rwanda in 2009 staged a joint military operation with the Congolese
Army in DRC to rout out the Hutu extremist insurgency there and
Kigali and Kinshasa restored diplomatic relations. Rwanda also joined
the Commonwealth in late 2009.
2Population
2.1 Population figures
Rwanda has a population of 11,689,696 (July 2012 est.).
At 408 inhabitants per square kilometre (1,060 /sq mi), Rwanda’s
population density is amongst the highest in Africa. Historians
such as Gérard Prunier believe that the 1994 genocide can be partly
attributed to the population density. The population is predominantly
rural, with a few large towns; dwellings are evenly spread throughout
the country. The only sparsely populated area of the country is the
savanna land in the former province of Umutara and Akagera National
Park in the east. Kigali is the largest city, with a population of around
one million.
Total population
58.44 years
Male
56.96 years
Female
59.96 years
2.6 Ethnic groups
Rwanda has been a unified state since pre-colonial times with only
one ethnic group, the Banyarwanda. This contrasts with the majority
of modern African states, whose borders were drawn by colonial
powers and did not correspond to ethnic boundaries or pre-colonial
kingdoms. Within the Banyarwanda people, there are three s
eparate groups, the Hutus (84% of the population), Tutsis (15%)
and Twas (1%).
Unlike the disparate ethnic groups of neighbouring Uganda and
Tanzania, these three groups share a common culture and language
and are classified as social groups rather than tribes. The Tutsis were
traditionally the ruling class, from whom the Kings and the majority
of chiefs were derived, while the Hutus were agriculturalists. The
Twas are a pygmy people thought to descend from Rwanda’s earliest
inhabitants. The current government discourages the Hutu/Tutsi/Twa
distinction, and has removed the classification from identity cards.
2.7Religion
Most Rwandans are Christian, but there have been significant
changes since the Genocide, with many conversions to Evangelical
Christian faiths and Islam. Catholics represent 56.5 % of the
population, Protestants 37.1 % (of whom 11.1 % are Seventh Day
Adventists) and Muslims 4.6%. 1.7 % claim no religious beliefs.
Traditional African religion, despite officially representing only
0.1 % of the population, retains an influence. Many Rwandans
view the Christian God as synonymous with the traditional Rwandan
God Imana.
2.8Language
The country’s principal language is Kinyarwanda, which is spoken
by most Rwandans. The major European language introduced
during colonialism was French. The influx of former refugees from
Uganda and elsewhere has created a linguistic divide between the
English-speaking population and the French-speaking remainder of
the country. Rwandan, English and French are all official languages.
Rwandan is the language of government and English is the primary
educational medium. Swahili, the lingua franca of East Africa, is also
widely spoken, particularly in rural areas.
2.2 Population growth rate
2.751% (2012 est.).
2.3 Age structures (2012 estimates)
Total percentage
Male
Female
0 – 14 years
42.9%
2,454,924
2,418,504
15 – 64 years
54.7%
3,097,956
3,123,910
65 years and
over
2.4%
110,218
164,913
Source: CIA World Factbook
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
2
2.9Education
The Rwandan government provides free education in state-run
schools for nine years – six years in primary and three years following
a common secondary programme. President Kagame announced
during his 2010 re-election campaign that he plans to extend this free
education to cover the final three secondary years. Many poorer
children still fail to attend school due to the necessity of purchasing
uniforms and books and commitments at home.
3Economy
There are many private schools across the country, some churchrun, which follow the same syllabus but charge fees. A very small
number offer international qualifications.
Minerals exports declined 40% in 2009-10 due to the global
economic downturn. The 1994 genocide decimated Rwanda’s fragile
economic base, severely impoverished the population, particularly
women, and temporarily stalled the country’s ability to attract private
and external investment. However, Rwanda has made substantial
progress in stabilising and rehabilitating its economy to pre-1994
levels. GDP has rebounded with an average annual growth of
7%-8% since 2003 and inflation has been reduced to single digits.
Nonetheless, a significant percent of the population still live below
the official poverty line.
From 1994 until 2009, secondary education was offered in either
French or English; due to the country’s increasing ties with the
East African Community and the Commonwealth, only the English
syllabuses are now offered.
The country has a number of higher establishments, with the
National University of Rwanda (UNR), Kigali Institute of Science
and Technology (KIST) and Kigali Institute of Education (KIE) being
the most prominent. In 2009, the gross enrolment ratio for tertiary
education in Rwanda was 5%.
The country’s literacy rate, defined as those aged 15 or over who can
read and write, was 71% in 2009, up from 38% in 1978 and 58% in
1991.
2.10Health
The quality of healthcare is generally low, with one in five children
dying before their fifth birthday, often from malaria. There is a
shortage of qualified medical professionals in the country, and some
medicines are in short supply or unavailable. 87% have access to
healthcare but there are only two doctors and two paramedics per
100,000 people.
The government is seeking to improve the situation as part of the
Vision 2020 development programme. In 2008, the government
spent 9.7% of national expenditure on healthcare, compared with
3.2% in 1996. It also set up training institutes including the Kigali
Health Institute (KHI) and started a social service scheme.
Prevalence of some diseases is declining, including the elimination
of maternal and neonatal tetanus and a sharp reduction in malaria
morbidity, mortality rate and specific lethality, but Rwanda’s health
profile remains dominated by communicable diseases. HIV/
AIDS prevalence in the country is classified by the World Health
Organisation as a generalised epidemic. An estimated 7.3% of urban
dwellers and 2.2% of rural dwellers, ages between 15 and 49 are HIV
positive.
Rwanda is a poor rural country with about 90% of the population
engaged in (mainly subsistence) agriculture and some mineral and
agro-processing. Tourism, minerals, coffee and tea are Rwanda’s
main sources of foreign exchange.
Despite Rwanda’s fertile ecosystem, food production often does not
keep pace with demand, requiring food imports. Rwanda continues
to receive substantial aid money and obtained IMF-World Bank
Heavily Indebted Poor Country (HIPC) initiative debt relief in 200506. In recognition of Rwanda’s successful management of its macro
economy, in 2010, the IMF graduated Rwanda to a Policy Support
Instrument (PSI). Rwanda also received a Millennium Challenge
Threshold Programme in 2008.
Africa’s most densely populated country is trying to overcome the
limitations of its small, landlocked economy by leveraging regional
trade. Rwanda joined the East African Community and is aligning its
budget, trade, and immigration policies with its regional partners. The
government has embraced an expansionary fiscal policy to reduce
poverty by improving education, infrastructure, and foreign and
domestic investment and pursuing market-oriented reforms.
Energy shortages, instability in neighbouring states, and lack of
adequate transportation linkages to other countries continue to
handicap private sector growth.
The Rwandan government is seeking to become regional leader
in information and communication technologies. In 2010, Rwanda
neared completion of the first modern Special Economic Zone
(SEZ) in Kigali. The SEZ seeks to attract investment in all sectors,
but specifically in agribusiness, information and communications
technologies, trade and logistics, mining, and construction.
The global downturn hurt export demand and tourism, but economic
growth is recovering, driven in large part by the services sector, and
inflation has been contained. On the back of this growth, government
is gradually ending its fiscal stimulus policy while protecting aid to the
poor.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
3
3.1 Latest Economic indicators
2 Qtr
Prices
Consumer prices (av; 2005=100)
Consumer prices (% change, year on year)
Financial indicators
Exchange rate Rwfr:US$ (av)
Exchange rate Rwfr:US$ (end-period)
Deposit rate (av; %)
Lending rate (av; %)
Money market rate (av; %)
Foreign reserves (US$ m)
Reserves excl gold (end-period)
2010
3 Qtr
2011
4 Qtr
1 Qtr
2 Qtr
3 Qtr
2012
1 Qtr
4 Qtr
155
4
155.1
2.2
155.8
0.2
157.3
2.6
163
5.1
161.1
3.9
168
7.9
169.8
7.9
581
588.6
6.7
16.8
6.6
592.9
590
6.2
17.1
7.4
588.7
594.5
6.9
16.7
6.8
601.5
600.5
7.5
16.6
6.7
601.5
602.4
8.2
16.6
7
600.8
600
n/a
16.9
6.9
603.6
604.1
n/a
n/a
n/a
609
606.8
n/a
n/a
n/a
783.3
777.3
812.8
706.5
747.7
825.5
1050
899.6
Source: Economist Intelligence Unit
Foreign reserves (US$m)
Exchange rate
3.2 Two-year forecast summary
(% unless otherwise indicated)
2010 (a)
2011 (b)
2012 (c)
2013 (c)
Real GDP growth
7.5
8.6
6.5
7.8
Consumer price inflation (av)
2.3
4.9
8.5
6.7
Deposit rate
6.8
7.9
8.2
7
Government balance (% of GDP)
-0.1
-3.5
-1.8
-4
Exports of goods fob (US$ m)
297
372.6
358.1
389.5
Imports of goods fob (US$ m)
1,084.0
-1,367.9
-1,414.1
-1,461.8
-421
-692.2
-657.8
-528.5
-7.6
-11.5
-9.8
-6.7
Current-account balance (US$ m)
Current-account balance (% of GDP)
External debt (year-end; US$ bn)
0.8
0.9
0.9
1
Exchange rate Rwfr:US$ (av)
583.11
601.83
624.75
632.25
Exchange rate Rwfr:US$ (end-period)
594.45
604.14
622.78
641.84
Exchange rate Rwfr:¥100 (av)
664.51
754.18
788.21
761.73
Exchange rate Rwfr:€ (av)
773.68
837.58
798.68
798.22
a) Actual; b) Economist Intelligence Unit estimates; c) Economist Intelligence Unit forecasts
Source: Economist Intelligence Unit
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
4
4Government and Politics
4.1 Political structure
Official name
République Rwandaise
Key ministers
• President: Paul Kagame
Form of state
Unitary republic
• Agriculture and Animal Resources: Agnes Kalibata
Legal system
The Rwandan legal system is based on Belgian law and a constitution
introduced in June 2003.
• Defence: James Kabarebe
National legislature
National Assembly, with 80 members: 53 directly elected and 27
indirectly elected by representatives of special interest groups;
Senate, with 24 members: 16 indirectly elected and eight appointed
by the President.
• Prime Minister: Pierre Damien Habumuremyi
• Cabinet Affairs and Information: Protais Musoni
• East African Community: Monique Mukaruliza
• Education: Vincent Biruta
• Energy and Water: Isumbingabo Emma Francoise
• Finance and Economic Planning: John Rwangombwa
• Foreign Affairs and Co-operation: Louise Mushikiwabo
National elections
The last legislative elections were held in September 2008 and
the last presidential elections were held in August 2010. The
next legislative election is due in September 2015 and the next
presidential election is due in August 2017.
• Gender and Family Promotion: Aloysia Inyumba
Head of state
The President, elected by universal suffrage to a second and final
seven-year term in August 2010.
• Justice/Attorney-general: Tharcisse Karugarama
National government
Appointed by the President in September 2010.
Main political parties and political forces
• Rwandan Patriotic Front (RPF)
• Parti démocrate centriste (PDC)
• Parti libéral (PL)
• Parti social démocrate (PSD)
• Ideal Democratic Party (IDP)
The externally based opponents of the government include Forces de
résistance pour la démocratie (FRD), Rassemblement pour le retour
des réfugiés et la démocratie au Rwanda (RDR), and rebels based
in the Democratic Republic of Congo, Forces démocratiques de
libération du Rwanda (FDLR), which include the former Interahamwe
and members of the former Rwandan army (Forces armées
rwandaises – FAR)
• Health: Agnes Binagwaho
• Infrastructure: Albert Nsengiyumva
• Internal Security: Sheikh Hererimana Mussa Fazil
• Local Government: James Musoni
• Natural Resources: Stanislas Kamanzi
• President’s Office: Venantia Tugireyezu
• Public Service and Labour: Anastase Murekezi
• Sports and Culture: Joseph Habineza
• Trade and Industry: François Kanimba
• Youth, Sports and Culture: Jean Philbert Nsengimana
• Central Bank Governor: Claver Gatete
International organisation participation
• ACP
• AfDB
• AU
• CEPGL
• COMESA
• EAC
• EADB
• FAO
• G-77
• IAEA
• IBRD
• ICAO
• ICRM
• IDA
• IFAD
• IFC
• IFRCS
• ILO
• IMF
• Interpol
• IOC
• IOM
• IPU
• ISO (correspondent)
• ITSO
• ITU
• ITUC
• MIGA
• NAM
• OIF
• OPCW
• UN
• UNAMID
• UNCTAD
• UNESCO
• UNIDO
• UNISFA
• UNMISS
• UNWTO
• UPU
• WCO
• WHO
• WIPO
• WMO
• WTO
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
5
5Transport and
Communications
The transport system in Rwanda centres primarily around the road
network, with paved roads between the capital, Kigali and most
other major cities and towns in the country. Rwanda is also linked by
road with other countries in East Africa, via which the majority of the
country’s imports and exports are made.
The country has an international airport at Kigali, serving one
domestic and several international destinations, and also has limited
transport between the port cities on Lake Kivu. There are currently no
railways in Rwanda.
A large amount of investment in the transport infrastructure has been
made by the government since the 1994 genocide, with aid from the
European Union, China, Japan and others
5.1Roads
Rwanda has a total of 12,000 km of roads, of which 1,000 km are
paved. The remainder are dirt roads with quality varying from smooth
hard surfaces with drainage to rutted, extremely uneven tracks
passable only with a four-wheel drive vehicle.
Most of the main towns in the country are now connected by paved
road. The condition of these roads was until recently very poor, with
numerous pot-holes and vehicles often driving on the dirt verges
since these were deemed smoother than the road itself. A recent
government programme of upgrading and resurfacing means that
most major routes are now in good condition.
The major urban arteries of Kigali, as well as the high streets in
Ruhengeri, Kibuye and Gisenyi are dual carriageways, but all national
long distance roads are single carriageway. There are no motorways
in Rwanda.
5.2 Air transport
The country’s main air gateway is Kigali International Airport, which
is located at Kanombe, a suburb approximately 10 km from Kigali
city centre. The airport has international flights to Lagos, Brazzaville,
Dubai, Nairobi, Entebbe, Addis Ababa, Bujumbura, Johannesburg,
Amsterdam, Brussels and soon Doha and is the main airport for the
national carrier RwandAir.
There are plans being discussed to build a new airport at Nyamata in
Bugesera district, approximately 40 km from Kigali which would be
much bigger and could act as a hub for the entire region. This would
be done in conjunction with an upgrade to the road in that area as
mentioned above.
The only other airport in the country with passenger service is
Kamembe Airport, which is in the city of Cyangugu. RwandAir
operates a service between Kigali and Kamembe, which serves
southwestern Rwanda and the Congolese city of Bukavu.
5.4Railways
There are currently no railways in Rwanda.
In 2006, China promised to fund a study to build a rail link from
Bujumbura in Burundi via Kigali in Rwanda to Tanzania, which would
be 1,000 mm (3 ft 3 3⁄8 in) gauge. Alternatively, the Northern Corridor
Transit Coordination Authority has proposed railway connection from
Rwanda and Burundi via Congo to connect to the southern Africa
1,067 mm (3 ft 6 in) (Cape gauge) railway network.
5.5Telecommunications
The aftermath of the 1994 genocide and a monopolistic
market structure until 2006 have weighed on the Rwandan
telecommunications sector, but the country is now rapidly catching
up with other markets in Africa.
Mobile market penetration is still significantly below the regional
average. The country has been slow to liberalise the sector, allowing
South Africa’s MTN a monopoly until 2006 when the fixed-line
incumbent, Rwandatel became the second mobile operator. The
launch of a third network (Millicom/Tigo) in 2009 sparked a new
subscriber growth phase, but the average revenue per user has more
than halved since then.
Rwandatel’s mobile licence was cancelled in 2011 and its Libyanowned assets frozen under a UN resolution, to be sold in 2012.
Bharti Airtel of India was licensed as the country’s new third mobile
network, and a fourth operator may be licensed in the future.
Third-generation mobile services have been launched, providing an
opportunity for operators to improve ARPU by offering broadband
services. Rwanda’s internet and broadband sector has suffered from
limited fixed-line infrastructure and high prices, but developments in
the fixed network market are beginning to change this. The operators
are rolling out national fibre-optic backbone networks which also
allow them to connect to the international submarine fibre-optic
cables that landed on the African east coast in 2009 and 2010.
These cables have given the entire region fibre-based international
bandwidth for the first time and brought to an end its dependency on
satellites.
The price for international internet bandwidth is expected to fall to
a fraction of the current level. Several ISPs are rolling out WiMAX
wireless broadband networks. They have adopted VoIP internet
telephony although the technology has not yet been officially
deregulated, which potentially turns them into converged fixedwireless voice and data/broadband service providers.
Rwanda is also a key partner in the One Laptop per Child project and
has a major e-government programme.
5.3Waterways
Lake Kivu is by far the largest of Rwanda’s lakes, forming the border
with the DRC. There are occasional boat services between the major
ports of Cyangugu, Kibuye and Gisenyi but these do not run to a
regular timetable and often have to be chartered. There are also boats
used to ferry people to some of the islands in the lake, but these also
do not run regularly. Local fishermen operate along the entirety of
the lakeshore, usually in dug-out canoes or other hand-crafted boats.
The Rwandan navy operates a few boats on the lake to protect the
country against infiltrators from the Congolese side.
Transport on Rwanda’s other major lakes is mostly limited to ferries,
usually local boats similar to those used to fishing, which transport
people from one side to the other. Some lakes have resort bars and
hotels, such as Jambo Beach on Lake Muhazi, which can offer a
pleasure cruise to their customers in their own speed boat. Local
fishermen operate on most lakes.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
6
6Doing business in Rwanda
6.1 Openness to, and restrictions upon, foreign investment
The Government of Rwanda recognises the private sector is an
essential engine of development and welcomes Foreign Direct
Investment (FDI). Since 2008 the government has undertaken a
series of pro-investment policy reforms to ensure Rwanda remains
competitive in attracting foreign investment. As a result, the World
Bank recognised Rwanda as the world’s top business climate
reformer in 2009 and the second most improved in 2010. Rwanda
now ranks third in sub-Saharan Africa, behind only Mauritius and
South Africa.
The Rwanda Development Board (RDB) was established in 2008 to
fast track development projects and to facilitate new investment.
RDB consolidates several government agencies previously involved
in promoting investment including the Rwanda Investment and
Export Promotion Agency (RIEPA), the Rwanda Commercial
Registration Service Agency (RCRSA), the Human Resource and
Institutional Capacity Development Agency (HIDA), the Rwanda
Information and Technology Agency (RITA) and the Rwanda Office of
Tourism and National Parks (ORTPN).
The establishment of RDB builds on the investment law of 2006
which assists investors in obtaining necessary licenses, visas, work
permits, and tax incentives and which remains in full force. The law
provides permanent residence and access to land for investors who
deposit US$ 500,000 in a commercial bank in Rwanda for a period
not less than six months. This law also fixes the minimum initial
capital investment requirement for foreign investors at US$ 250,000
to qualify for tax and other investment incentives. Despite RDB’s
role in facilitating FDI, international investors have remarked that
they have faced difficulty in obtaining or renewing visas and that tax
incentives and import duties have been applied inconsistently.
RDB provides investors with a “one-stop” investment services
centre. Through the one-stop centre RDB assists potential investors
in securing all required approvals, certificates, work permits, tax
incentives and land registrations. Foreign investors who pass through
RDB have not reported any discrimination. By law, foreign firms are
treated equally with regard to taxes, access to licenses, approvals,
and procurement.
No statutory limits on foreign ownership or control exist, and there
is no official economic or industrial strategy that has discriminatory
effects on foreign investors.
Rwanda is still developing its legal infrastructure. Specialised
commercial courts began operations in 2008 and, with the help of
foreign commercial judges, have largely cleared a substantial backlog
of cases. Despite this, the Heritage Foundation’s 2011 Economic
Freedom Index raises concerns regarding a lack of independence
and capacity in the judicial system as well as corruption in legal
processes. Investors have commented that the sanctity of contracts
is not always upheld and court judgments are not always enforced in
a timely fashion.
In 2008, the government implemented business reform legislation,
which included new bankruptcy regulations and arbitration laws. In
2009 it approved a new Intellectual Property law. A company law
also adopted in 2009 strengthened investor protections by requiring
greater corporate disclosure, increasing the liability of directors and
improving shareholders’ access to information.
In 2011, the Government of Rwanda reformed tax payment
processes and enacted additional laws on insolvency and arbitration.
These laws were designed to facilitate international business and to
further improve the investment climate.
There is no mandatory screening of foreign investment. However,
RDB does evaluate business plans of investors seeking tax
incentives in order to record incoming foreign investment and to
better allocate investment incentives to qualified foreign investors.
The government encourages foreign investment through outreach
and tax incentives. The only difference in treatment between foreign
and domestic companies is the initial capital requirement for official
registration – US$ 250,000 for foreign investors; US$ 100,000
for domestic investors. There are no reports of foreign investors
declining to invest due to these differing treatments. Foreign
investors can start a new business irrespective of the initial capital
requirement.
Foreign investors can acquire real estate, but there is a general limit
on land ownership. Although land is owned by the state, both foreign
and local investors can acquire land through lease-hold agreements
that extend to a maximum of 99 years.
The government established the Privatisation Secretariat and the
Rwanda Public Procurement Agency to ensure transparency in
government tenders and divestment of state-owned enterprises.
Rwanda’s ranking in Transparency International’s “Corruption
Perception Index” has improved significantly, falling from 102 in 2008
to 49 in 2011. The index rated Rwanda as the “least corrupt” country
in East Africa. Despite the strong improvement in these rankings,
the most recent Auditor General report to Rwanda’s Parliament
highlighted that over US$2.6 million of tenders were awarded in
breach of Rwandan procurement law in 2010. Some of the entities
applying inappropriate procurement methods were the Ministry
of Infrastructure, the Prime Minister’s Office and the Office of the
Ombudsman.
There are no laws requiring private firms to adopt articles of
incorporation or association which limit or prohibit foreign
investment, participation, or control.
The World Bank, Transparency International, the Heritage Foundation
and MCC have all reported improved business climate indicators over
the last three years.
Measure
Year
Index/Ranking
TI Corruption
Index
2011
5/49
Heritage
Economic
Freedom
2011
62.7/75
World Bank Doing
Business
2012 (published in 2011)
45
MCC Government
Effectiveness
2012 (published in 2011)
0.81/97%
MCC Rule of Law
2012 (published in 2011)
0.62/92%
MCC Control of
Corruption
2012 (published in 2011)
1.27/100%
MCC Fiscal Policy
2012 (published in 2011)
0.6/88%
MCC Trade Policy
2012 (published in 2011)
78.0/82%
MCC Regulatory
Quality
2012 (published in 2011)
0.56/92%
MCC Business
Start Up
2012 (published in 2011)
0.994/100%
MCC Land Rights
Access
2012 (published in 2011)
0.823/93%
MCC Natural
Resource
Management
2012 (published in 2011)
70.04/73%
6.2 Conversion and transfer policies
There is no difficulty obtaining foreign exchange, or transferring funds
associated with an investment into a freely usable currency and at
a legal market clearing rate. In 1995, the government established a
market-determined exchange rate system under which all lending
and deposit interest rates were liberalized. The central bank holds
daily foreign exchange sales freely accessed by commercial banks.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
7
Investors can remit payments only through authorised commercial
banks. There is no limit on the inflow of funds, but the central bank
requires justification for all transfers over US$ 20,000 to facilitate the
oversight of potential money laundering. Additionally, there are some
restrictions on the outflow of export earnings. Companies generally
must repatriate export earnings within three months after the goods
cross the border. Tea exporters must deposit sales proceeds soon
after auction in Mombasa. Repatriated export earnings deposited in
commercial banks must match the exact declaration the exporter
used crossing the border. Rwandans working overseas can freely
make remittances to their home country.
It usually takes two to three days to transfer money using SWIFT
financial services. Other financial services companies such as
Western Union and Money Gram are also available to investors
seeking to transfer funds.
Since January 2007, the Rwandan Franc (RwF) has been convertible
for essentially all business transactions. Rwanda has a liberal
monetary system and complies with International Monetary Fund
(IMF) Article VIII and all Organisation for Economic Cooperation and
Development (OECD) convertibility requirements.
6.3 Expropriation and compensation
The government reserves the right to expropriate property “in
the public interest” and “for qualified private investment” under
the expropriation law of 2007. The government and land owner
negotiate compensation directly depending on the importance of
the investment and the size of the expropriated property. RDB may
facilitate expropriation in cases where the expropriation is potentially
controversial.
Valuation of expropriated property is often opaque and controversial.
In the past several years, a number of property owners have
protested expropriation of their property by the city of Kigali and
claimed the compensation offered was below market value and not
in accordance with the expropriation law. Currently, implementation
of the Kigali City Master Plan is creating additional threatened
expropriations, with property owners being compelled to construct
multi-story commercial developments or face potential eviction from
their property.
Rwanda’s 2007 Law Relating to Expropriation in the Public Interest
requires compensation to be paid to property owners prior to
relocation or expropriation. In practice, however, this procedure has
not always been followed.
There are no laws that require local ownership, but the Organic
Land Law allows the Government to expropriate land that is
“underutilised.”
6.4 Dispute settlement
The government established an arbitration centre in 1998 as an
alternative dispute resolution mechanism, but it has not lived up to
expectations according to businesses that have utilised it. Rwanda
is a member of the International Centre for the Settlement of
Investment Disputes (ICSID) and African Trade Insurance Agency
(ATI), which are supported by the World Bank and Lloyds of London.
ATI covers risk against restrictions on import and export activities,
inconvertibility, expropriation, war, and civil disturbances. Rwanda
is also a member of the East African Court of Justice for the
settlement of disputes arising from or pertaining to the East African
Community (EAC).
In 2008, Rwanda opened specialised commercial courts to address
commercial disputes and facilitate enforcement of property and
contract rights. To clear a backlog of commercial cases, Rwanda hired
experienced foreign judges who presided over Rwandan commercial
trials. Their role was positively received and non-controversial. The
law governing commercial establishments, the investment law, the
law on privatisation and public investment, the land law and the law
on protection and conservation of the environment currently are the
main laws governing investments in Rwanda.
Judgments of foreign courts and contract clauses choosing foreign
governing law are accepted and enforced by local courts. Local courts
lack experience adjudicating cases with non-Rwandan governing law.
There have been a number of private investment disputes in Rwanda,
but the government has never been involved as a complainant or
respondent in a World Trade Organisation (WTO) dispute settlement.
Rwanda signed and ratified the Multilateral Investment Guarantee
Agency (MIGA) convention on October 27, 1989. MIGA issues
guarantees against non-commercial risks to enterprises that invest in
member countries.
6.5 Performance requirements/incentives
Unless stipulated in a memorandum of understanding that
characterises the purchase of privatised enterprises, performance
requirements are not imposed as a condition for establishing,
maintaining, or expanding other investments. They are mostly
imposed as a condition to access tax and investment incentives.
Investors who demonstrate capacity to add value and invest in
priority sectors enjoy more tax and investment incentives including
Value Added Tax (VAT) exemptions on all imported raw materials,
100 percent write-off on research and development costs, five to
seven percent reduction in corporate income tax if the company
exports products and services valued from USD three to five million,
duty exemption on equipment, and a favourable accelerated rate of
depreciation of 50 percent in the first year. The government offers
grants and special access to credit to investors developing rural
areas. There are no import quotas for investors.
Although there are no legal obligations regarding these matters, the
government encourages foreign investors to transfer technology
and expertise to local staff, in order to help develop Rwanda’s human
capital. RDB has been increasingly successful developing investment
incentives and publicising investment opportunities. Registered
investors obtain certificates that bring benefits, including exemption
from value-added tax and duties when importing machinery,
equipment, and raw materials. However, some investors have
complained that coordination between RDB and Rwanda Revenue
Authority is limited. Registered investors have noted that taxes were
assessed by Rwanda Revenue Authority despite RDB’s assurances
that their investments qualified for tax-exempt or tax-incentivized
status. This was particularly the case with regards to importing
machinery and equipment.
There is no legal requirement that investors in general must purchase
from local sources or export a certain percentage of their output.
However, to benefit from incentives in a planned export zone,
investors will be required to export a certain percentage of the
finished product.
The government gives preferential tax incentives to investors
who create significant export-oriented growth. The government
determines eligibility for such incentives upon request based on
several factors: exports must total at least 80 percent of production
(or exports total at least 10 percent if manufacturing under bond);
capital investment is at least US$ 100,000 (local investors and
Common Market for East and Southern Africa – COMESA – member
states) or US$ 250,000 (non-COMESA investors).
There is no legal obligation that nationals own shares in foreign
investments or that shares of foreign equity be reduced over time.
However, the government strongly encourages local participation in
foreign investments. The government does not impose conditions on
transferring technology.
The government is not involved in assessing the type and source
of raw materials for performance, but the National Bureau of
Standards determines quality standards. The government does
not require investors to disclose proprietary information to
government authorities.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
8
Foreigners applying for work permits and/or residency visas must
apply within 15 days of their arrival in country. The government
generally processes visa applications for foreign nationals in a
timely manner. However, the application process for work permits
and extended stay visas has recently become more onerous,
with immigration authorities requesting extra documentation on
applicants’ qualifications and taking multiple months to reach a
decision in many cases. Applicants may facilitate the process by
ensuring that they travel with original police clearances, preferably
stamped or notarised. Educational documents should be on original
letterhead. Applicants should also obtain a certified copy of their
diplomas, should they not be travelling with the original.
Investors should be aware that East African Community (EAC)
applicants are given hiring preference and the Immigration Office
may hesitate to authorize work permits for non-EAC skilled labour.
6.6 Right to private ownership and establishment
Local and foreign investors have the right to own and establish
business enterprises in all forms of remunerative activity. The
Rwandan constitution stipulates that every person has the right to
private property, whether personal or in association with others. The
government cannot violate the right to private ownership except in
the public interest and only then after following procedures that are
determined by law and subject to fair compensation.
The law also allows private entities to acquire and to dispose of
interests in business enterprises. Foreign nationals may hold shares
in locally incorporated companies. The government has divested and
continues to divest in public enterprises. However, private holding
companies closely affiliated with the government or the ruling party
continue to play a large role in the private sector.
6.7 Protection of property rights
The law protects and facilitates acquisition and disposition of all
property rights. Investors involved in commercial agriculture have
lease-hold titles and are able to secure property titles, if needed. The
land law passed in 2005 stipulates modalities of property registration
and a land titling campaign that began as a pilot project in 2008 is
now underway nationwide.
The Government maintains measures that may violate the WTO’s
TRIMs (Trade Related Investment Measures) by allowing parallel
imports of goods from countries where patents and original
trademarks are not registered and recognised. However, as a least
developed country, Rwanda has until 2013 to abide by specific
WTO TRIMs.
Rwanda adheres to key international agreements on intellectual
property rights and their protection, but as a least developed country,
Rwanda has until 2013 to abide by specific Trade Related Intellectual
Property (TRIP) arrangements. As a member of COMESA, Rwanda
is automatically a member of African Regional Intellectual Property
Organisation (ARIPO). It is also a member of World Intellectual
Property Organisation (WIPO) and is currently working towards
harmonising its legislation with WTO trade-related aspects of
intellectual property.
The Ministry of Commerce (MINICOM), the Rwandan Revenue
Authority (RRA), and the Rwandan Bureau of Standards (RBS) work
together to address issues involving counterfeit products on the
Rwandan market. Through the RBS and the RRA, Rwanda has earned
accolades for its protection of intellectual property rights, but many
goods that violate patents, especially pharmaceutical products, make
it to market nonetheless.
Rwanda has not yet ratified WIPO internet treaties, but the
Government has taken steps to implement and enforce the WTO
TRIPS agreements. Intellectual property legislation covering
patents, trademarks and copyrights was approved in October
2009. A Registration Service Agency, which is part of the RDB, was
established in 2008 and will further improve intellectual property
rights by registering all commercial entities and facilitating business
identification and branding.
6.8 Transparency of the regulatory system
The government generally uses transparent policies and effective
laws to foster clear rules consistent with international norms.
Institutions such as the Rwanda Revenue Authority (RRA), the
Ombudsman’s office, Rwanda Bureau of Standards (RBS), the
National Public Prosecutions Authority (NPPA), the Rwanda Utilities
Regulatory Agency, the Public Procurement Agency, and the
Privatisation Secretariat all have clear rules and procedures. However,
some investors claim that the RRA unfairly targets foreign investors
for audits.
There is no formalised mechanism to publish draft laws for public
comment, although civil society sometimes has the opportunity
to review proposed laws. There is no government effort to restrict
foreign participation in industry standards-setting consortia or
organisations.
Some investors complain that the strict enforcement of tax, labour,
and environmental laws impede investment. The government
updated the labour code in 2009 to simplify recruitment of labour and
facilitate the hiring, firing and retention of competent staff.
Rwanda established an Ombudsman’s office in 2003 that monitors
transparency and regulatory compliance in all governmental sectors.
The Rwanda Utility Regulation Agency, the Auditor General’s Office,
the Anticorruption Division of the RRA, the RBS, and the National
Tender Board also enforce regulations. In 2009 and 2010, the press
reported instances of alleged malfeasance involving private citizens
and Rwandan officials. This led to investigations and arrests of high
ranking officials as well as a number of resignations. In 2011, the only
major reported instance of alleged malfeasance involving a senior
Rwandan official led to the arrest and resignation of the editor of the
newspaper that carried the story.
There is no informal regulatory process managed by
nongovernmental organisations. Existing legal, regulatory and
accounting systems are generally transparent and consistent with
international norms but are not always enforced.
A key component of the government’s regulatory system is
the Office of the Auditor General, established in 1999 to audit
government adherence to fiscal controls. The Auditor reports
regularly to the Parliament and those reports have led to wideranging criminal investigations of alleged misconduct.
Consumer protection associations exist, but are largely ineffective.
The business community has been able to lobby the government and
to provide feedback on government policy and execution through the
Private Sector Federation, a business association partially funded by
the government.
6.9 Efficient capital markets and portfolio investment
Access to affordable credit is a serious challenge in Rwanda, as
interest rates are relatively high and loans are usually short-term.
Savings rates have been low. However, credit terms generally
reflect market rates and foreign investors are able to negotiate credit
facilities from local lending institutions if they have collateral and
“bankable” projects.
The private sector has limited access to credit instruments. Most
Rwandan banks are conservative, risk-averse and trade in a limited
range of commercial products. Following privatisation, commercial
banks introduced a variety of credit instruments with more products
becoming available as the local banking industry matures. Credit
cards are not used extensively, except in major hotels and a few
restaurants. Debit cards have been introduced on a limited basis. In
December 2011, Visa International opened an office in Rwanda and
announced a partnership with the central bank through which the
company intends to significantly expand electronic payment services
throughout Rwanda.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
9
An over-the-counter (OTC) market was established in 2008 with the
assistance of the US Department of Treasury, but volume is limited
and confined to sale of government treasury bills and a few corporate
bonds and shares. In December 2010, Rwanda’s largest foreign
investor, Heineken, launched the country’s first Independent Private
Offering (IPO) for 30 percent of the shares in its Rwandan subsidiary
Bralirwa. According to the Minister of Finance, the shares were
oversubscribed. Bralirwa listed its shares on the Kigali OTC market
in January 2011, the first Rwandan company to do so. Subsequently,
Bank of Kigali became the second listed Rwanda firm with its
shares officially trading on the Rwanda Stock Exchange from
1 September 2011.
The central bank capital requirement for commercial and investment
banks is currently US$ 8.3 million. As of 2011, all banks were
compliant with the minimum capital requirement. The required
minimum capital adequacy ratio of 15 percent is well above the Basel
minimum requirement of eight percent.
With only a small OTC market, corporations generally trade shares
among themselves or with private investors. No hostile takeovers
have occurred involving foreign investors, and both the central
bank and the government have been very active in seeking foreign
investors for the banking sector.
The IMF gives the central bank high marks for its effective
management of the regulatory system. In June 2010, Rwanda
became the seventh country in the world to adopt the IMF’s
Policy Support Instrument, a programme designed for countries
that have achieved macroeconomic stability and no longer need
financial support from the IMF. As of December 2011, Rwanda
was completing its third review under the IMF’s Policy Support
Instrument.
6.10Competition from state-owned enterprises (SOEs)
Rwandan law allows private enterprises to compete with public
enterprises under the same terms and conditions with respect to
access to markets, credit, and other business operations. Since
2006, the government has made an intensive effort to privatize
SOEs, to reduce the government’s non-controlling shareholdings
in private enterprises, and to attract foreign direct investment,
especially to the telecommunications, tourism, banking, and
agriculture sectors. Foreign investors now own controlling interests
in some of Rwanda’s largest firms.
Rwandan investors and investor groups have acquired many
privatised SOEs. A number of these investor groups are backed by
government shareholders, including the Rwandan Social Security
Board and other government savings schemes. Others are led
by individuals with close ties to the government and/or ruling
party. SOEs include water and electricity utilities and companies
in construction, mining, finance, tea and other agricultural
investments. The government continues to own minority shares in
telecommunications, insurance, hotels and other sectors.
Some private sector firms assert that SOEs and private enterprises
in which the government owns shares, or that have close ties to the
government officials, receive preferential treatment with regard to
access to credit and tax compliance enforcement.
SOEs generally have boards of directors that function independently.
However, ministers and their representatives sit on SOE boards and
exercise considerable influence. Most SOEs are required to publish
audited annual reports, but some are not readily available.
6.11Corporate social responsibility
There is a growing awareness of corporate social responsibility
but only a few companies (primarily those that have international
ownership) have actually implemented sustainable programmes.
6.12Political violence
Rwanda is a stable country with little violence. A strong police and
military provide a security umbrella that minimises potential criminal
activity and political disturbances. On several occasions since 2008,
unknown assailants detonated grenades in Kigali and in rural areas of
the country. The most recent detonation occurred on 3 January 2012.
There have been no incidents involving politically motivated damage
to investment projects or installations since the late 1990’s.
Presidential elections in 2010 were peaceful and orderly. President
Kagame won 93 percent of the popular vote and returned for his
second, and final, seven-year term in office. Although the eastern
region of Democratic Republic of the Congo (DRC) bordering Rwanda
remains unstable, rebel groups operating in the DRC have not
conducted significant insurgent activity in Rwanda since 2001.
In 2009, Rwanda re-established diplomatic ties with the DRC and the
two countries are now cooperating to establish peace in the eastern
DRC and to improve regional economic ties. Rwanda acts in concert
with its neighbours to fight crime and terrorism. It also actively
cooperates in efforts to identify and freeze the assets of known
terrorist individuals or organisations.
6.13Corruption
The government maintains a high-profile anti-corruption effort and
senior leaders articulate a consistent message that combating
corruption is a key national goal. There are relatively frequent public
reports of investigations into allegations of misconduct by officials
using their office for personal gain. The government regularly
investigates such incidents and generally prosecutes and punishes
those found guilty. Enforcement is the same for both foreign and
local investors.
High-ranking officials accused of corrupt activities often resign during
the investigation period and many have been prosecuted. Senior
government officials take pride in Rwanda’s reputation for being
tough on corruption, and numerous governmental institutions play an
active role in investigating public officials accused of corruption.
Rwanda has signed and ratified the UN Anticorruption Convention.
It is a signatory of the OECD Convention on Combating Bribery. It
is also a signatory of the African Union Anticorruption Convention.
Giving and accepting a bribe is a criminal act under law, and penalties
depend on circumstances surrounding the specific case.
Some businesses report occurrences of petty corruption in the
customs clearing process, but there are limited reports of corruption
in transfers, dispute settlement, regulatory system, taxation or
investment performance requirements.
A local company cannot deduct a bribe to a foreign official from taxes.
A bribe by a local company to a foreign official is a crime in Rwanda.
Institutions including the Ombudsman’s office, the Anti-Corruption
Unit of the RRA, and the Auditor General’s Office identify corruption
cases. The police and the NPPA prosecute cases. Since 2009, the
Ombudsman’s office has criminal investigative powers that allow it to
pursue corruption cases.
There is a local chapter of Transparency International in Rwanda.
Transparency International reported in its 2011 report that Rwanda
has improved its ranking in the Corruption Perception index from 2.7
in 2007 to 5.0 in 2011.
6.14Labour
General labour is available, but there is a shortage of skilled labour,
including accountants, lawyers, and technicians. Higher institutes
of technology, many private universities, and vocational institutes
are improving and producing more and more graduates each year.
Carnegie Mellon University opened a campus in Kigali – its first in
sub-Saharan Africa – and plans to offer masters-level courses in
information and communication technologies starting in 2012. In
2009, the government raised compulsory basic education from six
to nine years and made English mandatory, instead of French, as the
language of instruction from elementary school grade four onwards.
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
10
Starting in the 2012 school year, the government intends to extend
compulsory basic education from nine to twelve years.
Rwanda attempts to adhere to International Labour Organisation
(ILO) conventions protecting worker rights. Policies to protect
workers in special labour conditions exist, but enforcement remains
inconsistent. The government encourages but does not require onthe-job training of and technology transfer to local employees.
The government revised the national labour code in 2000 to eliminate
gender discrimination, restrictions on the mobility of labour, and
wage controls. In 2009, parliament passed a new labour code,
which sets the minimum work age for formal employment at 18 and
strengthened prohibitions on the use of child labour and hazardous
or forced work. Companies find skill deficits in many sectors
when hiring, but these deficits will continue to shrink as literacy
rates increase and more qualified people graduate from Rwandan
institutions of higher learning. The general population’s literacy rate
continues to improve.
6.15Foreign trade zones/free ports
Rwanda is a member of several sub-regional economic
organisations, such as the East African Community (EAC), which
put in place a customs union in 2009. That union facilitates the
movement of goods produced in the region and permits an EAC
citizen with certain skills to work in any member country. Rwanda
is also a member of the Economic Community of the Great Lakes
(CEPGL) together with the DRC and Burundi, and of COMESA, which
includes Rwanda, Burundi, Comoros, DRC, Djibouti, Egypt, Ethiopia,
Kenya, Libya, Madagascar, Malawi, Mauritius, Seychelles, Sudan,
Swaziland, Uganda and Zimbabwe.
COMESA countries have a free trade agreement that permits goods
originating in member countries and that comply with certain rules
of origin to enter other member markets duty free. Value addition on
imported raw materials must be three percent to qualify for duty free
entry. Rwanda has established a free trade zone outside Kigali, with
excellent current and planned future communications infrastructure.
Bonded warehouse facilities are now available to businesses
importing duty free materials
6.16Foreign direct investment statistics
Foreign direct investment in Rwanda surged from 2006 to 2009,
but fell significantly in 2010. According to the World Bank’s World
Investment Report 2010, Foreign Direct Investment (FDI) flows into
Rwanda increased from US$ 16 million in 2006 to US$ 119 million
in 2009, before dropping to US$ 42 million in 2010. 2010 FDI flows
equated to 0.75% of 2010 gross domestic product.
6.17Starting a business in Rwanda
The table below represents the steps required when opening
a business in Rwanda. It also details the time involved and the
associated costs:
No. Procedure
Time to
Complete
1.
Check company name,
submit registration
application and pay
registration fee
One day
Pick up registration certificate
1 – 3 days
2.
Associated
Costs
RWF 150,00
or no charge
online
No charge
7Country Outlook
7.1Overview
Victoire Ingabire, the leader of the Rwandan opposition party, United
Democratic Forces (UDF), has alleged that terrorist charges against
her are politically motivated. On 19 April Jean Bosco Uwinkindi
became the first genocide suspect to be transferred to Rwanda by
the Tanzania-based International Criminal Tribunal of Rwanda (ICTR).
In February the government launched a pilot project offering a singlewindow electronic service for international trade.
Real GDP grew by 8.6% in 2011, up from 7.5% in 2010, according
to the National Institute of Statistics of Rwanda (NISR). Rwanda’s
Capital Market Authority (CMA) has said that there are unlikely to
be any further initial public offerings (IPOs) in 2012. Trade deficit
contracted by 5.8% in 2011 as exports grew by an impressive 69%
while imports grew at the more modest pace of 8.3%. Mineral
exports alone doubled to US$165m, of which US$6m were reexports.
7.2 Domestic politics
Ms. Ingabire, who was arrested in October 2010 for alleged terrorist
links, suddenly withdrew from her trial in the capital, Kigali, on 16
April. She has alleged that the charges brought against her are
politically motivated and that the court is not independent. Ms.
Ingabire has been on trial since last September along with four
former members of the Hutu rebel group, Forces démocratiques de
libération du Rwanda (FDLR). They have been accused of threatening
state security, genocide denial and promoting ethnic division,
including attempts to create an armed wing of the UDF (based in
Brussels, the Belgian capital) aimed at causing insecurity in Rwanda.
Despite her walk-out, the court’s presiding judge, Alice Rulisa, has
ruled that proceedings will continue but that Ms. Ingabire will neither
be forced to attend nor have an advocate appointed in her place.
In the evening of 19 April Mr. Uwinkindi – arrested in June 2010
on multiple counts of genocide, conspiracy to commit genocide
and extermination as a crime against humanity – became the first
genocide suspect to be transferred by the ICTR to Rwanda itself.
At the time of the genocide in 1994, Mr. Uwinkindi was the pastor
of the Pentecostal church in Kanzenze, south of Kigali, where he
is alleged to have led Hutu militias against Tutsi civilians. After the
atrocities ended, 2,000 corpses were discovered in the vicinity of his
church. The transfer of Mr. Uwinkindi marks a significant milestone
both in terms of the evolution of post-genocide justice and of the
international perception of Rwanda’s court system.
Another suspect, Leon Mugesera, was transferred to Rwanda
from Canada on 24 January after 16 years of fighting charges of
hate speech dating back to 1992. Also in January a French judicial
investigation exonerated the ruling Rwandan Patriotic Front for the
deaths of a former Rwandan president, Juvenal Habyarimana, and a
former Burundian president, Cyprien Ntaryamira, which prompted
the genocide, and the number of extraditions of suspects to face trial
in Rwanda is now expected to increase.
7.3 International relations
Rwanda’s international donors – particularly the US and the UK –
continue to support the country despite growing concerns about
domestic political liberties and, to a lesser extent, the country’s
involvement in the Democratic Republic of Congo (DRC).
Rwanda and France have restored diplomatic relations, but mutual
suspicion persists.
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Diplomatic relations with the DRC have warmed considerably, and
increased collaboration is expected between the Congolese armed
forces and the Rwandan Defence Force to contain the threat posed
to both by the apparent alliance between the FDLR and disaffected
Congolese Tutsis. Bilateral discussions between Rwanda and the
DRC are also focusing on economic co-operation, in particular on
how to share gas reserves beneath Lake Kivu, which straddles the
countries’ border. Military co-operation between the Rwandan and
Burundian governments is extensive, although largely, it seems, on
the Rwandan government’s terms.
7.4 Policy trends
As part of its long-term strategy to improve Rwanda’s business
competitiveness, in early February the government launched a
pilot project offering a single-window service that will electronically
provide all the information and administrative requirements
necessary for importing and exporting. The scheme aims to simplify
procedures, reduce costs and improve information dissemination
and data collection, as well as improve transparency and
accountability into the whole process of clearing traded goods.
It will use the ASYCUDA World programme, an international standard
for customs management and integrated border-management
systems developed by the UN. The three-month pilot encompasses
five organisations:
• The Rwanda Revenue Authority
• Ministry of Health
• Rwanda Development Board
• Rwanda Bureau of Standards
• Logistics company, Magasins generaux du Rwanda
As Rwanda is landlocked, the cost of trade is higher than in countries
that have access to sea ports, making it particularly important to
find ways to reduce costs. The pilot service is something that the
country can do unilaterally, a relief given the obstacles that often crop
up when it depends on regional policies or investment initiatives
in neighbouring countries, which the Rwandan government is less
able to influence. Rolling out the single window across all relevant
government agencies nationwide could save an estimated
US$6-9m per year, equivalent to around 1% of the value of all
recorded traded goods.
7.5 Economic growth
According to figures released in March by the NISR, real GDP
grew by 8.6% in 2011, up from 7.5% in the previous year. The latest
figure exceeded original forecasts of 7%, but fell slightly below
the IMF’s revised estimate of 8.8%. Led by a 5% increase in food
crop production, the agricultural sector is estimated to have grown
by 4.7%, down slightly from 5% in 2010. The industrial sector is
estimated to have grown by 17.6% in 2011 compared with 8% in
2010, predominantly driven by strong growth in construction as well
as a strong recovery in mineral production, which increased by 50%
after falling by 11% in 2010. Manufacturing grew by 8% over the
same period, mainly owing to the energy sector. The largest area of
the economy, services, grew by 8.9%, slightly down from the year
before. The key contributing subsectors were finance and insurance
activities as well as wholesale and retail trade.
The government fast-tracked the privatisation of several large
state-owned firms in 2011 following the successful IPO of shares
in Bralirwa, the largest brewery firm in Rwanda in December 2010,
which was oversubscribed by 174%. It divested a 25% stake in the
Bank of Kigali through an IPO at the end of June 2011, which raised
US$ 63m and was oversubscribed by 274%. The government had
lined up an additional five state-owned companies in the telecoms,
banking, cement and insurance sectors for partial sale of shares
through IPOs by 2015, and 20 firms in total for listing. However, only
two have so far been floated, and the CMA stated in January that it is
unlikely further IPOs will be held in 2012. Despite the drying up of the
IPO pipeline, the CMA is still pushing to introduce fully automated
trading on the fledgling Rwanda Stock Exchange, which opened in
January 2011, by the end of this year.
7.6 External account
Rwanda’s trade deficit contracted by 5.8% in 2011 as exports grew
by an impressive 69% while imports grew at a more modest pace
of 8.3%, according to the NISR. Mineral exports alone doubled from
US$ 82m in 2010 to US$ 165m, of which US$ 6m were re-exports.
The growth in mineral exports was driven by cassiterite in particular,
which hit US$ 103m, up from US$ 67m, owing to an 88% leap in
volume as well as a 28% rise in prices. Cassiterite extended its
lead over coffee as Rwanda’s largest single export. Coffee exports
also posted good results, rising by 34% to US$ 75m, on the back
of higher global prices as well as local farmers being able to charge
more because of an improvement in quality. Tea prices have been
fairly stable, but rising production helped tea exports rise by 15% to
US$ 64m. Such dynamics were partly offset by the impact on the
trade balance of higher import costs and strong domestic demand for
imported capital goods.
A.1Appendix two – sources
of information
• Economist Intelligence Unit
• CIA World Factbook
• Bloomberg
• World Bank
• Wikipedia
• Wikipedia
• US Department of State
© 2012 KPMG Services Proprietary Limited, a South African company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss
entity. All rights reserved. MC7204 KPMG and the KPMG logo are registered trademarks of KPMG International Cooperative (“KPMG International”), a Swiss entity. The foregoing information is for general use only. NKC does
not guarantee its accuracy or completeness nor does NKC assume any liability for any loss which may result from the reliance by any person upon such information or opinions.
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