Damalion Rwanda desk
Doing business in Rwanda
Rwanda is a very beautiful country located in Africa. It has presidential system, strong judiciary and laws which make doing of business better. It is an agriculture country and mostly people are linked with agriculture sector. Apart from agriculture, tourism, manufacture industry and services sectors also play crucial role in Rwanda economy. Rwanda has also some treaties, agreements and trade partnership with neighboring countries. It has diverse economy based on exports and imports.
Main trading partners are United Arab Emirates, China, Tanzania and Saudi Arabia. Rwanda’s legal system has immense importance and work as a dispute resolution to improve ease of doing business. Tax system of Rwanda is also very diverse, there are number of taxes such as Value added tax, capital gains and withholding tax are entailed on different sectors and people. Rwanda economy is competitive and there are different consumer’s laws which protect consumers. Rwanda has signed treaties and formulated laws to protect and guard intellectual property. Rwanda economic system is very stable; all pillars of state, institutions and laws are the protective force to ensure ease of doing business in Rwanda.
What make Rwanda unique to do business in?
- There is 12.6 million population
- Three languages are spoken in Rwanda; English, French and Kinyarwanda
- Agriculture is the backbone of economy
- Tourism has huge potential
- Diverse treaties and laws guard businesses
- Rwanda 2020 vision a game changer
- 50% women as legislators
- Hub of rare minerals and metals.
Agriculture Sector and its role in Economy
Agriculture is the backbone of Rwanda’s economy. According to World Bank report, mostly people are linked to agriculture and it is 63 percent of exports to Gross Domestic Product.
Agriculture includes four important sectors such as fisheries, crops, livestock and forestry. Rwanda’s major agriculture exports are coffee, tea and. Investment in agriculture is lucrative idea for the global investors.
Innovative industry of Manufacture
The manufacture sector of Rwanda is still evolving. There are numerous categories such as food, beverages, textile, wood, clothing, paper and printing, pharmaceutical, rubber and plastic as well as furniture. According to finance ministry, manufacture sector contributes 17% of gross domestic products. Apart from that, Rwanda’s manufacture sector reflects many investment opportunities locally and globally. Doing business in this field would be great opportunity for all.
Education Sector and its role in Economy
The education sector of Rwanda is multi-dimensional. There are three different cadres of education such as primary, secondary, and higher secondary. This is 12-year education before entering into a professional or graduation level of education. Education is being given in three different languages at the primary level in Kinyarwanda. In middle one can adopt French and English. To improve education a strategic planning department was set up which outlined the future goals of education. Apart from primary and secondary, there is a focus on vocational and remote education in Rwanda. Recently, Rwanda has focused on technical and scientific education to transform its economy into a knowledge economy. This is a wonderful step and would bring a positive impact on the future education system.
Health system of Rwanda
Rwanda has massive health system. It has basic health units, primary health centers and metro-puritan hospitals. Despite many challenges, Rwanda health system has remained sustainable. It has started insurance scheme which covers almost 75% of population. That is outstanding way to transform education. Good health will bring good impact on economy.
Real estate sector accelerates doing of Business
There is a massive boom in real estate sectors. With the increasing of population, investors have turned towards building low-cost houses. Investment has surged up to 100 billion dollars. It is the reason that real estate sectors share has increased up to 7% of gross domestic products. Kigali, which is an urban center, 16,000 apartments are being built.
Tourism Industry harbinger of Growth
Tourism is one of the major industries. There are various attractions such as wildlife, forests, parks and scenery. From 2013-18, tourism industry grew 25% of gross domestic product. Many hotels such as Tulip and Marriott were built to provide excellent infrastructure. Historical tourism also has huge potential in Rwanda which include museum such as Ethnographic museum. Rwanda invites investments in this sector to expand it.
Infrastructure and Public Development
Rwanda spends 10th of its budget on infrastructure such as roads, rail, water, transport and public schools and hospitals. This economic sector is the driver of economy.
Vision 2020 also gives stress on infrastructure building. World Bank says, Rwanda needs more investment in infrastructure to build inclusive and sustainable economy. Keeping this in mind, Rwanda government is expanding share of GDP and bringing more foreign investment. As a result, it is a massive opportunity to invest and do business in Rwanda.
Mining Sector and Huge Extraction Opportunities
Rwanda provides enormous mineral extraction opportunities. There are rare minerals, raw material, iron ores and coal. Rwanda is largest producer of tin, tantalum, tungsten. It also exports gold and gemstone. Rwanda keeps minerals like clay, silica and gypsum. It produces thousands of minerals every year, which play core role in bringing massive foreign exchange. The massive mineral sector provides employment to almost 55000 people and income to millions of families. Mining sector is also a source of generating gigantic opportunities of investment.
Energy potential in Economy
Rwanda uses various sources of energy. It has domestic production, import led energy and shared arrangements with proximity countries. To accomplish its electricity needs, Rwanda uses hydropower, thermal and methane as well as imported fuel. In 2009, Rwanda implemented its energy policy to transform energy sector. Efficient use, improvement in dispensation and consumption of energy were the major features of this policy to ensure inclusive economic growth and to provide stable energy for investment and export oriented growth.
Information Communication Technology
The information technology is expanding in Rwanda. In modern days businesses, information technology is sine quo non. It plays pivotal role e-commerce, online businesses and in banking transactions. Rwanda is utilizing ICT in many sectors such as health, education, social security and e-commerce. It is also the source of employment and efficient economy. In vision 2020, special focus has been given to ICT development and promotion. Many institutions have been set up to promote ICT. National university of Rwanda is playing pragmatic role in Information Communication Technologies.
Dynamic Labor and Employment
Rwanda has 3.1 million labors potential. It ensures equality and equity while adopting the job. It has also introduced labor laws to protect working class from exploitation such as labor code. With the advancement of technology, Rwanda has started to concentrate on to bring improvement in vocational training, skills and knowledge to fulfill the modern needs. For this purpose, government is going to enhance budget as well as establishment of new training centers are in the offing. It will help to transform labor into more productive and skilled labor.
Advantages of Investing in Rwanda
- Included in top 100 in competitive index
- Stands below 50 in corruption index
- Robust governance
- Thorough protection by various laws
- Availability of friendly environment and climate.
How Legal System Promote Doing of Business in Rwanda
Rwanda’s legal system is multi-dimensional. It has civil law, originated from French Code and Common Law based on Anglo Saxon. As a result, it forms hybrid system. Rwanda legal system thoroughly protects the rights of local businesses, regional traders and foreign investors. For this purpose, numerous laws have been enumerated such as Competition Law, Comesa and EAC. To overcome the disputes, Rwanda Development Board has been setup. In case of dispute between investors or traders this board works as dispute resolution. Further, Rwanda has established Commercial Courts, Banking Courts and Appellate Courts to protect the businesses. Alternative Dispute Resolution also works to reduce the differences among companies, traders and businessmen.
Rwanda has prohibited many illegal practices such as exploitation, cartel conduct and involvement in restricted activities. For this purpose, many laws have been introduces such as Competitive Law, Cartel Conduct code and monetary discipline law.
Legal type of Companies In Rwanda
In Rwanda law recognizes following types of companies:
- Private Limited Company
- Public Limited Company
- General partnership Company
- Limited Partnership
- Share Partnership
Business Opportunities and Operation of Business
- Different Companies Working in Rwanda
Rwanda provides massive business opportunities. Presently, different sectors such as textile, wood, furniture, food, etc are operating in Rwanda. There are number of foreign companies which are operating in Rwanda, these are China Electronics, Movit Uganda, Mukwano Industry, ALINL Technologies and Yavonie.
- How to Setup a Company
To set up a company, there are certain governmental requirements likewise notarization from attorney. There is no objection certificates from different departments, and tax registration identification.
- Opportunities for Foreign Investors
Rwanda is a huge evolving market for investment. It provides various areas which include agro-industry, value addition in textile, pharmaceutical, investment in mining and extraction along with e-commerce and entrepreneurship. The government also ensures numerous incentives like a preference regime in taxes (no temporary tax on international investments under certain conditions). Further, there are 7-year holidays in corporate tax, withholding tax-free, and also included exemptions about capital gain taxes. These are massive measures to attract business to Rwanda.
Highlights of Legal system
- Hybrid system based on civil and common laws
- Commercial courts
- Alternate dispute resolution
Financial and Banking System and Its significance in Doing of Business
The financial system of Rwanda is multifold. It includes public and private sectors.
To maintain businesses many intuitions have been created such as National Bank of Rwanda, Rwanda Development Board and International Trade Administration. Its banking system is very quick and fast and established on modern designs and assisted by global entities. As a result, it provides efficient system of transactions and comprehensive investment regime. Banks are the major part of financial system which stands at 66%.
Apart from that pension system is also diverse and its economy share is 17%.
Further, micro-finance has also its share. Rwanda has also shifted its focus on increasing of savings. Development banks are the additional part of financial system to bring development in public and private domains. International Monetary Fund has always supported financial stability of Rwanda in tested time; and has emphasized on structural reforms to overhaul the financial system of Rwanda.
Therefore, one understands that Rwanda stable outlook provides great opportunity to do business in Rwanda.
Holistic Tax System
Rwanda has brilliant tax system, it ensures horizontal and vertical equity. Rwanda has imposed Resident based tax culture. Under this all citizen are responsible to pay taxes on their income. Under company law, a company, business or commercial entity are also considered legal person and liable to pay their taxes. Local companies pay up to 30 percent of tax on their annual income.
Meanwhile, new ventures and businesses have massive preference regime. In this way, doing business for novel entities becomes convenient. Other important taxes are capital gain tax, withholding tax and value added tax. Rwanda provides complete tax break on pay roll taxes and free stamp duty. It has also introduced double tax treaties with many countries such as Turkey, Belgium and Singapore. The wide and clear tax system enables businesses to work with comfort in the country.
Advantages of Holistic Tax Regime
Protection of Intellectual Property to guard Doing of Business
Rwanda pays special attention on protection of Intellectual property. Intellectual property guards against copyrights so that people can realize the full value of their creation.
The purpose of intellectual property laws are to promote originality and revoke fake and forge documents. It has also introduced trademark laws. In this backdrop, followings laws are encoded which include Intellectual Property Act 2009 and later revised in 2018 to expand its legal framework to internet and online subject.
This law introduces many practices such as No Objection Certificates and License granting by officials of government to secure legitimate interests and copy rights of people.
Rwanda has signed multi-lateral treaties and agreements to fully comply with international intellectual regime in which includes Paris Convention, World Intellectual Property and Madrid Protocol. Therefore, it can be assumed that Rwanda fully adopt international practices to preserve intellectual rights of people, businesses, industries and foreign investment to promote doing of business.
Dimensions of Intellectual Property
- National and International
- Individuals, Businesses and Industries
Protection of Immigrants for Business
Rwanda protects the rights of foreign employees and immigrants who came for investment or working purposes. To protect the rights of immigrants, Rwanda has introduced work permits and fixed term contracts. Starting business in Rwanda by foreigner also required to fulfill certain conditions such as NOC (national occupational classification) from respective departments.
Further, immigrant laws are very comprehensive. They cover renewal procedure, changing of businesses and allow hiring of local and foreign workers. Government has crafted different labor laws to protect the rights of people such as Labor Law Regulation. Moreover, salary will be paid in local currency to foreigners as well as locals.
There exist National Directorate General to regulate all procedure and laws enacted by the legislature. Rwanda has also launched foreign invest regime for foreigners. Rwanda Revenue Authority has been setup for this purpose.
It provides regulation, registration and licensing to industrial and non-industrial sectors to immigrants. Rwanda Social Security Board also works along with to protect private employees. In this way, Rwanda ensures a complete protection to do business in Rwanda
Immigrants Protective Measures
- National Directorate
- Compliance of enacted laws
In a nutshell, Rwanda is emerging market in Africa. Its GDP stands at $10.62bn.
Meanwhile, per capita income is almost 900 dollars. Agriculture is the vital area of Rwanda economy. However, manufacturing sector and service sector have immense capacity to grow. Further, mining, energy and e-commerce sectors are the major accelerating sectors of economy.
Rwanda government is focusing on building strong legal system, efficient tax regime, immigrant laws and financial stability to protect local, regional and global investment. On the other hand, government is the part of African Union, World Bank, African Development Bank and East African Community to transform economy and bring development initiates. These abovementioned indicators evince huge potential to do business in Rwanda.
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