The data in this report reflects the economic situation in Rwanda before the COVID-19 pandemic. Rwanda’s main economic drivers are tourism, hospitality, and exports of tea and coffee. All of these sectors have either been completely shut down due to the pandemic or severely reduced. The International Monetary Fund has forecasted that COVID-19 will result in the Rwandan economy having the lowest rate of growth, 2 percent, since the 1994 Genocide with a return to 6-7 percent growth by 2022. It is notable that the underlying regulatory environment and pro-growth government has not changed, leaving open the possibility that Rwanda could be back to its February 2020 level of economic performance by 2022.
The Government of Rwanda
Rwanda has a history of strong economic growth, high rankings in the World Bank’s Ease of Doing Business Index, and a reputation for low corruption. The Government of Rwanda (GOR) has taken a series of policy reforms intended to improve Rwanda’s investment climate and increase foreign direct investment (FDI). In 2018, the GOR implemented additional reforms to decrease bureaucracy in: construction permitting; establishing electrical service; and customs processing times for exporters. The GOR also introduced online processes for certificates of origin and phytosanitary approvals. The country presents a number of FDI opportunities, including: manufacturing; infrastructure; energy distribution and transmission; off-grid energy; agriculture and agro-processing; low cost housing; tourism; services; and information and communications technology (ICT). The Investment Code provides equal treatment between foreigners and nationals for certain operations, free transfer of funds, and compensation against expropriation; the 2008 U.S.-Rwanda Bilateral Investment Treaty (BIT) reinforced this treatment.
According to the National Institute of Statistics for Rwanda (NISR), Rwanda attracted USD 462 million in FDI inflows in 2018, representing five percent of GDP. Rwanda had a total USD 3.2 billion of FDI stock in 2018, the latest year data is available. In 2019, the Rwanda Development Board (RDB) reported registering USD 2.46 billion in new investment commitments (a 22.6 percent increase from 2018), mainly in energy, manufacturing, construction, agriculture, services and mining. FDI accounted for 37 percent of registered projects.
In February 2020, Standard and Poors upgraded Rwanda’s rating from B to B+, citing strong and continued growth prospects. The COVID pandemic has obviously changed this outlook. Government debt has rapidly increased over the past few years to more than 50 percent of GDP, but most of these loans are on highly concessionary terms. The GOR is expected to add to this debt as part of their COVID response. Development Institutions such as the World Bank, African Development Bank , International Monetary Fund and others, have lessened or completely suspended debt repayment terms for less developed countries such as Rwanda as a result of COVID-19. Many companies report that although it is easy to start a business in Rwanda, it can be difficult to operate a profitable or sustainable business due to a variety of hurdles and constraints. These include the country’s landlocked geography and resulting high freight transport costs, a small domestic market, limited access to affordable financing, payment delays with government contracts, and inconsistent enforcement of laws and regulations. Government interventions designed to support overall economic growth can significantly impact investors, with some expressing frustration that they were not consulted prior to the abrupt implementation of government policies and regulations that affected their business. A number of investors have stated that tax incentives included in deals signed by RDB are not honored by the lead tax agency, the Rwanda Revenue Authority (RRA). Similarly, some investors stated that Rwanda’s immigration authority does not always honor the employment and immigration commitments of investment certificates and deals. Some investors reported difficulties in registering patents and having rules against infringement of their property rights enforced in a timely manner. While electricity and water supply have improved, businesses may continue to experience intermittent outages, especially during peak times, due to distribution challenges. Generating power is not an issue with the GOR as they are planning to develop more than100 percent of their power generation needs through various power projects. Some investors report difficulties in obtaining foreign exchange from time-to-time, which could be attributed to Rwanda running a persistent trade deficit.
|TI Corruption Perceptions Index||2019||51 of 180||http://www.transparency.org/
|World Bank’s Doing Business Report||2019||38 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2019||94 of 129||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, historical stock positions)||2018||N/A||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2018||780||http://data.worldbank.org/
Note: According to NISR, stock of U.S. FDI in the country stood at USD 182.67 million in 2018 (most recent data available)
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Over the past decade, the GOR has undertaken a series of policy reforms intended to improve the investment climate, wean Rwanda’s economy off foreign assistance, and increase FDI levels. Rwanda enjoyed strong economic growth up until March 2020, averaging over seven percent annually over the last decade, high rankings in the World Bank’s Doing Business report (38 out of 190 economies in 2020, and second best in African, compared to 29 in 2019 and 41 in 2018), and a reputation for low corruption. GDP growth in 2020 is expected to be negative due to the dampening economic effects of COVID-19. The RDB was established in 2006 to fast track investment projects by integrating all government agencies responsible for the entire investor experience under one roof. This includes key agencies responsible for business registration, investment promotion, environmental compliance clearances, export promotion and other necessary approvals. New investors can register online at the RDB’s website and receive a certificate in as fast as six hours, and the agency’s “one-stop shop” helps investors secure required approvals, certificates, and work permits. RDB states its investment priorities are: innovation and technology, particularly ICT and green innovation; tourism and real estate; agriculture and food security; energy and infrastructure; and mining.
In 2020, The World Bank Ease of Doing Business report indicated that Rwanda made doing business easier by exempting newly formed small and medium businesses from paying for a trading license during their first two years of operation. In addition, the GOR reduced the time to obtain water and sewage connections in order to facilitate construction permits and improved building controls by requiring construction professionals to obtain liability insurance. The country also upgraded its power grid infrastructure and improved its regulations on weekly rest, working hours, severance pay and reemployment priority rules.
A number of investors have said a top concern affecting their operations in Rwanda is that tax incentives included in deals negotiated or signed by the RDB are not fully honored by the RRA. Investors further cite the inconsistent application of tax incentives and import duties as a significant challenge to doing business in Rwanda. For example, a few investors have said that local customs officials have attempted to charge them duties based on their perception of the value of an import, regardless of the actual purchase price.
Under Rwandan law, foreign firms should receive equal treatment with regard to taxes, as well as access to licenses, approvals, and procurement. Foreign firms should receive VAT tax rebates within 15 days of receipt by the RRA, but firms complain that the process for reimbursement can take months, and occasionally years. Refunds can be further held up pending the results of RRA audits. A number of investors cited punitive retroactive fines following audits that were concluded after many years. RRA aggressively enforces tax requirements and imposes penalties for errors – deliberate or not – in tax payments. Investors cited lack of coordination among ministries, agencies and local government (districts) leading to inconsistencies in implementation of promised incentives and other facilitation. Others pointed to lack of clarity on who the regulator is on certain matters. The U.S. Treasury Department’s Office of Technical Assistance (OTA) has provided tax consultants to RRA to review auditing practices in Rwanda. The OTA program concluded in 2020 and produced a standardized tax audit handbook for RRA’s auditors to use.
Limits on Foreign Control and Right to Private Ownership and Establishment
Rwanda has neither statutory limits on foreign ownership or control nor any official economic or industrial strategy that discriminates against foreign investors. Local and foreign investors have the right to own and establish business enterprises in all forms of remunerative activity.
Foreign nationals may hold shares in locally incorporated companies. The GOR has continued to privatize state holdings, although the government, ruling party, and military continue to play a dominant role in Rwanda’s private sector. Foreign investors can acquire real estate but with a general limit on land ownership. While local investors can acquire land through leasehold agreements that extend to a maximum of 99 years, foreign investors can be restricted to leases up to 49 years with the possibility of renewal. The government published a new Investment Code in 2015 aimed at providing tax breaks and other incentives to boost FDI. The Investment Code includes equal treatment for foreigners and nationals with regard to certain operations, free transfer of funds, and compensation against expropriation. In April 2018, Rwanda introduced new laws to curb capital flight. Management, loyalty and technical fees a local subsidiary can remit to its related non-residential companies (parent company) are capped at two percent of turnover. Companies resolving to go beyond the cap are subject to a 30 percent corporate tax on turnover, in addition to 15 percent withholding tax and 18 percent reserve charge.
Other Investment Policy Reviews
In February 2019, The World Trade Organization (WTO) published a Trade Policy Review for the East African Community (EAC) covering Burundi, Kenya, Rwanda, Tanzania and Uganda. The report is available at:
RDB offers one of the fastest business registration processes in Africa. New investors can register online at RDB’s website ( ) or register in person at RDB offices in Kigali. Once a certificate of registration is generated, company tax identification and employer social security contribution numbers are automatically generated. The RDB “One Stop Center” assists firms in acquiring visas and work permits, connections to electricity and water, and support in conducting required environmental impact assessments.
RDB is prioritizing additional reforms to improve the investment climate. By 2020, it hopes to amend the land policy to merge issuance of freehold titles and occupancy permits; introduce online notarization of property transfers; implement small claims procedure to allow self-representation in court and reduce attorney costs; launch electronic auctioning to reduce time to enforce judgments, reducing court fees and allowing payments electronically; and establish a commercial division at the Court of Appeal to fast-track commercial dispute resolution.
Rwanda promotes gender equality and has pioneered a number of projects to promote women entrepreneurs, including the creation of the Chamber of Women Entrepreneurs within the Rwanda Private Sector Federation (PSF). Both men and women have equal access to investment facilitation and protections.
The government does not have a formal program to provide incentives for domestic firms seeking to invest abroad, but there are no restrictions in place limiting such investment.
3. Legal Regime
Transparency of the Regulatory System
The GOR generally employs transparent policies and effective laws largely consistent with international norms. Rwanda is a member of the U.N. Conference on Trade and Development’s international network of transparent investment procedures. The Rwanda eRegulations system is an online database designed to bring transparency to investment procedures in Rwanda. Investors can find further information on administrative procedures at: https://businessprocedures.rdb.rw/.
Rwandan laws and regulations are published in the Government Gazette and online at . Government institutions generally have clear rules and procedures, but implementation can sometimes be uneven. Investors have cited breach of contracts and incentive promises, and the short time given to comply with changes in government policies, as hurdles to comply with regulations. For example, in 2019 the GOR submitted a draft law that was passed by Parliament the same year, banning single use plastic containers. Investors in the beverage and agro-processing sectors expressed concern that the law would have a serious impact on their operations, that alternative packaging was not available in some cases, and that the GOR did not consult effectively with stakeholders before submitting it. The law built on a ban on the manufacture and use of polyethylene bags introduced in 2008.
There is no formal mechanism to publish draft laws for public comment, although civil society sometimes has the opportunity to review them. There is no informal regulatory process managed by nongovernmental organizations. Regulations are usually developed rapidly in an effort to achieve policy goals and sometimes lack a basis in scientific or data-driven assessments. Scientific studies, or quantitative analysis (if any) conducted on the impact of regulations, are not generally made publicly available for comment. Regulators do not publicize comments they receive. Public finances and debt obligations are generally made available to the public before budget enactment. Finances for State Owned Enterprises (SOE) are not publicly available but may be requested by civil society organizations with a legitimate reason.
There is no government effort to restrict foreign participation in industry standards-setting consortia or organizations. Legal, regulatory, and accounting systems are generally transparent and consistent with international norms but are not always enforced. The Rwanda Utility Regulation Agency (RURA), the Office of the Auditor General (OAG), the Anticorruption Division of the RRA, the Rwanda Standards Board (RSB), the National Tender Board, and the Rwanda Environment Management Authority also enforce regulations. Consumer protection associations exist but are largely ineffective. The business community has been able to lobby the government and provide feedback on some draft government policies through the PSF, a business association with strong ties to the government. In some cases, the PSF has welcomed foreign investors to positively influence government policies. However, some investors have criticized the PSF for advocating to businesses about government policies rather than advocating business concerns to the government.
The American Chamber of Commerce launched in November 2019, and a European Chamber of Commerce launched in March 2020. Both are coordinating policy advocacy efforts to improve the business environment for American, European and other foreign firms in Rwanda. The Chinese also have a Chamber of Commerce registered in China and active in Rwanda.
International Regulatory Considerations
Rwanda is a member of the EAC Standards Technical Management Committee. Approved EAC measures are generally incorporated into the Rwandan regulatory system within six months and are published in the National Gazette like other domestic laws and regulations. Rwanda is also a member of the standards technical committees for the International Standardization Organization, the African Organization for Standardization, and the International Electrotechnical Commission. Rwanda is a member of the International Organization for Legal Metrology and the International Metrology Confederation. The Rwanda Standards Board represents Rwanda at the African Electrotechnical Commission. Rwanda has been a member of the WTO since 22 May 1996 and notifies the WTO Committee on Technical Barriers to Trade on draft technical regulations.
Legal System and Judicial Independence
The Rwandan legal system was originally based on the Belgian civil law system. However, since the renovation of the legal framework in 2002, the introduction of a new constitution in 2003, and the country’s entrance to the Commonwealth in 2009, there is now a mixture of civil law and common law (hybrid system). Rwanda’s courts address commercial disputes and facilitate enforcement of property and contract rights. Rwanda’s judicial system suffers from a lack of resources and capacity but continues to improve. Investors occasionally state that the government takes a casual approach to contract sanctity and sometimes fails to enforce court judgments in a timely fashion. The government generally respects judicial independence, though domestic and international observers have noted that outcomes in high-profile politically sensitive cases appeared predetermined.
In August 2018, the GOR created a Court of Appeal in an attempt to reduce backlogs and expedite the appeal process without going to the Supreme Court. The new Court of Appeal arbitrates cases handled by the High Court, Commercial High Court, and Military High Court. The Supreme Court continues to decide on cases of injustice filed from the Ombudsman Office and on constitutional interpretation. Based on Article 15 of Law 76/2013 of 11/09/2013, the Office of the Ombudsman has the authority to request that the Supreme Court reconsider and review judgments rendered at the last instance by ordinary, commercial, and military courts, if there is any persistence of injustice. More information on the review process can be found at . A Tax Court is yet to be established in Rwanda. In 2019, the RDB announced the government’s intent to create a commercial division at the Court of Appeal to fast-track resolution on commercial disputes.
Laws and Regulations on Foreign Direct Investment
National laws governing commercial establishments, investments, privatization and public investments, land, and environmental protection are the primary directives governing investments in Rwanda. Since 2011, the government reformed tax payment processes and enacted additional laws on insolvency and arbitration. The 2015 Investment Code establishes policies on FDI, including dispute resolution (Article 9). The RDB keeps investment-related regulations and procedures at: .
According to a WTO policy review report dated January 2019, Rwanda is not a party to any countertrade and offsetting arrangements, or agreements limiting exports to Rwanda.
A new property tax law was passed in August 2018. The new law removes the provision that taxpayers must have freehold land titles to pay property taxes. Small and medium enterprises (SMEs) will receive a two-year tax trading license exemption upon establishment.
Competition and Anti-Trust Laws
Since 2010, a Competition and Consumer Protection Unit was created at the Ministry of Trade and Industry (MINICOM) to address competition and consumer protection issues. The government is setting up the Rwanda Inspectorate, Competition and Consumer Protection Authority (RICA), a new independent body with the mandate to promote fair competition among producers. The body will reportedly aim to ensure consumer protection and enforcement of standards. To read more on competition laws in Rwanda, please visit: http://www.minicom.gov.rw/index.php?id=136.
Market forces determine most prices in Rwanda, but, in some cases, the GOR intervenes to fix prices for items considered sensitive in Rwanda. RURA, in consultation with relevant ministries, sets prices for petroleum products, water, electricity, and public transport. MINICOM and the Ministry of Agriculture have fixed farm gate prices, or the market value of a cultivated product minus the selling costs, for agricultural products like coffee, maize, and Irish potatoes from time to time. On international tenders, a 10 percent price preference is available for local bidders, including those from regional economic integration bodies in which Rwanda is a member.
Some U.S. companies have expressed frustration that while authorities require them to operate as a formal enterprise that meets all Rwandan regulatory requirements, some local competitors are informal businesses that do not operate in full compliance with all regulatory requirements. Other investors have claimed unfair treatment compared to SOEs, ruling party-aligned or politically connected business competitors in securing public incentives and contracts.
Expropriation and Compensation
The 2015 Investment Code forbids the expropriation of investors’ property in the public interest unless the investor is fairly compensated. A new expropriation law came into force in 2015, which included more explicit protections for property owners.
A 2017 study by Rwanda Civil Society Platform argues that the government conducts expropriations on short notice and does not provide sufficient time or support to help landowners fairly negotiate compensation. The report includes a survey that found only 27 percent of respondents received information about planned expropriation well in advance of action. While mechanisms exist to challenge the government’s offer, the report notes that landowners are required to pay all expenses for the second valuation, a prohibitive cost for rural farmers or the urban poor. Media have reported that wealthier landowners have the ability to challenge valuations and have received higher amounts. Political exiles and other embattled opposition figures have been involved in taxation lawsuits that resulted in their “abandoned properties” being sold at auction, allegedly at below market values.
ICSID Convention and New York Convention
Rwanda is signatory to the International Center for Settlement of Investment Disputes (ICSID) and the African Trade Insurance Agency (ATI). ICSID seeks to remove impediments to private investment posed by non-commercial risks, while ATI covers risk against restrictions on import and export activities, inconvertibility, expropriation, war, and civil disturbances.
Rwanda ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 2008.
Investor-State Dispute Settlement
Rwanda is a member of the East African Court of Justice for the settlement of disputes arising from or pertaining to the EAC. Rwanda has also acceded to the 1958 New York Arbitration Convention and the Multilateral Investment Guarantee Agency convention. Under the U.S.-Rwanda BIT, U.S. investors have the right to bring investment disputes before neutral, international arbitration panels. Disputes between U.S. investors and the GOR in recent years have been resolved through international arbitration, court judgments, or out of court settlements. Judgments by foreign courts and contract clauses that abide by foreign law are accepted and enforced by local courts, though they lack capacity and experience to adjudicate cases governed by non-Rwandan law. There have been a number of private investment disputes in Rwanda, though the government has yet to stand as complainant, respondent, or third party in a WTO dispute settlement. Rwanda has been a party to two cases at ICSID since Rwanda became a member in 1963; one of these cases is an ongoing case brought by an American investor against Rwanda. SOEs are also subject to domestic and international disputes. SOEs and ruling party-owned companies party to suits have both won and lost judgments in the past.
International Commercial Arbitration and Foreign Courts
In 2012, the GOR launched the Kigali International Arbitration Center (KIAC). KIAC case handling rules are modeled on the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules. By July 2019, KIAC reviewed 115 cases worth USD 64 million in claims involving petitions from 19 different nationalities since 2012. Some businesses report being pressured to use the Rwanda-based KIAC for the seat of arbitration in contracts signed with the GOR. Because KIAC has a short track record and its domiciled in Rwanda, these companies would prefer arbitration take place in a third country, and some have reported difficulty in securing international financing due to KIAC provision in their contracts.
Rwanda ranks 38 out of 190 economies for resolving insolvency in the World Bank’s 2020 Doing Business Report and is number two in Africa. It takes an average of two and a half years to conclude bankruptcy proceedings in Rwanda. The recovery rate for creditors on insolvent firms was reported at 19.3 cents on the dollar, with judgments typically made in local currency.
In April 2018, the GOR instituted a new Insolvency and Bankruptcy Law. One major change is the introduction of an article on “pooling of assets” allowing creditors to pursue parent companies and other members of the group, in case a subsidiary is in liquidation. The new law can be accessed here:
4. Industrial Policies
The 2015 Investment Code offers a package of benefits and incentives to both domestic and foreign investors under certain conditions, including:
- For an international company with its headquarters or regional office in Rwanda, a preferential corporate income tax rate of 0 percent;
- For any investor, a preferential corporate income tax rate of 15 percent;
- Corporate income tax holiday of up to seven years;
- Exemption of customs tax for products used in Export Processing Zones (EPZ);
- Exemption of capital gains tax;
- VAT refund;
- Accelerated depreciation; and
- Immigration incentives.
Poorly coordinated efforts between the RDB, RRA, MINICOM, and the Directorate of Immigration and Emigration can lead to inconsistent application of incentives, according to investors. Investors reported that tax incentives included in deals signed by the RDB are not honored by the RRA in all cases or sometimes not in a timely manner. Additionally, investors continue to face challenges receiving payment for services rendered for GOR projects, VAT refund delays, and/or expatriation of profits. In 2016, the GOR instituted a law governing public-private partnership (PPPs) as a step toward courting investments in key development projects. The law provides a legal framework concerning establishment, implementation, and management of PPPs. Detailed guidelines for the law can be accessed here:
Foreign Trade Zones/Free Ports/Trade Facilitation
Rwanda has established the Kigali Special Economic Zone (KSEZ), which was set up through the merger of former Kigali Free Trade Zone and the Kigali Industrial Park projects. SEZs in Rwanda are regulated by the SEZ Authority of Rwanda (SEZAR), based at the RDB. Land in KSEZ is acquired through Prime Economic Zone Secretariat, a private developer, under the regulations of SEZAR. The price per square meter is USD 62, and the minimum size that can be acquired is one hectare. Bonded warehouse facilities are now available both in and outside of Kigali for use by businesses importing duty-free materials. The GOR has established a number of benefits for investors operating in the SEZs, including tax and land ownership advantages. A company basing itself in the SEZ can also opt to be a part of the Economic Processing Zone. A number of criteria must be satisfied in order to qualify, such as extensive records on equipment, materials and goods, suitable offices, security provisions, and a number of property constraints.
Holding an EPZ license will exempt a company from VAT, import duties, and corporate tax. The company is then obliged to export a minimum of 80 percent of production. Even after considering savings due to these government incentives, a few investors reported that land in the SEZs was significantly more expensive than land outside the zones. The GOR has stated that there are no fiscal, immigration, or customs incentives beyond those provided in the 2015 Investment Code, though media has occasionally speculated that certain investors received additional incentives. The negative list of goods prohibited under the EAC Customs Management Act applies in SEZs. In November 2018, the GOR approved the Bugesera Special Economic Zone (BSEZ), located 45 minutes from Kigali. Procedural information and cost involved in operating in SEZs can be accessed here: . The SEZ policy was revised in 2018. Under the new policy, foreigners and locals may only lease land (formerly, foreign investors were able to purchase land outright in SEZ). To read more on the new policy, please see:
Rwanda created the Export Growth Facility (EGF) in 2015, with an initial capital of RWF 500 million, administered by the Development Bank of Rwanda (BRD). German KfW Development Bank injected EUR 8.5 million in support of the fund. The pilot program targets SMEs with export sales below USD 1 million. Priority sectors include horticulture, agro-processing, and manufacturing. The facility has three windows: an investment catalyst fund, a matching grant fund for market entry costs, and an export guarantee facility. Investment catalyst funds support private sector investments in export-orientated production through a 6.5 percent subsidy on market interest rates (normally between 16-20 percent). The matching grant fund provides grants (50 percent of the need) for expenditure on specific market entry costs (export strategy elaboration, export promotion, compliance with standards, etc.). The export guarantee fund provides short-term guarantees to commercial banks financing exporters’ pre- and post-shipment operations. The export guarantee component is not yet operational. The facility supports both locally and foreign-owned companies in Rwanda; at least one American company has already received a loan. Rwanda created the Business Development Fund (BDF) in 2011 to provide support to SMEs in credit guarantees, matching grants, asset leasing, and advisory services. BDF works with banks to provide guarantees between 50-75 percent of required collaterals. The maximum guarantee is RWF 500 million for agriculture projects and RWF 300 million for other sectors, for a maturity period of up to 10 years.
The GOR also manages the Rwanda Green Fund (FONERWA) to spur investment in green innovation. The UK Aid Department for International Development, KFW, and other donors have invested in the fund. FONERWA claims projects it supports have created more than 137,000 green jobs.
Performance and Data Localization Requirements
There is no legal obligation for nationals to own shares in foreign investments or requirement that shares of foreign equity be reduced over time. However, the government strongly encourages local participation in foreign investments. There is no requirement for private companies to store their proprietary data in Rwanda. There is also no requirement for foreign IT providers to turn over source code and/or provide access to encryption technology. IT companies dealing with government data cannot store it outside Rwanda or transfer it without GOR approval. Rwandans private data must be stored in Rwanda. There is no formal requirement that a certain number of senior officials or board members be citizens of Rwanda. Under the 2015 Investment Code, the government allows registered those who invest a minimum of USD 250,000 to hire up to three expatriate employees, without the need to conduct a labor market test in Rwanda. Investors who wish to hire more than three expatriate employees must conduct a labor market test, unless the available position is listed on Rwanda’s “Occupations in Demand” list. The Directorate General of Immigration and Emigration does not always honor the employment and immigration commitments of investment certificates and deals, according to a number of investors.
While the government does not impose conditions on the transfer of technology, it does encourage foreign investors, without legal obligation, to transfer technology and expertise to local staff to help develop Rwanda’s human capital. There is no legal requirement that investors must purchase from local sources or export a certain percentage of their output, though the government offers tax incentives for the latter. Unless stipulated in a contract or memorandum of understanding characterizing the purchase of privatized enterprises, performance requirements are not imposed as a condition for establishing, maintaining, or expanding other investments. Such requirements are imposed chiefly as a condition to tax and investment incentives. The GOR is not involved in assessing the type and source of raw materials for performance, but the RSB determines quality standards for some product categories.
5. Protection of Property Rights
The law protects and facilitates acquisition and disposition of all property rights. Investors involved in commercial agriculture have leasehold titles and are able to secure property titles, if necessary. The 2015 Investment Code states that investors shall have the right to own private property, whether individually or in association with others. Foreign investors can acquire real estate, though there is a general limit on land ownership. While local investors can acquire land through leasehold agreements that extend to 99 years, the lease period for foreigners has been as limited to 49 years, in some cases. Such leases are theoretically renewable, but the law is new enough that foreigners generally have not yet attempted to renew a lease. Mortgages are a nascent but growing financial product in Rwanda, increasing from 770 properties in 2008 to 13,394 in 2017, according to the RDB.
Intellectual Property Rights
The 2015 Investment Code guarantees protection of investors’ intellectual property rights (IPR), and legitimate rights related to technology transfer. IPR legislation covering patents, trademarks, and copyrights was approved in 2009. A Registration Service Agency, which is part of the RDB, was established in 2008 and has improved IPR t protection by registering all commercial entities and facilitating business identification and branding. The RDB and the RSB are the main regulatory bodies for Rwanda’s intellectual property rights law. The RDB registers intellectual property rights, providing a certificate and ownership title. Every registered IPR title is published in the Official Gazette. The fees payable for substance examination and registration of IPR apply equally to domestic and foreign applicants. Since 2016, any power of attorney that a non-resident grants to a Rwandan-based industrial property agent must be notarized. (Previously, a signature would have been sufficient.)
Registration of patents and trademarks is on a first time, first right basis, so companies should consider applying for trademark and patent protection in a timely manner. It is the responsibility of the copyright holders to register, protect, and enforce their rights where relevant, including retaining their own counsel and advisors. Through the RSB and the RRA, Rwanda has worked to increase IPR protection, but many goods that violate patents, especially pharmaceutical products, make it to market nonetheless. As many products available in Rwanda are re-exports from other EAC countries, it may be difficult to prevent counterfeit goods without regional cooperation. Also, investors reported difficulties in registering patents and having rules against infringement of their property rights enforced in a timely manner.
Rwanda conducts anti-counterfeit goods campaigns on a regular basis, but statistics on IPR enforcement are not publicly available. A few companies have expressed concern over inappropriate use of their intellectual property. While the government has offered rhetorical support, enforcement has been mixed. In some cases, infringement has stopped, but in other cases, companies have been frustrated with the slow pace of receiving judgment or of receiving compensation after successful legal cases.
As a COMESA member, Rwanda is automatically a member of African Regional Intellectual Property Organization. Rwanda is also a member of the World Intellectual Property Organization (WIPO) and is working toward harmonizing its legislation with WTO Agreement on the Trade-Related Aspects of Intellectual Property (TRIPS). Rwanda has yet to ratify WIPO Internet Treaties, though the government has taken steps to implement and enforce TRIPS Agreement. In addition to TRIPS, Rwanda is a party to the following treaties and conventions: the Paris Convention; the Berne Convention; the Patent Cooperation Treaty; the Madrid Protocol; the Hague Agreement; and the Brussels Convention. Rwanda is not a party to the following treaties and conventions: the Beijing Treaty; the Budapest Treaty; Locarno Agreement; the Marrakesh Treaty; the Nairobi Treaty; the Nice Agreement; the Phonograms Convention; the Singapore Treaty; the Strasbourg Agreement ; the Trademark Law Treaty; the Vienna Convention; the WIPO Copyright Treaty; and the WIPO Performance and Phonograms Treaty.
Rwanda is not included in the United States Trade Representative (USTR)Special 301 Report or the Notorious Markets List.
6. Financial Sector
Capital Markets and Portfolio Investment
Rwanda’s capital markets are relatively immature and lack complexity. Only eight companies have publicly listed and traded equities in Rwanda. The Rwanda Capital Market Authority was established in 2017 to regulate the capital market, commodity exchange and related contracts, collective investment schemes, and warehouse receipts. Most capital market transactions are domestic. While offers can attract some international interests, they are rare. Rwanda is one of a few sub-Saharan African countries to have issued sovereign bonds. In 2019, the National Bank of Rwanda issued five new bonds including a 20-year bond, the longest tenor ever issued by the country. During the same year, seven existing bonds were reopened. Rwandan government bonds and other debt securities are highly oversubscribed and bond yields average 12 percent. BNR, the country’s Central Bank, has implemented reforms in recent years that are helping to create a secondary market for Rwandan treasury bonds. Secondary market continue go growth from low base. In 2019, BNR reported that deals and turn overs increased by 47.0 percent and 106.5 percent respectively following intense awareness campaigns and increased number of products (new issuances and re-openings). In January 2020, the IMF completed its first review of Rwanda’s economic performance under the Policy Coordination Instrument and Monetary Policy Consultation, which can be found here:
Money and Banking System
Many U.S. investors express concern that local access to affordable credit is a serious challenge in Rwanda. Interest rates are high for the region ranging from 15 percent to 20 percent, banks offer predominantly short-term loans, collateral requirements can be higher than 100 percent of the value of the loan, and Rwandan commercial banks rarely issue significant loan values. The prime interest rate is 16-18 percent. Large international transfers are subject to authorization. Investors who seek to borrow more than USD 1 million must often engage in multi-party loan transactions, usually leveraging support from larger regional banks. 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. In some cases, preferred financing options may be available through specialized funds including the Export Growth Fund, BRD, or FONERWA.
Rwanda’s financial sector remains highly concentrated. The share of the three largest Banks’s assets increased from 46.5 percent in December 2018 to 48.4 percent in December 2019. The largest, partially state-owned, Bank of Kigali (BoK), holds more than 30 percent of all assets. The banking sector holds more than 65 percent of total financial sector assets in Rwanda. Non-performing loans dropped from 6.4 percent in December 2018 to 4.9 percent in December 2019. Foreign banks are permitted to establish operations in Rwanda, with several Kenyan-based banks in the country. Atlas Mara Limited acquired a majority equity stake in Banque Populaire du Rwanda (BPR) in 2016. BPR/Atlas Mara has the largest number of branch locations and is Rwanda’s second largest bank after BoK. In total, Rwanda’s banks have assets of more than USD 3 billion, which increased 12.5 percent between December 2018 and 2019, according to BNR. The IMF gives BNR high marks for its effective monetary policy. BNR introduced a new monetary policy framework in 2019, which shifts toward inflation-targeting monetary framework in place of a quantity-of-money framework.
In 2019, BNR reported that commercial banks liquidity ratio was 49 percent (compared to BNR’s required minimum of 20 percent), suggesting reluctance toward making loans. The capital adequacy ratio grew to 24.1 percent from 21.4 percent over the year, well above the minimum of 15 percent, suggesting the Rwanda banking sector continues to be generally risk averse. Local banks often generate significant revenue from holding government debt and from charging a variety of fees to banking customers. Credit cards are becoming more common in major cities, especially at locations frequented by foreigners, but are not used in rural areas. Rwandans primarily rely on cash or mobile money to conduct transactions.
During the COVID-19 pandemic local banks deferred loan payments from customers. Despite this, the banking sector was confident that they had sufficient liquidity until July 2020 due to the favorable economic conditions prior to COVID-19. In March 2020, the IMF disbursed USD 109 Million to Rwanda under the Rapid Credit Facility and the World Bank approved a USD 14.25 million immediate funding in the form of an International Development Association credit to support Rwanda’s response to the COVID-19 pandemic. At the same time, the BNR arranged a 50 Billion Rwandan Franc (USD 53.4 Million) liquidity fund for local banks. By December 2019, the number of debit cards in the country grew eight percent year over year to 945,000, and the number of mobile banking customers grew 22 percent to 1,266,000. The total number of bank and MFI accounts increased from 7.1 million to 7.7 million between 2018-2019. The number of retail point of sale (POS) machines grew from 2,801 to 3,477 while POS transactions grew by 53 percent in volume and 29 percent in value between 2019 and 2018 according to BNR.
Foreign Exchange and Remittances
In 1995, the government abandoned a dollar peg and established a floating exchange rate regime, under which all lending and deposit interest rates were liberalized. BNR publishes an official exchange rate on a daily basis, which is typically within a two percent range of rates seen in the local market. Some investors report occasional difficulty in obtaining foreign exchange. Rwanda generally runs a large trade deficit, estimated at more than 10 percent of GDP in 2019. Transacting locally in foreign currency is prohibited in Rwanda. Regulations set a ceiling on the foreign currency that can leave the country per day. In addition, regulations specify limits for sending money outside the country; BNR must approve any transaction that exceed these limits.
Most local loans are in local currency. In December 2018, BNR issued a new directive on lending in foreign currency which requires the borrow to have a turnover of at least RWF 50 million or equivalent in foreign currency, have a known income stream in foreign currency not below 150 percent of the total installment repayments, and the repayments must be in foreign currency. The collateral pledged by non-resident borrowers must be valued at 150 percent of the value of the loan. In addition, BNR requires banks to report regularly on loans granted in foreign currency.
Investors can remit payments from Rwanda only through authorized commercial banks. There is no limit on the inflow of funds, although local banks are required to notify BNR of all transfers over USD 10,000 to mitigate the risk of potential money laundering. A withholding tax of 15 percent to repatriate profits is considered high by a number of investors given that a 30 percent tax is already charged on profits, making the realized tax burden 45 percent. 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 shortly after auction in Mombasa, Kenya. Repatriated export earnings deposited in commercial banks must match the exact declaration the exporter used crossing the border.
Rwandans working overseas can make remittances to their home country without impediment. It usually takes up to three days to transfer money using SWIFT financial services. The concentrated nature of the Rwandan banking sector limits choice, and some U.S. investors have expressed frustration with the high fees charged for exchanging Rwandan francs to dollars.
Sovereign Wealth Funds
In 2012, the Rwandan government launched the Agaciro Development Fund (ADF), a sovereign wealth fund that includes investments from Rwandan citizens and the international diaspora. By September 30, 2019, the fund was worth 194.3 billion RWF in assets (around USD 204 million). The ADF operates under the custodianship of BNR and reports quarterly and annually to the Ministry of Finance and Economic Planning, its supervisory authority. ADF is a member of the International Forum of Sovereign Wealth Funds and is committed to the Santiago Principles. ADF only operates in Rwanda. In addition to returns on investments, citizens and private sector voluntary contributions, and other donations, ADF receives RWF 5 billion every year from tax revenues and 5 percent of proceeds from every public asset that is privatized. The fund also receives 5 percent of royalties from minerals and other natural resources each year. The government has transferred a number of its shares in private enterprises to the management of ADF including those in the BoK, Broadband Systems Corporation (BSC), Gasabo 3D Ltd, Africa Olleh Services (AoS), Korea Telecom Rwanda Networks (KTRN), and the One and Only Nyungwe Lodge. ADF invests mainly in Rwanda. While the fund can invest in foreign non-fixed income investments, such as publicly listed equity, private equity, and joint ventures, the AGDF Corporate Trust Ltd (the fund’s investment arm) held no financial assets and liabilities in foreign currency, according to the 2018 annual report.
7. State-Owned Enterprises
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 GOR has made efforts to privatize SOEs; reduce the government’s non-controlling shares in private enterprises; and attract FDI, especially in the ICT, tourism, banking, and agriculture sectors, but progress has been slow. Current SOEs include water and electricity utilities, as well as companies in construction, ICT, aviation, mining, insurance, agriculture, finance, and other investments. Some investors complain about competition from state-owned and ruling party-aligned businesses. SOEs and utilities appear in the national budget, but the financial performance of most SOEs is only detailed in an annex that is not publicly available. The most recent state finances audit report of the OAG also covers SOEs and has sections criticizing the management of some of the organizations. SOEs are governed by boards with most members having other government positions.
State-owned non-financial corporations include Ngali Holdings, Horizon Group Ltd, REG, Water and Sanitation Corporation, RwandAir, National Post Office, Rwanda Printery Company Ltd, King Faisal Hospital, Muhabura Multichoice Ltd, Prime Holdings, Rwanda Grain and Cereals Corporation, Kinazi Cassava Plant, and the Rwanda Inter-Link Transport Company. State-owned financial corporations include the NBR, Development Bank of Rwanda, Special Guarantee Fund, Rwanda National Investment Trust Ltd, ADF, BDF and the Rwanda Social Security Board. The GOR has interests in the BoK, Rwanda Convention Bureau, BSC, CIMERWA, Gasabo 3D Ltd, AoS, KTRN, Dubai World Nyungwe Lodge, and Akagera Management Company, among others.
Rwanda continues to carry out a privatization program that has attracted foreign investors in strategic areas ranging from telecommunications and banking to tea production and tourism. As of 2017 (latest data available), 56 companies have been fully privatized, seven were liquidated, and 20 more were in the process of privatization. RDB’s Strategic Investment Department is responsible for implementing and monitoring the privatization program. Some observers have questioned the transparency of certain transactions, as a number of transactions were undertaken through mutual agreements directly between the government and the private investor, some of whom have personal relationships with senior government officials, rather than public offerings.
8. Responsible Business Conduct
There is a growing awareness of corporate social responsibility (CSR) within Rwanda, and several foreign-owned companies operating locally implement CSR programs. Rwanda implements the OECD’s Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Rwanda also implements the International Tin Supply Chain Initiative tracing scheme. In 2016, the Better Sourcing Program (currently RCS Global Group) began an alternative mineral tracing scheme in Rwanda. Rwanda also has guidelines on corporate governance by publicly listed companies. In recognition of the firm’s strong commitment to CSR, the U.S. Department of State awarded Sorwathe, a U.S.-owned tea producer in Kinihira, Rwanda, the Secretary of State’s 2012 Award for Corporate Excellence for Small and Medium Enterprises. In 2015, the U.S. firm Gigawatt Global was also a finalist for the Secretary of State’s Award for Corporate Excellence in the environmental sustainability category. Rwanda is not a member of the Extractive Industries Transparency Initiative (EITI).
Rwanda is ranked among the least corrupt countries in Africa, with Transparency International’s 2019 Corruption Perception Index putting the country among Africa’s four least corrupt nations and 51st in the world. The government maintains a high-profile anti-corruption effort, and senior leaders articulate a consistent message emphasizing that combating corruption is a key national goal. The government investigates corruption allegations and generally punishes those found guilty. High-ranking officials accused of corruption often resign during the investigation period, and many have been prosecuted. Rwanda has ratified the UN Anticorruption Convention. It is a signatory to the OECD Convention on Combating Bribery. It is also a signatory to the African Union Anticorruption Convention. U.S. firms have identified the perceived lack of government corruption in Rwanda as a key incentive for investing in the country. There are no local industry or non-profit groups offering services for vetting potential local investment partners, but the Ministry of Justice keeps judgments online, making it a source of information on companies and individuals in Rwanda at . The Rwanda National Public Prosecution Authority issues criminal records on demand to applicants at .
Resources to Report Corruption
Contact at government agency or agencies are responsible for combating corruption:
Mr. Felicien Mwumvaneza, Commissioner for Quality Assurance Department (Anti-Corruption Unit) Rwanda Revenue Authority
Avenue du Lac Muhazi, P.O. Box 3987, Kigali, Rwanda
Telephone: +250 252595504 or +250 788309563
email@example.com / firstname.lastname@example.org
Mr. Obadiah Biraro, Auditor General, Office of the Auditor General
Avenue du Lac Muhazi, P.O. Box 1020, Kigali, Rwanda
Telephone: +250 78818980 , email@example.com
Contact at “watchdog” organization
10. Political and Security Environment
Rwanda is a stable country with relatively little violence. According to a 2017 report by the World Economic Forum, Rwanda is the ninth safest country in the world. Gallup’s Global Law and Order Index report of 2018 ranked Rwanda 2nd safest place in Africa. Investors have cited the stable political and security environment as an important driver of investments. A strong police and military provide a security umbrella that minimizes potential criminal activity.
The U.S. Department of State recommends that U.S. citizens exercise caution when traveling near the Rwanda-Democratic Republic of the Congo (DRC) border, given the possibility of fighting and cross-border attacks involving the Democratic Forces for the Liberation of Rwanda (FDLR) and other groups opposed to the GOR. Relations between Burundi and Rwanda are tense, and there is a risk of cross-border incursions and armed clashes. Since 2018, there have been a few incidents of sporadic fighting in districts bordering Burundi and in Nyungwe National Park.
Grenade attacks aimed at the local populace occurred on a recurring basis between 2008 and 2014 in Rwanda. There have been several cross-border attacks in Western Rwanda on Rwandan police and military posts reportedly since 2016. Despite occasional violence along Rwanda’s borders with the DRC and Burundi, there have been no incidents involving politically motivated damage to investment projects or installations since the late 1990s. Relations with Uganda are also tense, but leaders continue to emphasize they are seeking a political solution. Rwanda has not allowed commercial traffic to cross the Rwandan-Ugandan border since February 2019 forcing most, if not all, commercial traffic to the Rwandan-Tanzanian border. In May 2020, the Rwandan-Tanzania border crossings were negatively impacted due to the influx of Tanzanian truck drivers infected with COVID-19.
Please see the following link for State Department Country Specific Information: https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/Rwanda.html
11. Labor Policies and Practices
General labor is available, but Rwanda suffers from a shortage of skilled labor, including accountants, lawyers, engineers, tradespeople, and technicians. Higher institutes of technology, private universities, and vocational institutes are improving and producing more and highly-trained graduates each year. The Rwanda Workforce Development Authority sponsors programs to support both short and long-term professional trainings targeting key industries in Rwanda. Carnegie Mellon University opened a campus in Kigali in 2012–its first in sub-Saharan Africa–and currently offers a Master of Science in Electrical and Computer Engineering and Master of Science in Information Technology. In 2013, the nonprofit university program, Kepler, was established for students to work toward a U.S.-accredited degree through online learning and in-person seminars through a relationship with Southern New Hampshire University. Oklahoma Christian University offers an online Master of Business Administration program with on-site support in Kigali. The African Institute of Mathematics, University of Global Health Equity and African Leadership University campuses in Rwanda offer college level and advanced degrees in many fields. Investors are strongly encouraged to hire Rwandan nationals whenever possible. According to the Investment Code, a registered investor who invests an equivalent of at least USD 250,000 may recruit three foreign employees. However, a number of foreign investors reported difficulties importing qualified staff in accordance with the Investment Code due to Rwandan immigration rules and practices. In some cases, these problems occurred even though investors had signed agreements with the government regarding the number of foreign employees.
Investors are strongly encouraged to hire Rwandan nationals whenever possible. According to the Investment Code, a registered investor who invests an equivalent of at least USD 250,000 may recruit three foreign employees. However, a number of foreign investors reported difficulties importing qualified staff in accordance with the Investment Code due to Rwandan immigration rules and practices. In some cases, these problems occurred even though investors had signed agreements with the government regarding the number of foreign employees.
Rwanda has ratified all of the International Labor Organization’s eight core conventions. Policies to protect workers in special labor conditions exist, but enforcement remains inconsistent. The government encourages, but does not require, on-the-job training and technology transfer to local employees. The law restricts voluntary collective bargaining by requiring prior authorization or approval by authorities and requiring binding arbitration in cases of non-conciliation. The law provides some workers the right to conduct strikes, subject to numerous restrictions, but strikes are very rare. There is no unemployment insurance or other social safety net programs for workers laid off for economic reasons. The minimum wage remains at 100 Rwandan Franc per day (less than USD 0.10 per day) and has not been changed since the 1974. The legal framework for employment rights for disabled persons is not as strong as in the United States, but the government and some employers are making efforts to offer reasonable accommodations. In 2000, the government revised the national labor code to eliminate gender discrimination, restrictions on the mobility of labor, and wage controls. Private firms are responsible for their local employees’ income tax payments and Rwanda Social Security Board pension contributions. For full-time workers, these payments amount to more than 30 percent of take-home pay, which can be a disadvantage if competing firms are in the informal economy and not compliant with these requirements. Labor laws are not waived in order to attract or retain investment. There are no labor law provisions in SEZs or industrial parks, which differ from national labor laws. Collective bargaining is not common in Rwanda. Few professional associations fix minimum salaries for their members and some investors have expressed concern that labor law enforcement is uneven or opaque. The minimum wage has not changed since 1974 and is 100 Rwandan francs (USD 0.10) per day.
The legal framework for employment rights for disabled persons is not as strong as in the United States, but the government and some employers are making efforts to offer reasonable accommodations. In 2000, the government revised the national labor code to eliminate gender discrimination, restrictions on the mobility of labor, and wage controls. Private firms are responsible for their local employees’ income tax payments and Rwanda Social Security Board pension contributions. For full-time workers, these payments amount to more than 30 percent of take-home pay, which can be a disadvantage if competing firms are in the informal economy and not compliant with these requirements. Labor laws are not waived in order to attract or retain investment. There are no labor law provisions in SEZs or industrial parks, which differ from national labor laws. Collective bargaining is not common in Rwanda. Few professional associations fix minimum salaries for their members and some investors have expressed concern that labor law enforcement is uneven or opaque. The minimum wage has not changed since 1974 and is 100 Rwandan francs (USD 0.10) per day.
12. U.S. International Development Finance Corporation (DFC) and Other Investment Insurance Programs
DFC (Former Overseas Private Investment Corporation) has provided financing and political risk insurance to more than a dozen U.S. projects in Rwanda since 1975. DFC officials have expressed interest in expanding the corporation’s portfolio in Rwanda and are currently evaluating potential projects. The Export-Import Bank continues its program to ensure short-term export credit transactions involving various payment terms, including open accounts that cover the exports of consumer goods, services, commodities, and certain capital goods. The 1965 U.S.-Rwanda Investment Incentive Agreement remains in force; Rwanda and the United States are discussing potential updates to this agreement.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
|Direct Investment from/in Counterpart Economy Data|
|From Top Five Sources/Top Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||Amount||100%||Total Outward||Amount||100%|
|“0” reflects amounts rounded to +/- USD 500,000.|
Table 4: Sources of Portfolio Investment
Data on Rwanda equity security holdings by nationality is not available. According to a 2018 BNR report, portfolio investment remains the lowest component of foreign investment in Rwanda mainly due to the low level of financial market development. Portfolio investment stock amounted to $109.3 million in 2018, a 5 percent increase from 2017 levels. In 2018, Rwanda recorded foreign portfolio inflows of $5.4 million compared to $2.5 million in 2017.
14. Contact for More Information
Economic and Commercial Officer
United States Embassy
2657 Avenue de la Gendarmerie, P.O. Box 28 Kigali, Rwanda