4

RwandaAlexandre Rutayisire

I. Introduction
Rwanda is located in the East Central Africa, neighboring Tanzania to the East, Uganda to North,Republic Democratic of Congo to the West and Burundi to the South. It lays few degrees south ofequator and is a land locked. Rwanda is African great lakes region and is highly elevated; its
geography is dominated by mountains in the west and Savanna to the east. Rwanda is a small country
with the size of 26,338 square kilometers (10,169 square miles). Comparatively, Rwanda is theWorld’s 149th largest country when classified from the largest to the lowest countries of the World; it
is comparable in size to Haiti or the state of Maryland in the United States. The capital city of Rwanda
is Kigali and is located near the centre of the country. The economy of Rwanda suffered heavily
during 1994 genocide but it has since strengthened. The major Rwanda cash crops are Coffee and Tea.
Tourism is a faster growing sector and it is one of the sectors that produce for the country foreign
currency, industrial sector is small and is contributing 14.3 percent of the total GDP.
I.1 Geography and climate
Rwanda also known as a “land of a thousand hills” Is high elevated country, the lowest point is
Rusizi River which lays at 950 meters above sea level, the central- western part of the country isdominated by the mountains, the highest point being mount Karisimbi at 4,508 meters (14,787 ft)
which is one of the Virunga Volcano chains found to the western border of the country near
Democratic republic of Congo. Rwanda has a template tropical highland climate, the daily temperature
range between 12 oC (54 oF) and 27 oC (81 oF)in the centre of the country with little variation over theyear,
The country has many lakes , the largest being Lake kivu. It is one of the twenty deepest lakes in theworld with 480 metres (1,575 ft). It occupies the floor of Albertine Rift along most of the length of thewestern border, other lakes include Burera, Luhondo, Rweru, Muhazi and Ihema.
I.2 Population
The year 2014 ended with the total population of 12,100,049 people according to World Bank
report, this represent an increase of 323,527 people compared to 2013 population, Rwanda is among
the highly densely populated country in Africa with 459 people per square km, and it was ranked
182nd in the World. The Rwandan population is predominantly women according to the estimate fromthe World Bank report, 42 of the total population is under 15 years old, 54.6 percent of the population
is between 15 and 64 years old and 2.4 percent of the population is above 64 years.
The previous National Census of 2012 estimated the Rwandan population to be at 10,537,222 people.
I.3 Language and Culture
The most commonly used language in Rwanda is Kinyarwanda which is the local language used by
all Rwandans, Kiswahili is used in commercial centers and near the Rwandan borders of Republic
Democratic of Congo and near Tanzania where this language is commonly used. Kinyarwanda,
English and French are official languages and are used mostly in administration and in education.

101

I.4 Religion
Christianity makes the central part of Rwandan population, 90 percent of Rwandans are Christian,
60percent being Catholic, 30percent is Protestants including Pentecostals, Presbyterians, Free
Methodist, and Baptist, Muslims are less than 10percent and they are mainly found in cities. The
coming of Christianity rituals replaced indigenous religious practices though small number ofRwandans still believes in traditional rituals.
I.5 Political Administration
The three arms of the government namely executive; judiciary and legislature are separate andindependent of each other, with the executive arm being led by the president and the cabinet. The
president is the head of state and has a broad powers including creating policy in conjunction with thecabinet, exercising the plorogative mercy, commanding the armed forces, negotiating and ratifying
treaties, signing presidential orders and declaring war or state of emergency. The president appoints
the Prime minister and other members of the cabinet.
The Constitution was adopted following a national referendum in 2003, replacing constitution
which had been in place in 1994. The Constitution mandate a multiparty system of government with
politics based on democracy and election.
The Parliament consists of two chambers. It makes legislation empowered by Constitution to
oversee the activities of the president and cabinet. The lower chamber is the chamber of deputies
which has 80 members serving five year terms, twenty four of these seats are served for the women
elected through a joint assembly of local government officials and another three seats are reserved foryouth and disabled members. The remaining 53 are elected by universal suffrage under a proportional
representation system. Following the 2013 election there are 51 female deputies. Rwanda is one oftwo countries with female majority in the national parliament. The upper chamber is the 26 seat
senates whose members are selected by a variety of bodies, a mandatory minimum of 30 percent of thesenators are women. Senators serve eight year term.

102

II. Overview of Macroeconomic Activity and Fiscal Position
Rwanda’s economy was badly affected by 1994 genocide, since 2003 the government of Rwanda
took strict measures to improve the economy since then the economy has been growing at the rate of
7-8% per year. The main sectors attributed to economic growth are agriculture, Mining, services, andtourism. Industrial sector is small contributing 14.8% of GDP in 2014 product manufactured include
Cement, Agricultural products, Small scale beverages, Soap, furniture, shoes, plastic goods, textile andCigarettes Reliance. Service sector rebounded in 2010 becoming the country’s largest by economic
output contributing 43.6 percent of the country’s GDP key tertiary contributor include Banking,Insurance real estates, business services and public administration including education and health.
Table 1: Real GDP Growth Rates at Constant 2011 Prices, in%
ATIVITY DESCRIPTIONGROSS DOMESTIC PRODUCTAGRICULTURAL,FORESTRY & FISHING
Food crops
Export crops
Livestock and Livestock products
Forestry
Fishing
INDUSTRY
Mining and quarrying
TOTAL MANUFACTURING
of which: Food
Beverages &tobacco
Textile, clothing and leather goods
Wood &paper: printing
Chemicals, rubber and plastic products
Non-metalic,mineral product
Metal product, Machinery & equipment
Furniture &other manufacturing
Construction
TRADE &TRANSPORT
Maintenance &repair of motor vehicles
Whale sale and retail trade
Transport
OTHER SERVICES
Hotels and restaurants
Information & communication
Financial Services
Real estate activities
Scientific and technolocal activities
Administrative & support services
Public administration & defense
Education
Human health & social work activities
Cultural, domestic &other services
Taxes less subsidies on products
Source: National Institute of Statistics of Rwanda

2009/10
4.3
5.0
7.0
-1.0
4.0
3.0
3.0
0.0
-16.0
6.0
6.0
3.0
2.0
8.0
-4.0
10.0
34.0
34.0
-2.0
1.0
0.0
0.0
6.0
6.0
4.0
6.0
0.0
6.0
6.0
6.0
8.0
12.0
17.0
1.0
9.0

2010/11
5.8
2.5
3.0
-6.0
4.0
3.0
5.0
13.0
23.0
6.0
1.0
8.0
1.0
-4.0
17.0
9.0
3.0
18.0
18.0
9.0
13.0
9.0
5.0
6.0
6.0
1.0
34.0
1.0
0.0
-1.0
9.0
13.0
5.0
3.0
2.0

2011/12
9.5
8.0
10.0
14.0
5.0
3.0
-4.0
13.0
19.0
9.0
11.0
4.0
5.0
-2.0
7.0
18.0
62.0
26.0
15.0
14.0
6.0
15.0
12.0
8.0
5.0
25.0
10.0
-1.0
2.0
3.0
31.0
12.0
25.0
2.0
3.0

2012/13
6.9
6.0
6.0
19.0
6.0
4.0
3.0
12.0
4.0
5.0
4.0
3.0
-1.0
19.0
-4.0
13.0
1.0
8.0
20.0
9.0
8.0
8.0
15.0
6.0
4.0
12.0
15.0
2.0
3.0
5.0
13.0
6.0
3.0
15.0
-3.0

2013/14
5.1
3.0
3.0
-9.0
7.0
2.0
5.0
6.0
15.0
5.0
9.0
3.0
10.0
7.0
-5.0
6.0
-2.0
11.0
5.0
8.0
4.0
9.0
8.0
6.0
4.0
5.0
5.0
5.0
5.0
5.0
6.0
6.0
8.0
14.0
0.0

2014/15
7.2
5.0
5.0
3.0
9.0
3.0
3.0
7.0
2.0
2.0
-3.0
-2.0
21.0
8.0
3.0
10.0
21.0
14.0
11.0
7.0
5.0
7.0
5.0
9.0
3.0
20.0
8.0
9.0
5.0
6.0
5.0
7.0
14.0
15.0
11.0

II.1 International environment
11.1.1 Trade Balance
For the fiscal year 2013/2014 the trade balance stood at USD 1,212.93 million, the total export value
amounted to USD 707.32 million and the total imports FOB to USD 1,920.25 million. Compared to
2012/2013 exports value remains almost unchanged while imports value slightly increased by 0.9
percent following these trends the deficit deteriorated by 1.5 percent, thus import cover declined to36.8 percent in 2013/2014 from 37.2 percent registered in 2012/13.
II.1.2 Exports

103During the year 2013/2014 total receipts from exports were valued at USD576.65 million mostdominated by traditional products which represent 56 percent of the total exports receipts while otherexports together with re-exports represent 44 percent of the total export earnings for the fiscal year
2013/2014. Other exports products comprise of a set of foodstuffs and other minerals, live animals,
among others while re-exports were mostly composed of petroleum products, machines and engines,
vehicles and minerals
Table 2 : Formal export development (Value FOB in million of USD, Volume in thousands of
tons)
CoffeeTea
Minerals
Other products
Total exports
Source: Central Bank of Rwanda

July 12-June 13
Volume
Value
20.53
69.09
22.06
63.89
8.41
186.31
181.1595.7
321.39574.49July 13-June 14
Volume
Value
17.83
47.49
21.6
52.26
10.23
204.28122.84116.24306.68576.64%change
Volume
-13.1
-2.1
21.6
-32.2
-4.9

Value
-31.3
-18.2
9.6
21.5
0.4

Tea exports performed poorly during the fiscal year 2013/2014 in both value and volume declining
by 18.2% and 2.1% respectively, due to the decline of 4.5 percent in production and 16.4% in unit
price from USD 2.90/kg in 2012/13 to USD 2.42/kg in 2013/2014. In addition the decline resulted
from high increase in tea supply at Mombasa auction, where 71% Rwandan tea was traded following
the high production of the tea in Mombasa of the growing Countries while the demand remained
unchanged.
Coffee exports also recorded a poor performance decreasing by 31.3% in value and 13.2 percent involume due to bad weather especially lack of rainfall in the fourth quarter of 2013.The decline in value
is explained both in low production as a result of unfavorable weather conditions and the fall in theinternational commodity prices. In addition the level of stock end 2013 was low (2,560tons) comparedto the stock end 2012(3,262tons). Coffee remained dominated by ordinary coffee which represent
50percent of total production and dropped by 23.3%to 8,912 tons in 2013/14 from 11,615 tones in
2012/13. Fully washed coffee also declined by 13.7%from 7,169 tones to 6,186tons in 2013/14.
Mineral exports showed a good performance in 2013/2014 during the period under view Rwanda’s
mineral export rose by 9.6% in value increasing from USD186.31 million in 2012/2013 to USD
204.28 million in 2013/2014 and significantly increasing by 21.6 percent in volume, despite a decreasein unit price recorded by cassiterite (-0.9%) colt an(-20.5%) and wolfram (-4.9%). Due to increased
investment in mining sector the increase in volume offsets the decrease in unit prices. with regard tovolume, mineral exports remained dominated by cassiterite which represent 55.2 percent of the totalexports of minerals followed by coltan and wolfram wit a share of 22.4% and 22.3% respectively. In
terms of value, cassiterite export earnings high increased by 19.8% to USD 68.48 million from USD
57.12 million, wolfram rose by 9.3% to USD 29.46million and coltan increased by 4.1% to USD
106.38 million from USD 102.22 million in 2012/2013.
Compared to the last year hides and skins exports in 2013/2014 recorded good performance with anincrease of 2.5%in value driven by 0.8% in volume and increase of 1.7% in unit prices. In total
10,993.12 tons exported at 1.53/kg in 2012/2013.
During 2013/2014, pyrethrum exports performed poorly with a significant decrease of 82.1% invalue from USD 9.00 million in 2012/2013 to USD 1.61 million 2013/2014, following decline of unit
prices (-32.2%) decreasing from USD 250.73/kg to USD 169.95/kg from 35.90 tons to 9.46tons in
2013/2014
Non- traditional exports, such as other exports recorded an increase of 21.5% in value but
decreased by 32.2% in volume. Among nontraditional exports, textile exports value rose by 231.9%
followed by cement, iron and steel by 50.5% and 35% respectively. Regarding the re-export products
including other minerals, petroleum products, machines and engines, vehicles mainly exported toneighboring countries incredibly performed better in both value and volume by 2.9% and 56.1%
respectively.

104

Table 3: Evolution of some non-traditional export

Livestock
Edible vegitables,roots and tubers
Cereals
Production of the million industry
Mineral water and Beer
CementCosmetic product
Plastics and articles thereof
Textile and Textile articles
Footwear
Handcrafts
Scraps Iron
Iron and steel
Source: Central Bank of Rwanda(value FOB in USD million and volume in thousands of tons)
July12-June 13
July 13-June 2014%change
VolumeValue
VolumeValue
Volume
4.85
7.5
8.43
8.04
73.8
28.3
4.82
15.01
2.43
-47
9.83
3.2
5.34
1.58
-45.7
49.62
23.49
43.38
19.37
-12.7
14.94
12.71
8.26
4.94
-44.7
35.51
3.11
20.56
4.68
-42.1
0.67
1.91
0.73
1.71
9
1.57
3.64
2.17
3.59
38
0.1
0.47
0.35
1.56
250
0.57
0.63
0.4
0.24
-29.8
0.03
0.38
0.03
0.37
0
12.27
1.92
9.82
0.98
-20
7.73
6.4
9.02
8.69
16.7

Value

The external trade was also boosted by informal cross border trade which amounted to USD 105.7
million of export from USD 106.85million in 2013/2013 representing around 18.3% of formal exports.
During the same period, the informal imports declined by 19.8% from USD 21.45 in 2012/2013 to
USD 17.21 million in 2013/2014 because of visa requirement for entry into DRC, leading to
improvement in Rwanda’s informal trade balance with neighboring countries (+USD 88.46
million).This informal cross border is dominated by crop products and live animals where as main
trade partners are DRC and Uganda.
II.1.3 Partner Country Analysis
The following countries received the largest valued annual Rwandans exports: Switzerland(US$75.99 million), Kenya (US$67.73 million), Democratic Republic of Congo (US$60.25 million),
Australia (US$30.69 million), and United States of America (US$30.69 million)
Subsequently on quarterly basis table 5 shows that out of US$124.88 million of Rwanda’s export
during quarter four 2014 the most top five export destination countries accounted for US$ 83.76
million (67 percent). The Democratic Republic of Congo (DRC) saw the largest increase in value(US$ 19.55 million) while exports to Austria raised sharply and there was a large decrease in exports
to Switzerland in the fourth quarter 2014 compared to the same
Table 4: Rwanda’s' Top Five Domestic Exports partners,2014
Country
2013Q3
8.99
Congo, The Democratic Republic ofAustria
11.52
Kenya
36.54
Switzerland
5.72
United states
139.41
Total World
Source: National Institute of Statistics of Rwanda

2013Q4
8.99
0.00
17.08
26.77
2.91
101.38

2014Q1
12.90
10.68
19.48
15.71
2.37
92.46

2014Q2
12.87
9.94
18.83
20.01
5.13
92.46

2014Q3
14.95
16.85
12.48
25.14
8.46
130.05

US$ Million
2014Q4
19.55
17.41
16.94
15.14
14.73
124.88II.1.4 Development in the East African Region
Despite volatility in foreign inflows as a result of persistent of financial crisis, economic activities inthe EAC region remained resilient driven by the efficient microeconomic policies and the importantinvestment projects. EAC countries recorded mixed performance in 2013 with Uganda and Rwanda
economies slowing down compared to the previous year while the remaining countries kept on
growingFig 2 illustrates that Rwanda’s domestic exports to East African Community partner states (EAC) in
quarter four increased by six percent compared to the same quarter of 2013
Kenya saw the largest increase in the values of export from Rwanda (USD 67.73 million during 2014)
and this is mainly explained by an increase in the values for other black tea (fermented)

105

72
-49.6
-50.6
-17.5
-61.1
50.5
-10.5
14
231.9
-61.9
-2.6
-49
-35.8

Figure 1: Export to EAC partner states, 2013-2014
40

Values(US$ million)

35
30
Kenya

25

Tanzania,Republic of

20

Uganda15

Burundi10502013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4
PeriodSource: Central Bank of Rwanda

II.1.5 Imports
During the fiscal year 2013/2014, imports CIF increased by 7.8% in value to USD 2,381.64 million
from USD 2,210.14 million in 2012/2013 and have been mostly dominated by intermediary goods
with a share of 29.8% of the total import value, followed by consumer goods with 27.7%, capital
goods26.6%, while energy products represented 16.0% of the total imports value. The increase inimports value was mainly driven by the increase in imports of 1.4% in consumer goods, 15.3%
intermediary goods, 10.4% in capital goods and 2.3% in energy and lubricants. In terms of volume,
total imports increased by 0.8% during the period under review pushed up by increase of 2.2%,3.1%
and 6.2% in the intermediary goods, capital goods and energy and lubricants respectively, despite thedecrease of 3.8% of consumer goods.
Table 5: Evolution of import CIF adjusted (Value CIF in USD million, Volume in thousands oftons)
2012/2013
VolumeTotal Imports
1,774.82
Consumer goods
599.01
Capital goods
61.49
Intermediates Goods
854.8
Energy and lubricants259.52
Source: Central Bank of Rwanda

Value
2,210.14
649.26573.12616.11371.62

2013/2014
Volume1,789.41
576.5563.39
873.9
275.57Value
2,381.64
658.66632.76710.17380.05% change
Volume
0.82
-3.8
3.1
2.2
6.2

Value
7.76
1.4
10.4
15.3
2.3

II.1.6 Final consumer goods
Import value of final consumer goods increased by 1.4% value from USD 649.26 million in
2012/2013 to USD 658.66 million in 2013/2014, but decreased in volume by 3.8% from 633,705.82
tons to 649,259.65 tons in 2013/2014, dragged down by the decrease in volume of food products (5.8%), health and care (-1.9%), and domestic use (-29.4%); despite the increase in beverage andtobacco (+36.0%)
Food products take a lion’s share with 36.0% of the total value of consumer goods and they
increased by 4.5% in value, but decrease in volume by 5.8%. The decline was mainly attributed to fats
and oil of animal or plant origin (-18.6%) and cereals, flour and seeds (-20.8%). Domestic productionof sugars and sweets decreased by 9.2% in the first half of 2014 for maintenance of machinery,consequently, imports of sugars and sweets increased by 24.8% representing 10.3% of total imports ofconsumer goods and 28.7% of food products.

106Health care which accounted for 22.7% share of total value of the consumer goods decreased inboth value and volume by 9.3% and 1.9% respectively as a result of the decrease in imports volume ofpharmaceutical by 41.7%. Imports of goods for domestic use fell by 14.9% in value and 29.4% involume, mainly due to the decrease of imports volume of dishes and other kitchen articles by 7.3%.
II.1.7 Capital goods
Capital goods imports were rising in both value and volume in line with dynamic activities whichoccasioned higher demand for capital goods. In 2013/2014, capital goods imports rose by 10.4% in
value to USD 632.76 million from USD 573.12 million in 2012/2013. In terms of volume, they
increased by 3.1% due to imports of machinery which represented 67.1% in total imports of capital
goods, which were dominated by imports of phones and material for network as well as imports ofdifferent companies including former Electricity water and Sanitation Authority and Rwanda air.
II.1.8 Intermediary goods
Driven by higher domestic demand of their main components such as construction materials andindustrial products; the imports of intermediary goods in 2013/2014 increased by 15.3% in value andby 2.2% in volume. Industrial products which represented 45.3% of the total value imports ofintermediary goods increased by 8.3% in value and 3.5% in volume, largely attributed to the increasein imports of textiles, woods and chemical industries. Construction materials which accounted for
33.8% of the total value of imports of intermediary goods increased by 16.9% in value and 2.5% involume of which a big part is attributed to the imports of low quantity of cement and other similar
products which slightly increased by 0.4% due to the good performance (+0.9%) recorded in domestic
production during the first half of 2014 compared to the same period of last year.
Importation of Fertilizers in 2014 declined by 46.4% in volume mainly due to the fact that since
May 2013 the government left the importation of fertilizers to the private sector and between July andDecember 2013, the private sector imported more fertilizers building important stocks for the year2014.
II.1.9 Energy and lubricants
The imports of energy and lubricants (of which 95% are petroleum products) increased by 2.3% invalue to USD 380.05 million from USD 371.65 million, and increased 6.2% in volume due toincreasing domestic demand.
II.1.10 Partner state analysis (original imports)
During the year 2014, Rwanda imports originated mainly from China (US$ 348.07 million), Uganda(US$ 233.79 million), India (US$ 159.03 million), Kenya (US$ 163.71 million) and United ArabEmirates (US$ 112.46 million). However, in the quarter four of 2014, imports from Asia, the major
supplier, stood at US$ 204.47 million, representing around 49 percent of the country’s total imports.
The same countries continued to dominate Rwanda’s imports market in the fourth quarter of 2014 as
follows: China (20.91 percent), Uganda (14.72 percent), India (8.69 percent), Kenya (7.45 percent)and United Arab Emirates (5.64 percent).
Table 6: Rwanda’s' Top Five Domestic Import partners,2014
US$ Million
Country
2013Q3
China
68.05
Uganda
53.05
India
20.62
Kenya
33.56
United Arab Emirates
28.25
Total World
427.39Source: National Institute of Statistics of Rwanda

2013Q4
88.36
53.08
39.30
28.84
31.71
439.97

2014Q1
98.80
50.02
50.34
55.55
33.80
440.30

2014Q2
91.44
53.80
37.45
38.80
31.47
461.82

2014Q3
70.77
68.69
35.04
38.35
23.70
427.75

2014Q4
87.06
61.28
36.19
31.01
23.49
416.31

The following Fig 3 shows that Rwanda’s imports from EAC partner states in the fourth quarter of2014 were mainly from Uganda 54.24 percent of total imports from partner states, followed by Kenya(27.45 percent) and Tanzania (16.53 percent). Furthermore, Rwanda import from EAC partner states107stood at US$ 112.95 million, which is 27.15 percent share over the total imports bill during the fourth
quarter of 2014.
Figure 2: Imports from EAC partner states, 2013-2014
140

Values (US$ million)

120
100
Burundi80

Tanzania,Republic of

60

Uganda
40

Kenya

20
0
2013Q1 2013Q2 2013Q3 2013Q4 2014Q1 2014Q2 2014Q3 2014Q4
PeriodSource: National Institute of Statistics of Rwanda

II.1.11. Balance of Payments
Rwanda’s current account improved by 5.8% in 2013/2014 to a deficit of USD 522.83 million froma deficit of USD 554.64 million recorded during 2012/2013. The improvement is mainly attributable
to higher current transfers, which increased by 9.5% to USD 877.15 million from USD 800.71 million
during 2012/2013. However, the trade, services and income deficit declined to USD 1,399.98 million
from 1,355.26 million, while only trade balance worsened to USD 1.212.93 million in 2013/2014 from
USD 1,195.56 million in the last fiscal year due to the increase of imports compared to exports.
Table 7: Major Balance of Payment Components Development (in USD million)
2011-1,101.58
464.2474.6
63.9-1,565.82-186.97-51.8-1,340.36
880.52133.32747.2-459.84
682.5
11.88
234.54

A. Trade Balance
Export of which
CoffeeTea
Import FOB
B. Services (net)
C. Income (net)Trade, services, income balance
D. Current transfers net
PrivatePublicE. Current accountF. Capital and Financial account balance
Errors and omissions
G. Overall balances
Source: Central Bank of Rwanda

2012-1,268.26
590.7560.89
65.72-1859.01-93.24-73.81-1,435.31
722.46182.95539.51-712.84
511.47-11.06-212.44

2012/2013-1,195.56
707.3
69.09
63.89
-1,902.86-83.49-76.03-1,355.35
800.71
178.36622.35-554.64780.7-11.06210.96

2013/2014-1,212.93
707.3247.49
52.26-1,920.25-86.95-99.93-1,399.98
877.15
197.53679.62-522.65428.0620.29-74.29II.1.12 Current transfer
Net current transfers’ inflows amounted to USD 877.15 million for the fiscal year 2013/14 against
USD 800.71 million registered during the previous fiscal year. Current transfers were dominated by
official transfers with a share of 77% of the total by the end fiscal year 2013/2014 while privatetransfers accounted for 22%. A share of 65% of the private transfers were taken by remittances from
Diaspora amounting to USD 128.60 million out of USD 197.53 million of total private transfers
against USD 68.93 million received from churches and other associations

108

Table 8: Net current transfers (in USD Million)
2012
Current transfers (net)Current private transfers (net)Remittances from Diaspora(net)
Private transfers for churches and associations
Current officials transfers (net)Current support netof which HIPC initiative
Social security benefits
Humanitarian aid
Source: National Bank of Rwanda

722.46182.95118.2564.7
539.51433.7
4.79
0120.11FY2012/2013
800.71
178.36114.6763.68
622.35
510.7
5.08
0.2
122.95FY2013/2014
877.15
197.53128.6
68.93
679.62
390.31
0112.37II.1.13 Foreign exchange rate
Despite relatively small pressure experienced by the Rwandan francs the foreign exchange market
remained stable during 2013-14.The BNR kept the exchange rate fundamentally market driven andcontinued to intervene on the domestic foreign exchange market to smoothen the RWF exchange rate
volatility.
The moderate pressure was due to the high forex demand to finance imports which resulted in theannual RWF depreciation of 5.3 percent against USD (leading currency) as at end June 2014,
compared to the annual depreciation of 4.8percent in June 2013.For other global leading currencies(GBP &EURO) the RWF depreciated by 7.1 percent against GBP and 8.3percent against EUROduring the same period. In EAC region, the RWF depreciated against Kenyan Shillings (KES),
Ugandan Shillings(UGS) and Burundi Francs(BIF) respectively by 3.4 percent,3.7percent and 3.2
percent respectively but it appreciated against Tanzanian Shilling(TZS) by 0.4 percent.
Figure 3: Monthly exchange rate for the Rwf against the global leading currencies
1400
1300
1200
1100
1000
900
800
700
600
500

.

USD
EURO
GBP

June-13 July-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 June-14

Source: BNR Financial Market Department

Similarly, the FRW depreciated against all regional currencies. It depreciated by 2.6% versus the KES,
and by 0.2%, 4.5% and 5.5% against TZS, UGS and BIF respectively.
II.1.14 Foreign Direct Investment inflows and stock
Foreign direct investments are in three categories: equity capital which is new investment in acompany, loan from affiliates or from shareholders and retained earnings. In 2013, the FDI inflows
increased from US$ 255.0 million in 2012 to US$257.6 million dominated by loans from shareholders
of US$ 144.4 million representing 54.9 percent, equity capital of US$ 74.3 million accounting for 28.2
percent while retained earnings were US$44.2 million accounting for 16.9 percent. Flows ofborrowing from affiliates in 2013 were US$144.4 million close to US$145.2 million received in 2012.
Equity capital decreased from US$ 87.4 million in 2012 to US$ 74.2

109

Table 9: Inflows and Stocks of FDI by Type 2012-2013
2012
Inflows
87.4
145.6
22
0
255

FDI Components
Equity capital
Loans
Retained earnings
Other changes
Total
Source: Foreign Private investment

Stock245.23408.58
61.73
5.5
715.5

2013
In flows
74.2
144.4
44.2
-5.4
257.6

Stock
373.6
337.3
126.670837.7

Figure 4: Foreign Direct Investment inflows and stock by sector in 2013 (US$ million)
400
350
300
250

Inflows
Stock

200
150
100
50
0
MiningManufacturing

Finance&Insurance

Agriculture

ICT

Whole sale&retail

Construction

Tourism

Others

Source: Foreign Direct Investment 2013

In 2013, most of the Foreign Direct inflows were directed to Mining with US$ 99.3 million,
Manufacturing sector with US$ 64.0 million and Finance & Insurance sector with US$ 38.0 million. In
terms of stock, ICT dominated with US$ 340.6 million, followed by finance and insurance (US$ 167.3
million) and manufacturing (US$ 154.5 million).
Table10: Foreign Direct Investments Flows and Stocks by origin in 2013 (US$ million)
Country
Switzerland
South Africa
Mauritius
Kenya
Netherlands
UgandaBelgium
China
United Kingdom
Nigeria
Others
Total
Source: Foreign Private investment 2013

Inflows

Stocks

96
45.5
31.2
20.2
10.8
9.4
6.3
5.9
4.6
4
20
257.6

20
161.6
208.1
76
59.7
13
17.9
9.5
16.7
27
228.1
837.7

Considering the origin of FDI, Switzerland, South Africa, Mauritius and Kenya are the major sourceof FDI inflows, collectively accounting for 74.6 percent of total inflows in 2013. The level of inflows
from Switzerland is less than stocks due to short term trade credits and other accounts payables mostly
settled in less than a year.
II.1.15 Employment
The results of the FPC 2013 show that employment grew by 3.9 percent from 32.834 in 2012 to34,114 in 2013. In terms of nationality of employees, Rwandans were 96.0 percent against 4.0 percent
of foreigners. The number of short-term foreign employees was 387 which is equivalent to 1.1 percentof the total. According to category of employment, managerial positions are occupied by 1077 staff110

(3.2 percent), administrative 2,558 staff (7.5 percent); skilled 7,335 staff (20.9 percent) and casual
23,114 staff (68.4 percent). Details are provided in table 7
Table 11:Employment by residence in 2013
Local
Category
Resident
810
Managerial
2,448
Administration
6,561
Skilled technician
23,090Casual
32,909Total
Source: Foreign private investment

Foreign
ST

Total
LT

21
25
341
387

246
85
463
24
818

1,077
2,558
7,365
23,114
34,114II.1.17 Public external debt
The public external debt situation of Rwanda in the fiscal year 2013/2014 was mostly composed ofloans from Multilateral Institutions, such as the World Bank, African Development Bank, IDA and
IMF and represented 62.4% of total public external debt, while Euro bonds accounted for 23.9% of
total public external debt. The remaining 13.7% were from bilateral partners like Exim-India, EximChina and Kuwait.
Table 12: Stock of external debt in (USD million)
CREDITOR
2011
1.MULTILATERAL
832.99AfDB-ADB 1
210.62BADEA 2
34.03
EIB 3
5.03
EU 4
13.89
IFAD 5107.07
IMF 6
14.13
IDA 7
391.55NDF 8
16.08
OPEC 940.57
2.BILATERAL
151.66
AFD 102.12
CHINA
0EXIMCHINA
28.6
EXIMINDIA
28.65
Abu Dhabi
2.99
Kuwait Fund
44.68
Saudi Fund
44.28
LIBYA
0.35
EURO BOND
TOTAL
984.65
Source: Central Bank of Rwanda

End June 2012
841.66213.33
33.56
3.66
12.9
107.5713.59
401.11
15.33
40.38
163.02
1.36
0
30.7
39.55
2.99
44.48
44.59
0.34
1004.68

End June 2013895.25234.61
32.67
2.57
12.44
106.3812.03
435.5416.28
42.76
206.23
0
0
56.02
59.44
2.96
45.51
41.96
0.34
400
1501.51

End June 2014
1,041.83
278.92
34.99
1.38
11.99
112.62
11.32
541.25049.36
228.39
0
0
63.5
73.18
2.96
47.7
41.04
0
400
1670.21II.1.18 External public debt disbursements
Total disbursements stood at USD 172.9 million by the end of the fiscal year 2013/2014 against
USD 506.4 million at end of last fiscal year. The share of disbursements on multilateral creditors was
the most important representing 85.9% of the total disbursements observed in 2013/2014 followed bybilateral creditors’ with 14.1% of the total disbursements. The former was mainly from IDA and FAD1

AfDB-African Development BankBADEA-Arab Bank for the Economic Development of Africa
3
EIB-European Investment Bank
4
EU-European union
5
IFAD- International Fund for Agricultural Development
6
IMF- International Monetary Fund
7
IDA- International Development Association
8
NDF-Nordic Development Fund
9
OPEC- Organization Of Petroleum Exporting Countries
10
AFD- French Development Agency
2111

FSN with respective shares of 68.1% and 17.8% of multilateral disbursements. During the same period,
the share of Euro bonds was around 0.0% of the total disbursements.
Table 13 Development of disbursements (in USD million)
Description
MULTILATERAL CREDITORSof which: IDA
FAD-FSNBILATERAL CREDITORSEURO BONDS
TOTAL
of which:
Drawings for projects
Drawings for budgets support
Drawings for BOP support(IMF)
Source: Central Bank of Rwanda

July2011-June2012
146.9
94.7
35.8
24.9
171.8

July 2012-June2013
84.3
44.6
30.7
22.1
400
506.4

July2013-June2014
148.5
101.2
26.4
24.4
0
172.9

83.2
88.6
0

493.6
12.9
0

99.8
72.7

II.1.19 Public external debt servicing
External debt services were largely dominated by multilateral debt with a share of 48.6% by the endof the fiscal year 2013/2014 against 67.9 percent by the end of previous fiscal year. The bilateral debt
service represented 10.8% of the total external debt services by the end of the fiscal year 2013/2014
after 14.9% at end of 2012/2013. While Euro bonds represent 40.5% of the total external debt services
by the end of 2013/2014
II.1.20 Public external debt ratio to GDP
Rwanda recorded the government debt to GDP ratio of 28 percent of the country’s gross Domestic
product in 2014.The total average of Rwanda government debt to 63.89 percent from 1995 until 2014,
the highest recorded ever is 119.50 percent recorded in 1995 and the lowest recorded is 21.27 percent
recorded in 2008
Figure 5: Rwanda government debt to GDP(2005-2014)
70.68

26.58

2006

26.96

21.27

2008

22.86

23.06

23.92

2010

24.11

2012

29.42

28

2014

Source: National Bank of Rwanda

The government debt to GDP ratio is used by investors to measure the payment ability of the country’s
debt, it affects borrowing costs and government bonds yield.
II.2 Domestic Environment
II.2.1.Economic growth
During the fiscal year 2014/2015 Rwanda’s economy registered the growth of 7.2% higher inthe real term compared to GDP growth of 5.1% recorded in 2013/2014 ,this growth was supported
mainly by the services sector which contributed 47.0% to real GDP followed by Agriculture andIndustry sectors which contributed 33.0% and 14.0% to real GDP respectively. The agricultural sector
grew by 5% and contributed 1.6% points to the overall GDP growth, Industry sector grew by 7% and112

contributed 1% point to the GDP growth service sector increased by 8% and contributed 4% points tothTable 14: Real GDP Growth Rates at Constant 2011 Prices, in%
ATIVITY DESCRIPTIONGROSS DOMESTIC PRODUCTAGRICULTURAL,FORESTRY & FISHING
Food crops
Export crops
Livestock and Livestock products
Forestry
Fishing
INDUSTRY
Mining and quarrying
TOTAL MANUFACTURING
of which: Food
Beverages &tobacco
Textile, clothing and leather goods
Wood &paper: printing
Chemicals, rubber and plastic products
Non-metalic,mineral product
Metal product,Machinery & equipment
Furniture &other manufacturing
Construction
TRADE &TRANSPORT
Maintenance &repair of motor vehicles
Whale sale and retail trade
Transport
OTHER SERVICES
Hotels and restaurants
Information & communication
Financial Services
Real estate’s activities
Scientific and technolocal activities
Administrative & support services
Public administration & defense
Education
Human health & social work activities
Cultural, domestic &other services
Taxes less subsidies on products
Source: National Institute of Statistics of Rwanda

2009/10
4.3
5.0
7.0
-1.0
4.0
3.0
3.0
0.0
-16.0
6.0
6.0
3.0
2.0
8.0
-4.0
10.0
34.0
34.0
-2.0
1.0
0.0
0.0
6.0
6.0
4.0
6.0
0.0
6.0
6.0
6.0
8.0
12.0
17.0
1.0
9.0

2010/11
5.8
2.5
3.0
-6.0
4.0
3.0
5.0
13.0
23.0
6.0
1.0
8.0
1.0
-4.0
17.0
9.0
3.0
18.0
18.0
9.0
13.0
9.0
5.0
6.0
6.0
1.0
34.0
1.0
0.0
-1.0
9.0
13.0
5.0
3.0
2.0

2011/12
9.5
8.0
10.0
14.0
5.0
3.0
-4.0
13.0
19.0
9.0
11.0
4.0
5.0
-2.0
7.0
18.0
62.0
26.0
15.0
14.0
6.0
15.0
12.0
8.0
5.0
25.0
10.0
-1.0
2.0
3.0
31.0
12.0
25.0
2.0
3.0

2012/13
6.9
6.0
6.0
19.0
6.0
4.0
3.0
12.0
4.0
5.0
4.0
3.0
-1.0
19.0
-4.0
13.0
1.0
8.0
20.0
9.0
8.0
8.0
15.0
6.0
4.0
12.0
15.0
2.0
3.0
5.0
13.0
6.0
3.0
15.0
-3.0

2013/14
5.1
3.0
3.0
-9.0
7.0
2.0
5.0
6.0
15.0
5.0
9.0
3.0
10.0
7.0
-5.0
6.0
-2.0
11.0
5.0
8.0
4.0
9.0
8.0
6.0
4.0
5.0
5.0
5.0
5.0
5.0
6.0
6.0
8.0
14.0
0.0

2014/15
7.2
5.0
5.0
3.0
9.0
3.0
3.0
7.0
2.0
2.0
-3.0
-2.0
21.0
8.0
3.0
10.0
21.0
14.0
11.0
7.0
5.0
7.0
5.0
9.0
3.0
20.0
8.0
9.0
5.0
6.0
5.0
7.0
14.0
15.0
11.0

II.2.2 Inflation
Since June 2013, Rwanda continued to register low and stable inflation owing to sustained and wellcoordinated monetary and fiscal policies, good performance of the economy, easing inflationarypressures from trading partners and deceleration in international oil prices. Headline inflation eased
from 3.7% in June 2013 to 1.4% in June 2014 mainly due to the slowdown in food inflation from 4.4%
to 1.9% as well as in transport costs from 0.9% to -3.4% during the same period. Since February 2014,
headline inflation was consistently trending downwards partly reflecting weak aggregate demandthough this is likely to be reversed by the current supportive monetary and fiscal policies.
Core inflation declined to 2.0% end June 2014 from 3.4% in the same period of 2013 while
domestic inflation slowed from 4.1% to 2.1% during the same period. Similarly, imported inflation
decelerated to -0.4% from 1.9%, energy prices contracted by 0.2% from 0.9% while prices for fresh
products fell to -0.5% from 6.3% during the same period.
Recently, inflation developments have been dominated by prices for food and non-alcoholic beverages
as well as transport costs which altogether account for 46% of the CPI basket (28% and 18%
respectively).
II.2.3 Domestic Supply

113

There was a significant increase of Broad Money supply M3 (+27.5%) compared to the increase
recorded in previous year (+9) this increment was mainly driven by the accumulation of Net Domestic
Assets (+54.4%) while Net Foreign Asset recorded less growth (+14.1%) compared to the previous
fiscal year(+25.1%).The recorded changes in the fiscal year 2012/2013 in the Net Foreign Assets(NFA) had been boosted by Eurobond Proceeds.
Table 15: Money aggregates developments(end period in FRW billion, unless otherwise
indicated)
2012

Net foreign assets
Net domestic assets
Domestic credit
Central government(net)Autonomous Agencies
Public enterprises
Private sector
Other items net (Assets: +)Broad Money M3Currency in circulations
Depositsof which: Demand deposits
Other deposits
Foreign currency deposits
Source: Central Bank of Rwanda

2013

2014

June

June

Sept

Dec

Mar

June

513.7
367.1
554.2
-52.2
-2.2
2.6
606.1
-187.1
880.8
111.6
769.3
331
306
132.3

642.8
319.1
551
-164
-3
1
717
-231.9
961.9
116.3
845.6
389.8
295.2
160.6

683.5
292.3
540.8
-192.2
-4.7
1.3
736.6
-248.5
975.8
106.4
869.3
385.8
322.4
161.2

744
284.7
567.1
-187.3-4.7
1.3
758-282.51028.7
116.6
912.1
378.7
339.2
194.2

669.6
375.6
679.2
-105.1
-5.7
1.8
788.3
-303.61045.3
109.4
935.8
384.7
348.9
202.2

733.5
492.8
794
-16.5
-4.7
2
813.3
-301.21226.3120.2
1106.1
449.5
391.6
265

%changeJun-12/ Jun-13/
13-Jun14-Jun
25.1
14.1
-13.1
54.4
-0.6
44.1
-213.8
89.9
-37.2
-57.3
-61.3
95.9
18.3
13.4
-23.9
-29.9
9.2
27.5
4.2
3.3
9.9
30.8
17.8
15.3
-3.5
32.7
21.4
65

II.2.4 Financial sector
Banking sector
Rwanda banking sector consist of ten commercial banks, four microfinance banks, one developmentbank and one cooperative bank. In 2014 the Rwandan financial sector was dominated by banking
sector which held 67.6 percent of the total financial sector’s assets. Commercial banks dominated thebanking industry with a proportional of 81.2 percent of the total banking asset.
II.2.5 MicrofinanceMicrofinance sector in 2014 registered a slight decrease from 5.9 percent of the total financial asset
in 2013 to 5.7 percent as end June 2014.under this period there was a significant growth registered by
UMURENGE SACCOs which led to a big change in the assets of the whole sector. Assets of
UMURENGE SACCOs grew by 25.7 percent while other Microfinance institutions grew by 16.6
percent.
II.2.6 Insurance and Pension companies
Insurance accounts 9.4 percent of the totals sector’s assets end June 2014, it marked a drop from
10.7 percent as end June 2013.The insurance sector represents 35.1 percent of the total non Banking
Financial Institutions as at June 2014. 58.3 percent of this sector is held by public insurers, while 41.7
percent of the total insurance assets is held by private insurers.
As at end June 2014, pension fund section represent 17.3 percent of the total financial system’s assets
from 17.1 percent as at June 2013. It also represent a 64.9 percent of the total non Banking Financial
institutions.
II.2.6 Interest rate development
During the year 2013/2014, interest rates have been decreasing and stable, aided by sound liquidity
conditions and accommodative monetary policy stance. As a result the Key Rapo Rate (KRR) has
been reduced in June 2013 to 7 percent from 7.5 percent, consequently, deposits and lending rates
decreased from 10.6 percent to in June 2013 to 8.7 percent in June 2014 and the weighted averagelending rate down graded from 17.7 percent in June 2013 to 17.5 percent in June 2014.

114

As a result of Non Performing Loans(NPL) ratio and high operating costs experiencing in the banking
system, the lending rate has been declining at a lower pace then the deposit rate while the spread
between lending and deposit rates remained relatively high standing at 8.9 percent in June 2014 from
7.0 percent in June 2013.
Table 16 :Interest rates development (in percentage change)
Jun13
BNR Policy Rates
7
Key repo rate
11
Discount rate
Money Market Rate
6.7
Repo rate
10.8
T-Bills rate
Commercial Banks Rate
9.6
Interbank rate
10.6
Deposit rate
17.7
Lending Rate
Source: National Bank of Rwanda

Sept13

May14

Dec13

Jan14

Feb-14Mar-14Apr-14

7
11

7
11

7
11

7
11

7
11

7
11

7
11

6.5
10.5

5.5
7.1

4
5.6

4.3
6.36

3.7
6.1

3.3
6

3.1
6

3.6
5.9

3.7
5.7

7
9
17.8

5.6
8.6
16.9

5.6
8.9
17.45

5.8
8
17.1

5.8
8.3
16.8

5.7
8.1
17.4

5.7
9.3
17.2

5.7
8.7
17.5

115

Jun-14

III. Tax Structure
After the 1994 genocide Rwandan government in its process of reform and restructuring of public
Institution decided to establish Rwanda Revenue Authority in 1998 as a first priority
III.1 History of Tax system in Rwanda
The history of taxes in Rwanda indicates that the first tax legislation was inherited from colonial
regimes. This tax legislation included the Ordinance of August 1912, which established graduated tax
and tax on real property. There was another Ordinance on 15th November 1925 adopting and putting
into application the Order issued in Belgian Congo on 1st June 1925, establishing a profits tax.
This law was amended from time to time in order to comply with the changing economic
environment. Such other legislative instruments include the 1973 law governing property tax, the tax
on license to carry out trade and professional activities, the law N°. 29/91 of 28th June 1991 on sales
tax /turnover tax (now repealed and replaced by the law N°. 06//2001 of 20/01/2001 on the Code ofValue Added Tax (VAT).
A substantive Law governing Customs was enacted on 17th July 1968 accompanying the
Ministerial Order of 27th July 1968, putting into application the Customs Law.
The administration and accountability of taxes and duties in Rwanda was initially under the Ministryof Finance and Economic Planning. This was later vested into an independent body - the Rwanda
Revenue Authority - that was established by law no 15/97 of 8th November 1997.
In 2005, the parliament adopted law number N°25/2005 of 04/12/2005 on tax procedures, amending
Decree-Law of December 28, 1973 relating to Personal Tax, law n° 06/2001 of January 20, 2001 on
the Code of Value Added Tax and law n° 9/97 of June 26, 1997 on the Code of Fiscal Procedures.
Similarly, LAW Nº 16/2005 OF 18/08/2005 2005 on direct taxes on income was adopted replacing
Law n° 8/97 of 26/6/1997 on Code of Direct Taxes on Different Profits and Professional Income, andLaw n° 14/98 of December 18, 1998 establishing the Rwanda Investment Promotion Agency,
especially in its Articles 30, 31 and 34. Con
The parliament also adopted Law N°. 21 of 18/04/2006 establishing the customs law, replacing theLaw of July 17th 1968 concerning the Customs law as amended and completed to date.
However, on July 1, 2009, Rwanda adopted the EAC Customs Management Act 2004, An Act of
the Community to make provisions for the management and administration of Customs and for related
matter.
Enactment of new laws and amendments of old ones is a continuous process, the following are thecompiled tax laws and regulations used in Rwanda
1. Law No 34/2015 of 30/06/2015 establishing the infrastructure develop levy on imported goods.
2. Law No. 37/2015 of 30/06/2015 modifying and complementing law No 26/2006 of 27/05/2006
determining and establishing consumption tax on some imported and locally manufactured products
as modified and complemented to date
3. Law No. 02/2015 of 25/02/2015 modifying and complementing law No 37/2012 of 09/09/2012
establishing the Value Added Tax
4. Law No. 59/2011 of 31/12/2011 establishing the source of revenue and property of centralized
entities and governing their management
5. Law no 55/2013 of 02/08/2013 on mineral law
6. Law No. 28/2012 of 27/07/2012 modifying and complementing law No 16/2005 of 18/058/2005 on
direct taxes on income as modified and complemented to date
7. Law no 37/2012 of 0/11/2012 establishing the Value Added Tax
8. Law No. 38/2012 of 20/12/2012 modifying and complementing law No 25/2005 of 04/12/2005 onprocedures as modified and complemented to date
9. Law No. 01/2012 of 03/02/2012 modifying and complementing law No 25/2005of 04/12/2005 onprocedures as modified and complemented to date
10. Law No 08/2009 of 27/04/2009 determining the organization functioning and responsibilities of
Rwanda Revenue Authority(RRA)
11. Law no 73/2008 and Law no 74/2008 of 31/12/2008 modifying and implementing law no. 16/2005 of
18/08/2005 on direct taxes on income
12. Law no 57/2011 of 31/12/2011 modifying and complementing law no 26/2006 determining andestablishing consumption tax on some imported and locally manufactured products as modified andcomplemented to date116

13. Law no 19/2006 of 30/06/2009 modifying and complementing law no 26/2006 determining andestablishing consumption tax on some imported and locally manufactured products
14. Presidential Order no 25/01of 25/02/2015 modifying and complementing Presidential decree no85/01 of 02/09/2002 regulating general traffic police and road traffic as modified and complemented
to date15. Ministerial Order no 002/13/10/TC of 31/07/2013 on modalities of use of certified electronic billingmachine
16. Commissioner General rules no 002/13/2013 of 12//09/2013 implementing the ministerial orderno008/2009 of 01/12/2009 determining the amount of registration for imported and alreadyregistered vehicles in Rwanda
17. Commissioner General rules no001/2013 of 06/03/2013 implementing the law no16/2005 of
18/08/2005 on direct taxes on income

III.2 RRA Mission, Vission and Core Values
RRA vision is “To become a world class efficient and modern revenue agency, fully financing
national needs”
RRA mission is “Mobilize revenue for economic development through efficiency and equitable
services that promote business growth”
RRA core strategy values are:
1.
2.
3.
4.
5.

Integrity;
Customer focus;
Transparency;
Professional service delivery
Teamwork

Figure 6: Rwanda Revenue Authority organization structure
BOARD OFDIRECTORSCOMMISSINER
GENERALCOMMISSINER FORQUALITY ASSURANCE

DCG&COMMISSIONER FOR CORPORATECOMMISSIONERFOR FINANCE
DEPARTMENT

DC FOR CORPRISK &MORD

COMMISSIONERFOR CUSTOMSDC FOR CUSTOMSSERVICES

DC FOR L&BS

DCFOR RI&ED

DCFOR RESEARCH& PLANNING

DC FOR IT/IS

COMMISSIONERFOR DOMESTICDC FOR LTO

DC FOR SMTO

PRINCIPAL OF
TRAINING INST

DC FOR REGION &DEC TAXES

DC FOR TAXPAYERSERVICE117

DC FOR HUMANRESOUCEDC FOR ADMN&LOGISTCS

III.3 Board of directors
RRA board of directors is governed by the board chair person who is appointed by the Prime Misteron the recommendations of the cabinet, It is composed of eight permanent board members including
the RRA Commissioner General, The Governor of the Central bank, permanent Secretary in the
Ministry of Finance and economic planning, the permanent secretary in the ministry of trade andindustry others are non-permanent members from private sector federation. The RRA board of
directors is responsible for formulating and communicating day to day RRA policies
III.4 Taxation
The responsibility and accountability of taxes in Rwanda is under Rwanda Revenue Authority(RRA), taxes are collected by operational department which include Domestic Tax department andCustoms department
Domestic tax department is responsible for collection of domestic taxes, non fiscal revenues, social
security fund and taxes for local government; Customs department is in charge of collection ofcustoms duties.
III.5 Taxpayers Registration
According to the Rwandan tax law any corporation or individual who starts profit making activities
that may be taxable must be registered in the tax administration within seven (7) days from the
beginning of the business activity. After registration the tax payer will be issued the Tax Identification
Number (TIN).This is used in filling tax declaration and on all other tax related documents. The
taxpayer is obliged to use the same number in all his business activities
Any change, related to the taxpayer’s activities or him/her self must be notified in writing to the tax
administration within seven days (7) from the day of the notice of the change. The procedures andinstructions regarding taxpayer’s registration and cancellation of registration for persons who nolonger carry out business activities is issued by the Commissioner General.
III.6 Types of taxes in Rwanda
III.6.1 Personal Income Tax (PIT)
Personal income tax is levied on income received by individual. A resident taxpayer is liable toincome tax per the tax period from all domestic sources and foreign sources in accordance with thelaw.
A nonresident tax payer is only liable to income tax which has a source in Rwanda. Taxable income
is composed of the following:
1. Employment income
2. Business income
3. Investment income
Taxable income is rounded to the nearest thousand (1,000) to the following table:
Table 17: PIT rates
Annual taxable income
0-360,000
360,001-1,200,000
1,200,000 and +Source: Rwanda Revenue Authority

Tax rate
0%
20%
30%

Tax rates in the table does not apply for small and micro enterprises, the lump sum tax of 3%
applies to small businesses with the annual turnover between Rwf 12,000,000 and Rwf 50,000,000, formicro enterprises with annual turnover below Rwf12,000,000 the flat amount estimated assummarized in the table below:

118

Table 18: Flat tax amount
Annual turnover
From 2,000,001 to 4,000,000
From 4,000,001 to 7,000,000
From 7,000,001 to 10,000,000
From 10,000,001 to 12,000,000
Source: Rwanda Revenue Authority tax law

Annual flat amount of tax due in
Rwandan francs
60,000120,000
210,000
300,000

An individual who receives taxable income prepares an annual tax declaration in accordance withthe procedures specified by the Commissioner General and he or she presents the declaration to the tax
administration with payments not later than 31st March of the following tax period. Except newly
established businesses others are subject to quarterly prepayments 25% of tax declared in the previous
tax period
III.7.2 Withholding
Pay As You Earn
When an employer makes it available to an employee the employer must withhold, declare and pay
the PAYE tax to Rwanda Revenue Authority within 15days following the end of the month for which
the tax was due. In the case of engaging casual laborer for less than 30days during a particular tax year,
the employer shall withhold 15% of the taxable employment income of the casual labor.
Monthly employment income which includes the amount an employee is paid on an extra ordinary
basis as well as the bonus and the benefit he or she receive in kind is subject to tax in accordance withthe rate as shown
Table 19: PAYE tax rate
Monthly taxable income
0- 30,000
30,001-100,000
100,000 and +Source: Rwanda tax law

Tax rate
0%
20%
30%

The same rates are also used for quarterly PAYE calculation.
For taxpayer whose annual income is less than two hundred million (200,000,000) Rwandan francs ,the Pay As You Earn shall be quarterly and deposited with payments of the tax due within 15 days
after the end of the quarter to which Pay As You Earn is referred.
The Commissioner General shall determine the modalities of the declaration and payment of Pay As
You earn on quarterly basis.
Withholding tax on other payments:
A withholding tax of fifteen (15%) percent is levied on the following payments made by resident
individuals or resident entities including tax exempt entities
1. Dividends, except those between resident companies
2 .interests;
3. Royalties
4. Service fees including management and technical service fees;
5. Performance payment made to an artist, a musician or an athlete irrespective of whether paid
directly or through an entity that is not resident in Rwanda;
6. Lottery and other gambling proceeds
Fines related to violation of the a
The withholding agent is required to file a tax declaration and payments within 15 days following
the withholding month.
Withholding Tax on Imports and Public Tenders

119A withholding tax of five percent (5%) is levied on the value of goods at the importation in customs
on CIF (cost insurance and freight) value before the goods are released from customs.
The total withholding on public tender is 8% which includes 3% and 5% for Profit and VAT
withholding taxes for the taxpayers who win the public tenders respectively, the taxpayer whosebusiness is exempt from taxation and those with tax clearance certificate issued by the Commissioner
General are exempt from withholding tax.
All withholding taxes mentioned above are treated as advances on tax and are deductible on paymentof profit tax and on VAT payable.
III.7.3 Value Added Tax
The value added tax is charged on taxable goods and services and on taxable imported goods andservices. All taxpayers with an annual turnover which is above twenty million Rwandan francs(RWF 20,000,000) of the previous fiscal year or five million Rwandan francs (RWF 5,000,000) in thepreceding calendar quarter is required to register for VAT with the tax administration within a periodof seven days (7) from the end of the year or the end of the quarter mentioned above, registeredtaxpayer must display the certificate of registration at his/ her principal place of business. The amountof value of tax payable on goods and services or imported goods or services is calculated by applying
zero percent (0%) on zero rated goods and eighteen percent (18%) for other goods and services on thetransaction value.
The value added tax is payable:
1. on the taxable goods or services is paid to the Commissioner General by the taxpayer who
Supplied goods or services in accordance VAT Law;
2. On imported goods or services is paid by the importer.
All goods and services supplied by a person are taxable if they are supplied in Rwanda but
excluding exempted goods and services, the list of exempted goods and zero rated goods is provided
by VAT tax law, the sale of any asset used in the business is considered as a taxable action.
The declaration and payment of tax is made in fifteen days (15) after the end of the period of tax
period a registered tax payer must submit value added tax declaration in accordance with forms andformalities determined by Commissioner General. For taxpayers whose annual turnover is equal orless than two hundred million Rwandan francs (200,000,000Rwf) the value added tax declaration isquarterly and shall be submitted with payment of the tax due within fifteen (15) days after the end of
the quarter. However, taxpayers whose annual turnover is equal to or less than two hundred million
Rwandan francs (200,000,000 Rwf) who wish may opt for a monthly value added tax declaration.
A registered taxpayer must submit value added tax declaration, whether he/she made sales or not,whether he/she is claiming for refund or whether the difference is zero. Value added tax registeredpersons are obliged to use a certified electronic billing machine that generates invoices indicating the
tax as agreed by the tax administration. An Order of the Minister determines the design of thesemachines as well as modalities and conditions to be met in the use of those machines.
III.7.4 Corporate Income Tax
Corporate income tax (CIT) is the tax levied on business profit received by entities,
Resident entities are liable to corporate income tax on business profit per tax period whether fromdomestic or foreign operations; non- resident entities shall be liable to corporate tax on business profit
per tax period derived through a permanent establishment in Rwanda.
Taxable Business profit is rounded down to the nearest 1,000 RWF and taxable at a rate of thirty
percent (30%).However, a registered investment entity that operates in a Free Trade Zone and foreigncompanies that have their headquarters in Rwanda that fulfils the requirements stipulated in the
Rwandan law on
Investment Promotion is entitled to:
1. Pay corporate income tax at the rate of zero per cent (0%);
2. Exemption from withholding tax
3. Tax free repatriation of profits.
A registered investor shall be entitled to a profit tax discount of:
1. 2% if the investor employs between one hundred (100) and two hundred (200) Rwandans;120

2. 5%if the investor employs between two hundred and one (201) and four hundred (400)
Rwandans;
3. 6% if the investor employs between four hundred and one (401) and nine hundred (900)
Rwandans;
4. 7% if the investor employs more than nine hundred (900) Rwandans.
The tax discount mentioned in the previous paragraph is granted to the investor only if he or she
maintains the
Employees for a period of at least six (6) months during a tax period, and are not in the category of
employees
Who pay at the rate of zero percent (0%) as stipulated in Article 50 of this law.
Investment allowance
An investment allowance of forty percent(40%) of invested amount in new or used asset may be
depreciated excluding motor vehicles that carry less than eight (8) persons, those exclusively used in a
tourist business is deductible for a registered investor in the first tax period of purchases or of use ofan asset if:
1. The amount of business assets invested is equal to thirty million (30,000,000) Rwandan francs;
and2. the business asset are held at the establishment of at least three (3) tax period after the tax period
in which the investment allowance was taken into consideration.
The investment allowance becomes fifty percent (50%) if the registered business is located outside
Kigali or falls within the priority sector determined by the investment Code of Rwanda
The investment allowance reduces the acquisition or construction cost, as well as the basic
depreciation value
Training and Research
All training and research expenses incurred and declared and earlier agreed and which promote
activities during a tax period are considered as deductible from taxable profits, this excludes thepurchase of land ,of house of buildings and other immovable properties including refining,
rehabilitation and reconstruction as well as exploration expenses and other assets.
Loss carried forward
If the determination of business profit results in a loss in a tax period, the loss may be deductedfrom the business profit in the next five (5) tax period, earlier losses being deducted before later losses.
However, foreign sourced losses can neither reduce domestic sourced business profit nor can they
reduce future domestic sourced business profits. And the carry back of loss is not permitted by the
Rwandan domestic tax law.
Exportation
If a tax payer exports commodities or services that bring to the country between 3,000,000 US
dollars and 5,000,000 US dollars in a tax period, he or she is entitled to tax discount of 3%.
If he or she exports commodities or services that bring to the country between 5,000,000 US dollars ina tax period he or she is entitled to a tax discount of 5%
Micro Finance activities
Companies that carryout microfinance activities approved by competent authorities pay corporate
income tax at the rate of zero percent 0% for a period of five years from the time of approval of theactivity. However, this period may be renewed by the order of the ministerIII.7.5 Consumption Tax
Under the law No 26/2006 of 27/05/2006 determining the establishment of consumption tax as
modified and complemented as to date on some locally manufactured as well as imported products, thetable below shows the rate of consumption tax applicable121

Table 20: Exercise tax rates
eee
Juice, Soda and Lemonade
Mineral water
Beer
Wine
Brandies, Liquors and Whisky
Cigarettes
Fuel (excluding jet fuel),Gas oil, Fuel and Lubricants
Vehicle with an engine capacity of above 2500cc
Powdered Milk
Telephone communication
Source: Rwanda Revenue Authority

Tax rate
39%
10%
60%
70%
70%
120%
37%
15%
10%
3%

The taxable value on imported products shall be calculate according to cost,Insuarance and Freight
upon arrival in the country, for local manufactured products, it shall be calculated according to selling
price exclusive of taxes
The tx shall be payable when:
1. The taxable products are cleared out of factory for consumer use, in case of locally manufactured
Products
2. The taxable product is due for clearing at the customs under the customs system in case of imports.
The taxpayer is required to keep a register of law materials, and activity register and the register of
inventory of manufactured product.
The register of raw materials shall record the materials to be used in manufacturing of taxable products.
In the activity register, there shall be recorded the information concerning the daily status of every
equipment used in the factory or industry.
III.7.6 Customs duties
Rwanda as a member of East African community (EAC) customs union with other four member
states which are Burundi, Uganda, Kenya and Tanzania. Customs tariffs, rule of origin, and other trade
regulations have been harmonized through the EAC. All EAC partner states use the same customs
tariff on both imports and exports. For export from Rwanda to EAC member states are exempted fromtax except withholding tax and VAT if they are not non agricultural product. The countries which are
not from EAC pay customs duties the tariff structure is shown below:
Table 21: The East African tariff structure
Product
Raw materials
Capital goods
Intermediate goods
Finished goods
Source: Rwanda Revenue Authority

Tariff
0%
0%
10%
25%

III.8 Assessment by tax administration
When the Tax Administration discovers a miscalculation, an omission, a misrepresentation, an
understatement of income or any other error in the tax declaration or an assessment, it has the right toissue an adjusted assessment
In case the tax declaration form is rectified, the Tax Administration sends a rectification note to thetaxpayer. The note contains a draft of the adjusted assessment and all the elements leading to theadjusted assessment. The rectification note contains fines determined by the Tax Administration incase of non-compliance with the tax laws.
Fines
A taxpayer or any other person is subject to a fine if he or she fails to
1. File a tax declaration on time
2. File a withholding declaration on time
3. Withhold122

4. Provide proofs required by tax administration;
5. Cooperate with tax audit;
6. Register for tax purposes
7. Communicate on time the capacity or appointment he or she has been given;
8. Comply with the tax law and
9. Pay on time the profit tax advance
III.8.1 Fines fixed amountFines related to the violation of provision of paragraph one
1. one hundred thousand (100,000) Rwandan francs if the taxpayer’s annual turnover is equal
to or less than twenty million (20,000,000) Rwandan francs or
2. Three hundred thousand (300,000) Rwandan francs if the taxpayer’s annual turnover exceeds
twenty Million (20,000,000) Rwandan francs
3. Five hundred thousand (500,000) Rwandan francs if the taxpayer was informed by tax
administration.
that he or she in a large taxpayer’s category
III.8.2 Interest rates
In the events taxpayer fails to pay taxes within a set period by the law; he or she is required to pay
interest on the amount of tax
The interest rate is fixed at the interbank offered rate of the National Bank of Rwanda, increased bytwo (2) percent and which is set every year on the January first. Interest is calculated on the monthly
bases, non- compounding, counting from the first day after the tax should have been paid until the dayof payment.
Interest rate shall always be payable even when the taxpayer has started an administrative appeal
against the reassessment. Interest accrued cannot exceed 100 percent of the amount of tax
III.8.3 Late payment fines
If the amount tax shown on a tax declaration or the amount of which is the result of the adjusted
assessment by the tax administration is not paid in time, the taxpayer is subject to a fine of ten (10)percent of the tax payable.
III .8.4 Fines imposed to persons who do not comply with provisions of Value Added Tax:
1. in the event of operation without VAT registration where VAT registration is required, fifty
percent (50%) of the amount of VAT payable for the entire period of operation without VAT
registration;
2. In the event of the incorrect issuance of a VAT invoice resulting in a decrease in the amount of
VAT Payable or in an increase of the VAT input credit or in the event of the failure to issue a
VAT invoice, one hundred percent (100%) of the amount of VAT for the invoice or on thetransaction;
3. For issuing of a VAT invoice by a person who is not registered for VAT is assessed a penalty of
one hundred fifty percent (150%) of the VAT which is indicated in that VAT invoice and is due
to pay the VAT as indicated on that VAT invoice.
Since 2008, after RRA was established, tax revenue collection has been increasing year after year, thetable below show the tax collection from the fiscal year 2010 to fiscal year 2014
Table 22: Total tax collections 2010-2014 (in billion)Rwandan francs
Fiscal year

Total tax revenue(bn)July 09-June 2010
July 10-June 2011
July 11-June 2012
July 12-June 2013
July 13-June 2014
Source: Rwanda Revenue Authority

Total National budget

385.2
473.9
574.5
665.8
782.2

899.0
984.0
1194.21550.31677.7

123%contribution tax revenue to
National budget
47.9
48.2
48.1
42.9
46.6

Rwanda Revenue Authority is also responsible for
1.

2.
3.

Collection of non tax revenues which include fees for services rendered by other government
institutions
Health and pension contribution: In 2010, the government decided to transfer the collection
activities of Rwanda social security contributions and medical insurance contributions to Rwanda
Revenue Authority.
Local government revenue collections: Certain taxes which were formerly collected by local
government have been transferred to Rwanda Revenue Authority, these include;
The property tax
The rental income tax and
The trading license124IV. Country Specific Issues
Though Rwandan economy has been growing fast since the year 2003,it faces some challenges
which need to be addressed for its consistence growth, these challenges include reliance on rain fed
agriculture, transportation problems, low Tax to GDP ratio, High level of shadow economy.
IV.1 Reliance on rain fed agriculture
Rwanda large population depend on agriculture which is venerable to climate change, 72.6 percent
of Rwandans are farmers, and the Rwanda’s exports earnings are mainly commodity products which
include minerals and agricultural produce, their prices depend on the global market which fluctuates
over time, causing the export earnings not reliable. The volume of exports has been increasing forsome times but the balance of payment deficit has not been decreasing mainly because of the unstableprices of export and fluctuating output quantity.
IV.2 Transportation
Rwanda’s geographical location which is far from the sea port affects negatively its value ofimports in terms of transportation cost. This is because the only means of carriage of goods from thesea ports which are located in the neighboring countries (either port of Mombasa in Kenya or Dar essalaam) in Tanzania is through road transport, while the road infrastructure are not well developed andnon tariff barriers like bribery, many roadblocks are some of obstacles that results to high businesscost and reduction of business profits to all importers in general, it is also an obstacle to foreign
investors who may be willing to invest in the country.
IV.3 Low developed industrial sector:
Rwanda industrial sector has been growing in recent years where by foreign investors have been inincrease but it is still low developed, its contribution to total GDP is 14 percent 2013/2014 fiscal year
which is an obstacle to the export promotion and import substitution strategy of the government that
may reduce the trade balance deficit
IV.4 Poverty level
Rwandan population is still having a big number of poor people 63% of the population live on lessthan US$1.25 a day and 45% live below poverty line while 24% live in extreme poverty, this meansthat the purchasing power is still low and the level of tax base is low because taxes come from local
population hence domestic demand is still low, poverty level has been decreasing through thegovernment effort of Economic growth and Poverty Reduction Strategies (EDPRS) but still more
efforts are needed to eradicate it.
IV.5 High level of shadow economy
Like many other developing countries, many businesses are characterized by, unrecorded business
transactions, understatement of sales, overstatement of expenses for the purpose of reducing thetaxable profit, smuggling and other forms of tax evasion and tax avoidance which leads to loss ofgovernment revenue.

125

V. Conclusion: Where We Stand and Where We Go?
Rwanda has been able to recover from the aftermath of 1994 genocide, despite various challenges
its economy has been growing at the average rate of 7.7 percent since the year 2000.This strong
economic growth has been attributed mainly by its good economic plan described in the vision
2020.Specifc priorities were given to agriculture, Trade and manufacturing, ICT and services.
Good performance of tax collection agency “Rwanda Revenue Authority” is among the factors that
attributed to the GDP growth where annual tax collection was increased from Rwandan francs 65
billion in the year 2000 to Rwandan francs 751 billion in fiscal 2013/2014
Rwanda was ranked as a major business reformer in the World Bank doing business 2010 report, in
its efforts to attract foreign investors through (RDB) the government’s business marketing andregistration arm attracted 109 investment projects worth $381 million from local and foreign investors.
The tremendous economic growth registered in recent years has led to rise of per capita income from
US$ 2007 in 2000 to US$ 633 in 2013
Transforming Rwanda from predominantly agricultural economy to knowledge based economy andreducing poverty to GDP per capita ($1000) in 2020 is one of the priorities that the government isstriving to arrive at, and some of indicator has already shown that it is possible for the government torich on it. On its process to arrive at the knowledge based economy the government has invested infiber optic cable covering the entire country, a 97 percent GSB coverage of the country was put inplace.

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References
Law No 16/2005 of 18/08/2005 on direct taxes on income as modified and complemented to date
Law No 25/2005 of 04/12/2005 on tax procedures as modified and complemented to date
Law No 37/2012 of 09/11/2012 establishing the value added tax
Law No 37/2015 of 30/06/2015 determining the establishment of consumption tax on some imported
and locally manufactured products as modified and complemented to date
National Bank of Rwanda (2014) annual report July 2014
National Bank of Rwanda (2014) economic review 2014
National Bank of Rwanda (2014) foreign direct investment in Rwanda 2014
DFID Rwanda (2014) operational plan 2011-2016
XtraOrdinary (2015) Rwanda’s ambitious vision to become Africa’s ICT Hub
Available at www.extraordinary.co.ug
www.en.wikipidia.org/wiki/Rwanda
www.tradingeconomics.com

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