HomeReportsBureau of Economic and Business Affairs2017 Investment Climate Statements...Rwanda

# 					2017 Investment Climate Statements: Rwanda			

 In this section										/

													Executive Summary											

                -  Executive Summary 
                -  1. Openness To, and Restrictions Upon, Foreign Investment   
                -  2. Bilateral Investment Agreements and Taxation Treaties   
                -  3. Legal Regime   
                -  4. Industrial Policies   
                -  5. Protection of Property Rights   
                -  6. Financial Sector   
                -  7. State-Owned Enterprises   
                -  8. Responsible Business Conduct   
                -  9. Corruption   
                -  10. Political and Security Environment   
                -  11. Labor Policies and Practices   
                -  12. OPIC and Other Investment Insurance Programs   
                -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                -  14. Contact for More Information   

## Executive Summary

Rwanda enjoys 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 undertaken a series of pro-investment policy reforms intended to improve Rwanda’s investment climate and increase foreign direct investment (FDI). The country presents a number of opportunities for U.S. and foreign direct investment, including in renewable energy, infrastructure, agriculture, mining, tourism, and information and communications technology (ICT). The Investment Code includes equal treatment between foreigners and nationals with regard to certain operations, free transfer of funds, and compensation against expropriation.

According to the National Bank of Rwanda, Rwanda attracted USD 379.8 million of FDI inflows in 2015, representing 5 percent of GDP. Rwanda had a total USD 1.4 billion of FDI stock in 2015. In pursuit of its goal to become a regional hub for tourism, services, and logistics, the GOR has plans to commission a number of high-profile energy and infrastructure projects, including an “Innovation City,” new tourist facilities, ring roads around Kigali, wastewater treatment and potable water facilities, and large ticket regional items such as railway links to Uganda and Tanzania and regional oil pipelines. The GOR expects the new Bugesera International Airport to begin construction in 2017 and become operational by the end of 2018.

Investors cite a number of hurdles and constraints to operating in Rwanda, including the country’s landlocked geography and resulting high freight transport costs, a small domestic market, limited access to affordable financing, and payment delays with government contracts. Investors also often cite that tax incentives included in deals signed by the Rwanda Development Board (RDB) are not honored by the lead tax agency, Rwanda Revenue Authority (RRA). Rwanda’s immigration authority also 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. There are neither statutory limits on foreign ownership or control, nor any official policies that discriminate against foreign investors, though investors continue to complain about competition from state-owned and ruling party-aligned businesses. Private sector stakeholders continue to stress that they do not have enough visibility on the bidding process for regional projects under the Northern and Central Corridor Initiatives.

General labor is available, but Rwanda suffers from a shortage of skilled workers, including accountants, lawyers, and technicians. Higher institutes of technology, private universities, and vocational institutes are improving and producing more and better-trained graduates each year.

While energy supply has notably improved, many businesses continue to experience difficulties in gaining reliable access in peak access times due to distribution challenges. The Rwandan National Bank (BNR) has maintained macroeconomic stability in terms of inflation and exchange rates. Some investors reported difficulties in obtaining foreign exchange and several temporary foreign exchange shortages were reported in 2016. As throughout the region, there was a serious depreciation of the Rwandan franc against the U.S. dollar, reaching nearly ten percent in 2016. Rwanda is working to improve transparency and has made major strides in putting business registration procedures online. In 2016, there were several reported cases of alleged malfeasance involving private citizens and Rwandan officials that led to investigations and arrests of high-ranking officials, as well as a number of resignations.

*Table 1*

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

Over the past decade, the GOR has undertaken a series of pro-investment policy reforms intended to improve the investment climate, wean Rwanda’s economy off foreign assistance, expand, and increase levels of foreign direct investment. The country presents a number of opportunities for foreign direct investment, including in renewable energy, infrastructure, agriculture, mining, tourism, and information and communications technology (ICT).

Rwanda enjoys strong economic growth–which averaged over 7 percent annually from 2010 to 2015, high rankings in the World Bank’s Doing Business report (#59 out of 190 economies in the 2016 report, second best in Africa), and a reputation for low corruption. Rwanda economic growth decelerated to 5.9 percent in 2016 following a reduction in agricultural productivity due to prolonged drought in different parts of the country. Potential and current investors cite a number of hurdles and constraints, including Rwanda’s landlocked geography and resulting high freight transport costs, a small domestic market, limited access to affordable financing, payment delays with government contracts, and frequently inconsistent application of tax, investment, and immigration rules.

The Rwanda Development Board 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, 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.

Despite the RDB’s investment facilitation role, some foreign investors complain that while registration is easy, implementation can be less smooth due to delays in government payments for services or goods delivered, changes in memorandum of understanding (MoU) conditions during contract negotiations, and/or additional tax assessments. Investors also face difficulty in obtaining or renewing work visas due to the GOR’s demonstrated preference for hiring local or EAC residents over third country nationals. Investors often cite tax incentives included in deals signed by the RDB that are not honored by the Rwanda Revenue Authority (RRA), Rwanda’s tax authority, as a serious problem. Rwanda’s 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.

Investors also cite the inconsistent application of tax incentives and import duties as a significant challenge to doing business in Rwanda. 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 even years in some cases, and often involves lengthy audits by the RRA. RRA aggressively enforces tax requirements on firms and individuals and imposes very punitive fines for errors – deliberate or not – in tax payments.

**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. The Rwandan constitution stipulates that every person has the right to private property, whether personal or in association with others. The government cannot violate the right to private ownership except in the public interest and only then after following procedures that are determined by law and subject to fair compensation.

The law also allows private entities to acquire and dispose of interests in business enterprises. Foreign nationals may hold shares in locally incorporated companies. The government has continued to privatize state holdings though the government, ruling party, and military continue to play a dominant role in Rwanda’s private sector.**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 a maximum of 99 years, there are stricter limits on land ownership for foreign investors. In May 2015, the GOR published a new Investment Code aimed at providing tax breaks and other incentives to boost foreign investment. The Investment Code includes equal treatment between foreigners and nationals with regard to certain operations, free transfer of funds, and compensation against expropriation.

**Other Investment Policy Reviews**

The Organization for Economic Cooperation and Development (OECD) and New Partnership for Africa’s Development (NEPAD) have started a project in partnership with the GOR with the aim of improving the business climate and enhancing capacity. The project also supports Rwanda’s ongoing efforts to implement its National Programme of Action (NPA) under the African Peer Review Mechanism (APRM). The World Trade Organization (WTO) published a Trade Policy Review in 2013 covering all of the East African Community (Burundi, Kenya, Rwanda, Tanzania, and Uganda). The main areas for improvement revolve around implementation of the common external tariff (CET) and harmonization of trade, export, and tax policies. The report can be found here: https://www.wto.org/english/tratop_e/tpr_e/tp371_e.htm 

**Business Facilitation**

The RDB offers one of the fastest business registration processes in Africa. New investors can register online at the RDB’s website (http://org.rdb.rw/busregonline ) or register in person at the RDB’s office in Kigali.

**Outward Investment**

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.

							2. Bilateral Investment Agreements and Taxation Treaties					

Rwanda is a member of the World Trade Organization, East African Community (EAC), Economic Community of the Great Lakes (CEPGL), and the Common Market for Eastern and Southern Africa (COMESA). While the EAC now has a Customs Union and Common Market, the slow pace of regulatory reform, lack of harmonization, non-tariff barriers, and bureaucratic inefficiencies still hamper the free movement of goods, capital, and people. Rwanda takes part in EAC negotiations with other trading partners. Rwanda is eligible for trade preferences under the African Growth and Opportunity Act (AGOA). The United States and Rwanda signed a Trade and Investment Framework Agreement (TIFA) in 2006, and a Bilateral Investment Treaty (BIT) in 2008. Rwanda does not have a bilateral taxation treaty with the United States. Rwanda has signed bilateral investment treaties with Switzerland (1963), Germany (1967), and Belgium (1985). Rwanda signed bilateral investment treaties with the Republic of Korea, Mauritius, and South Africa, but these treaties have yet to enter into force.

							3. Legal Regime					

**Transparency of the Regulatory System**

The GOR generally employs transparent policies and effective laws 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: http://rwanda.eregulations.org /. Rwandan laws and regulations are published in the Government Gazette and/or online at http://primature.gov.rw/index.php?id=97 . Government institutions generally have clear rules and procedures.

There is no formal mechanism to publish draft laws for public comment, although civil society sometimes has the opportunity to review proposed laws. There is no informal regulatory process managed by nongovernmental organizations. 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), and the National Tender Board (NTB) also enforce regulations. In recent years, the OAG’s annual reports to parliament have prompted wide-ranging criminal investigations of alleged misconduct and corruption. 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 Private Sector Federation, a business association with strong ties to the government.

**International Regulatory Considerations**

Rwanda is a member of the East African Community (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 International Standardization Organization (ISO) and African Organization for Standardization (ARSO). Rwanda notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).

**Legal System and Judicial Independence**

The Rwandan legal system is mainly based on the Belgian civil law system. However, since the renovation of the legal framework in 2002, with a constitution introduced in June 2003, and the country joining the Commonwealth in 2009, there is now a mixture of civil law and common law (hybrid system). Rwanda’s commercial courts address commercial disputes and facilitate enforcement of property and contract rights. Rwanda’s judicial system suffers from a lack of resources and capacity, including well-functioning courts, with cases currently backlogged two to five years. Investors occasionally cite the GOR’s casual approach to contract sanctity and say the government sometimes fails to enforce court judgments in a timely fashion.

**Laws and Regulations on Foreign Direct Investment**

National laws governing commercial establishments, investments, privatization and public investments, land, and the protection and conservation of the environment are the primary directives governing investments in Rwanda. In 2011, the GOR reformed tax payment processes and enacted additional laws on insolvency and arbitration. Under the 2012 penal code, the government may compel a firm to disclose proprietary information to government authorities under the auspices of a criminal investigation of fraudulent bankruptcy or other alleged criminal offense. The 2015 Investment Code establishes policies on foreign direct investment, including dispute resolution (Article 9). The RDB keeps investment-related regulations and procedures at the following website: http://businessprocedures.rdb.rw .

**Competition and Anti-Trust Laws**

Although Rwanda already has legislation in place to regulate competition, the GOR is setting up the Rwanda Inspectorate and Competition 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. RICA will serve as a regulatory body to enforce technical regulations and laws related to trade, while the Rwanda Standards Board (RSB) will continue to set quality standards for goods. To read more on competition laws in Rwanda, please visit: http://mineacom.gov.rw/index.php?id=279 

**Expropriation and Compensation**

The 2015 Investment Code forbids the expropriation of investors’ property in the public interest unless the investor is fairly compensated. In March 2015, a new expropriation law came into force that included more explicit protections for property owners. Though Rwandan law is clear that private property will be expropriated only in the public interest and after appropriate compensation following market rates, property owners have complained about the definition of “public interest,” valuation procedures, payment levels, and timing of payments. In the past several years, a number of property owners have protested expropriation of their property by the City of Kigali and claimed that the compensation offered was below market value and not in accordance with the expropriation law.

Implementation of the Kigali City Master Plan has at times created additional threats of expropriation, as property owners in selected areas have been compelled to construct multi-story commercial developments or face potential eviction from their property. Several properties were expropriated by the government on behalf of private investors in recent years without following market rates. Recent evictees of large projects complain that there is too much time (up to 5 years) between valuation and the actual payment where improving property (even for vital needs) is nearly impossible. Though contestation is permissible by law, exercising it is costly and lengthy. Some businesses have felt pressure to move to Special Economic Zones or to commercial buildings with 100-300 percent higher rents due to the sudden enforcement of the Kigali City Master Plan.

**Dispute Settlement**

*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.

*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 East African Community. Rwanda has also acceded to the 1958 New York Arbitration Convention and the Multilateral Investment Guarantee Agency (MIGA) convention. Under the U.S.-Rwanda Bilateral Investment Treaty, 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 local courts 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 GOR has yet to stand as complainant or respondent in a World Trade Organization (WTO) dispute settlement. Rwanda has been a party to one case at ICSID over the past 10 years. State-owned enterprises (SOEs) are also subject to domestic and international disputes. In 2016, SOEs party to a suit won and lost several judgments by the Supreme Court, while other cases were settled under arbitration.

*International Commercial Arbitration and Foreign Courts*

In 2012, the GOR launched the Kigali International Arbitration Center (KIAC). According to press reports, the KIAC has reviewed 54 cases worth USD 100 million involving petitions of ten 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 government. These companies report difficulty in securing international financing due to this provision in their contracts.

**Bankruptcy Regulations**

Rwanda ranks 72 out of 190 economies for resolving insolvency in the 2016 World Bank’s Doing Business Report. According to the report, 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 19.2 cents on the U.S. dollar, with judgments typically made in local currency.

Over the last decade, Rwanda improved its insolvency system through a 2009 Insolvency Law clarifying the standards for beginning insolvency proceedings, preventing the separation of the debtor’s assets during reorganization proceedings, setting clear time limits for the submission of a reorganization plan, implementing an automatic stay of creditors’ enforcement actions, introducing provisions on voidable transactions and the approval of reorganization plans, and finally, establishing additional safeguards for creditors in reorganization proceedings. In 2008, the GOR implemented business reform legislation, which included new bankruptcy regulations and arbitration laws. In 2011, the GOR reformed tax payment processes and enacted additional laws on insolvency and arbitration. Under the 2012 penal code, the government may compel a firm to disclose proprietary information to government authorities under the auspices of a criminal investigation of fraudulent bankruptcy or other alleged criminal offense.

							4. Industrial Policies					

**Investment Incentives**

The 2015 Investment Code offers a package of investment benefits and incentives to both domestic and foreign investors under certain conditions, including:

- For an international company which has its headquarters or regional office in Rwanda a preferential corporate income tax rate of zero percent (0 percent);
- For any investor, a preferential corporate income tax rate of fifteen percent (15 percent);
- Corporate income tax holiday of up to seven (7) years;
- Exemption of customs tax for products used in Export Processing Zones (EPZ);
- Exemption of Capital Gains Tax;
- Value Added Tax refund;
- Accelerated depreciation; and
- Immigration incentives.

Further details on benefits under the Investment Code can be accessed here: http://businessprocedures.rdb.rw/media/Investiment_promotion_law.pdf .

Uncoordinated efforts between the RDB, RRA, and the Ministry of Trade, Industry and EAC Affairs (MINEACOM) can lead to inconsistent application of incentives, according to investors. Investors often cite that tax incentives included in deals signed by the RDB are not honored by the RRA. Additionally, investors continue to face challenges receiving payment for services rendered for GOR projects, VAT refund delays, and/or expatriation of profits. In May 2016, the GOR instituted a law governing public-private partnerships (PPPs) as a step toward courting investments in key development projects. The law provides a legal framework concerning establishment, implementation, and management of PPPs. The government is still developing implementing guidelines for the new law.

**Foreign Trade Zones/Free Ports/Trade Facilitation**

Rwanda has established Special Economic Zones, including the Kigali Free Zone (KFZ) and the Kigali Industrial Park free trade zone. 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 Special Economic Zone 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 Export Processing Zone 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. Despite government incentives, investors reported that land in the SEZs is relatively expensive.

**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 data storage in Rwanda. Under the National Information and Telecommunication Infrastructure (NICI) plan, Rwanda is pushing to become a regional ICT hub and has constructed a National Data Center (NDC). The facility acts as the country’s central data storage facility and stores applications used by government institutions. There is 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 the data outside Rwanda or transfer it without GOR knowledge and approval.

Some investors have cited the GOR’s reluctance to support visas for expatriate staff as one of the most significant limitations on doing business on Rwanda. Under the 2015 Investment Code, the government allows registered investors 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. Rwanda’s 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. Investors should be aware that East African Community (EAC) applicants are given hiring preference.

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 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 government is not involved in assessing the type and source of raw materials for performance, but the National Bureau of Standards determines quality standards for some product categories.

Rwanda requires that all U.S. citizens possess a visa to enter Rwanda. A visa valid for 30 days for the purpose of tourism can be purchased for USD 30 upon arrival at Kigali International Airport or at Rwanda’s land borders. Accepted forms of payment include U.S. dollars printed after 2006 and credit cards issued by Visa. U.S. citizens planning to remain in Rwanda for more than 30 days must apply for a permit within 15 days of their arrival. The government generally processes visa applications for U.S. citizen investors in a timely manner. However, some investors have complained that the application process for work permits and extended stay visas has become onerous. Immigration authorities frequently request extra documentation detailing applicants’ qualifications and, at times, have taken several months to adjudicate cases. Applicants may facilitate the process by ensuring that they travel with original police background checks, preferably notarized. Educational documents should be on original letterhead. Applicants should also bring a certified copy of diplomas if the original is not carried.

							5. Protection of Property Rights					

**Real Property**

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 a maximum of 99 years, the lease period for foreigners cannot exceed 49 years. Foreigners are treated the same as nationals in the Special Economic Zones (SEZs) and are granted freehold land titles.

**Intellectual Property Rights**

The 2015 Investment Code guarantees protection of investors’ intellectual property rights, and legitimate rights related to technology transfer. As a COMESA member, Rwanda is automatically a member of African Regional Intellectual Property Organization (ARIPO). It is also a member of the World Intellectual Property Organization (WIPO) and is working towards harmonizing its legislation with WTO trade-related aspects of intellectual property. The RDB and the Rwandan Bureau of Standards (RBS) are the main regulatory bodies for Rwanda’s intellectual property rights law. The RDB registers intellectual property rights, providing a certificate and ownership title. The RBS inspects imported products to ensure compliance with standards. Registration of patents and trademarks is on a first-in-time, first-in-right basis, so companies should consider applying for trademark and patent protection in a quick 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 RBS and the RRA, Rwanda has worked to increase protection of intellectual property rights, but many goods that violate patents, especially pharmaceutical products, make it to market nonetheless. A number of investors reported difficulties in registering patents and having rules against infringement of their property rights enforced in a timely manner.

Rwanda has yet to ratify WIPO internet treaties, though the government has taken steps to implement and enforce the WTO TRIPS agreements. Intellectual property 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 intellectual property right protection by registering all commercial entities and facilitating business identification and branding. Rwanda is not listed in USTR’s 2016 Special 301 report or the 2016 Notorious Markets List (NML). Rwanda conducts anti-counterfeit goods campaigns on a regular basis, but statistics on IP enforcement are not publicly available. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ 

							6. Financial Sector					

**Capital Markets and Portfolio Investment**

Access to affordable credit is a serious challenge in Rwanda. Interest rates are high for the region, banks offer predominantly short-term loans, and Rwandan commercial banks rarely issue significant loan values. 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. There are currently seven stocks listed on the Rwanda Stock Exchange. Rwanda is one of a few sub-Saharan Africa countries to have issued sovereign bonds. Four local currency bonds (three for RWF 15 billion/USD 18 million and one for RWF 10 billion/USD 12 million) were issued in 2016, with an average annual yield of 12.31 percent. In January 2016, the IMF completed the fourth review of Rwanda’s economic performance under the Policy Support Instrument (PSI), which can be found here: https://www.imf.org/external/pubs/ft/scr/2016/cr1624.pdf .

**Money and Banking System**

Rwanda’s financial sector remains highly concentrated. Around 50 percent of all bank assets in are held by five of the largest commercial banks, while just one bank – majority state-owned Bank of Kigali (BoK) – holds 30 percent of all assets. The banking sector holds around 67 percent of total financial sector assets in Rwanda. Non-performing loans constitute seven percent of all total banking sector assets. Foreign banks are permitted to establish operations in Rwanda. In January 2016, Atlas Mara Limited acquired a majority equity stake in Banque Populaire du Rwanda (BPR). BPR/Atlas Mara has the largest number of branch locations, and with assets of approximately USD 325 million, is Rwanda’s second largest bank after Bank of Kigali. Rwanda’s banks have assets of USD 1.5 billion. The IMF gives the National Bank of Rwanda (BNR), Rwanda’s central bank, high marks for its effective monetary policy.

The private sector has limited access to credit instruments. Prospective account holders are expected to provide proof of residency. Most Rwandan banks are conservative, risk-averse, and trade in a limited range of commercial products, though additional products are becoming available as the industry matures and competition increases. Rwanda has not lost any correspondent banking relationships in the past three years and all banks are expected to conform to Basel prudential principles. BNR reported that commercial banks made a total net profit of USD 100 million in 2016, but their liquidity ratio was at 42.5 percent, suggesting reluctance toward making loans. Credit cards are not used extensively, but the number of businesses utilizing credit card payment systems increased in 2016. Rwandans primarily rely on cash or mobile money to conduct transactions.

**Foreign Exchange and Remittances**

*Foreign Exchange*

In 1995, the government abandoned the dollar peg and established a floating exchange rate regime, under which all lending and deposit interest rates were liberalized. BNR sets the exchange rate on a daily basis and the resulting market exchange rate is typically within a two percent range of the official rate. Some investors reported difficulties in obtaining foreign exchange and several temporary foreign exchange shortages were reported in 2016. Foreign exchange shortages were partly driven by lower prices for commodity exports and the country’s widening trade deficit, which created some instability in the domestic currency market. As throughout the region, there was a serious depreciation of the Rwandan franc against the U.S. dollar, reaching nearly ten percent.

*Remittance Policies*

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. 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 two to three days to transfer money using SWIFT financial services. ,

**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. In 2015, the fund was worth approximately USD 39 million. The ADF operates under the custodianship of BNR and reports quarterly and annually to the Ministry of Finance and Economic Planning, which is its supervisory authority. ADF is a member of the International Forum of Sovereign Wealth Fund (IFSWF) and is committed to the Santiago Principles. ADF only operates in Rwanda.

							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 government has made an effort to privatize SOEs, to reduce the government’s non-controlling shares in private enterprises, and attract FDI, especially in the information and communications (ICT), tourism, banking, and agriculture sectors. Current SOEs include water and electricity utilities, as well as companies in construction, ICT, aviation, mining, insurance, agriculture, finance, and other investments. The government continues to own significant and sometimes controlling interests in insurance, hotels, food production, and other sectors. Investors continue to complain about competition from state-owned and ruling party-aligned businesses.

State-owned enterprises and utilities appear in the national budget, but are listed in an annex that is not made public. The most recent budget report of the Auditor General also covers State-owned enterprises and has sections heavily criticizing the management of some of the SOEs that were audited. That public report can be found here: (http://oag.gov.rw/fileadmin/user_upload/Procurement/Annual_Report_2015.pdf%20http://oag.gov.rw/documents/reports-to-parliament/performance-audit-reports/ ). SOEs are governed by boards with most members having other government positions. Each public company is under a government ministry (line ministry). The government of Rwanda holds stakes in other companies, including the Bank of Kigali (30 percent stake).

**Privatization Program**

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. Since the program started in 1995, 52 companies have been fully privatized and 20 more are in the process of privatization. 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, rather than public offerings.

							8. Responsible Business Conduct					

There is a growing awareness of corporate social responsibility (CSR), and several foreign-owned companies operating in Rwanda 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 (iTSCi) tracing scheme. In 2016, the Better Sourcing Program began an alternative mineral tracing scheme in Rwanda. Rwanda also has guidelines on corporate governance by publically 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, U.S. firm Gigawatt Global was also a finalist for the Secretary of State’s Award for Corporate Excellence in the environmental sustainability category.

							9. Corruption					

Rwanda is ranked among the least corrupt countries in Africa, with Transparency International’s 2016 Corruption Perception Index (CPI) putting the country among Africa’s four least corrupt nations and 50th 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 prosecutes and punishes those found guilty. High-ranking officials accused of corruption often resign during the investigation period and many have been prosecuted. Rwanda has signed and 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. Giving and accepting a bribe is a criminal act, and penalties depend on circumstances surrounding the specific case. U.S. firms have identified the perceived lack of government corruption in Rwanda as a key incentive to investing in the country.

Some firms have reported occurrences of petty corruption in the customs clearing process, but there are few or no reports of corruption in transfers, dispute settlement, regulatory system, taxation, or investment performance requirements. A local company cannot deduct a bribe to a foreign official from taxes. A bribe by a local company to a foreign official is a crime in Rwanda. The Office of the Auditor General has pursued many corruption cases in recent years, most of which involved misuse of public funds. The Rwanda Governance Board monitored governance more broadly and promoted mechanisms to control corruption. The RRA’s Anticorruption Unit has a code of conduct and an active mechanism for internal discipline. The Office of the Ombudsman, the National Tender Board, the Rwanda Utilities Regulatory Agency, and the National Bureau of Standards also enforced regulations regarding corruption.

*Resources to Report Corruption*

Mrs. Aloysie CYANZAYIREChief OmbudsmanOmbudsman (UmuvunyiP.O Box 6269, Kigali, RwandaTelephone: +250 252587308omb1@ombudsman.gov.rw / sec.permanent@ombudsman.gov.rw

Mr. Felicien MwumvanezaCommissioner for Quality Assurance Department (Anti-Corruption Unit)Rwanda Revenue AuthorityAvenue du Lac Muhazi, P.O. Box 3987, Kigali, RwandaTelephone: +250-252595504 or +250 788309563felicien.mwumvaneza@rra.gov.rw / commissioner.quality@rra.gov.rw

Mr. Obadiah BIRAROAuditor GeneralOffice of the Auditor GeneralAvenue du Lac Muhazi, P.O. Box 1020, Kigali, RwandaTelephone: +250 78818980oag@oag.gov.rw

*Contacts at NGOs operating in Rwanda*

Mr. Apollinaire MupiganyiExecutive DirectorTransparency International RwandaP.O: Box 6252 Kigali, RwandaTelephone: +250 788309563amupiganyi@transparencyrwanda.org / mupiganyi@yahoo.fr

							10. Political and Security Environment					

Rwanda is a stable country with relatively little violence. A strong police and military provide a security umbrella that minimizes potential criminal activity. The Democratic Forces for the Liberation of Rwanda (FDLR) is an armed group that includes former soldiers and supporters of the regime that orchestrated the 1994 genocide and that continues to operate in eastern DRC, near the border with Rwanda. The U.S. Department of State recommends that U.S. citizens exercise caution when traveling near the Rwanda-DRC border, given the possibility of fighting and cross-border shelling involving the FDLR and other armed groups in the region.

Grenade attacks aimed at the local populace occurred on a recurring basis between 2008 and early 2014 in Rwanda. Four attacks occurred in Kigali in 2013 and early 2014, killing five and injuring 48 persons. There have been no such attacks in Rwanda since early 2014, although there have been three cross-border attacks on Rwandan police and military posts reportedly by the FDLR since January 2016. Despite occasional violence along Rwanda’s border with eastern DRC and the ongoing political crisis in neighboring Burundi, there have been no incidents involving politically motivated damage to investment projects or installations since the late 1990s. Please see the following link for State Department Country Specific Information: https://travel.state.gov/content/passports/en/country.html

							11. Labor Policies and Practices					

General labor is available, but Rwanda suffers from a shortage of skilled labor, including accountants, lawyers, engineers, and technicians. Higher institutes of technology, private universities, and vocational institutes are improving and producing more and better-trained graduates each year. Carnegie Mellon University opened a campus in Kigali in 2012–its first in sub-Saharan Africa–and currently offers masters-level courses in information and communication technologies. In 2013, the nonprofit university program Kepler was established for students to work toward obtaining a U.S.-accredited degree through online learning and in-person seminars. In 2012, the government extended basic compulsory education from nine to twelve years. In 2009, the government designated English, rather than French, as the language of instruction for students from grade four onwards.

Companies find skill deficits in many sectors when hiring. Investors are required 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. The Rwandan education system continues to struggle with the transition, given a shortage of teachers qualified to teach in English. A study of dropout and repetition rates conducted in collaboration with the Ministry of Education (MINEDUC) and UNICEF published in August 2016 found that only 38 percent of those enrolled complete primary education and even a smaller percentage successfully complete secondary education (16 percent complete lower secondary and 10 percent complete higher secondary level). The official 2015 literacy rate for individuals aged 15 to 59 is 80.2 percent for women and 82.4 percent for men, according to the government, but functional literacy rates are much lower according to independent evaluations.

Rwanda has ratified all the International Labor Organization (ILO) 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 nonconciliation. The law provides some workers the right to conduct strikes, subject to numerous restrictions. There is no unemployment insurance or other social safety net programs for workers laid off for economic reasons. Labor laws are not waived in order to attract or retain investors. There are no additional or different labor law provisions in SEZs.

In 2000, the government revised the national labor code to eliminate gender discrimination, restrictions on the mobility of labor, and wage controls. In 2009, parliament passed a new labor code, which sets the minimum age for formal employment at 16 and for hazardous work at 18, and strengthened prohibitions on the use of child labor and hazardous or forced work. Approximately 13 percent of children in Rwanda are engaged in child labor, particularly in agriculture and in domestic service. Tea has been included on the U.S. government’s List of Goods Produced by Child Labor or Forced Labor since 2010, with an estimated 13,000 children involved in the production process. The U.S. Department of Labor-financed “REACH-T” project successfully removed approximately 5,000 children engaged in or at risk of child labor in the country’s 12 tea-producing districts between 2013 and 2017. Private firms are responsible for their local employees’ income tax payments (PAYE) and pension contributions. For full-time workers, these payments amount to more than 30 percent of take-home pay, which can be a substantial disadvantage in hiring for firms that comply.

							12. OPIC and Other Investment Insurance Programs					

The Overseas Private Investment Corporation (OPIC) has provided financing and political risk insurance to eleven U.S. projects in Rwanda since 1975. OPIC officials have expressed interest in expanding the corporation’s portfolio in Rwanda and are currently evaluating potential projects. The Export-Import Bank (EXIM) continues its program to insure 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.

							13. Foreign Direct Investment and Foreign Portfolio Investment Statistics					

*Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy*

*Table 3: Sources and Destination of FDI*

Data on Rwandan outward FDI is not available.

*Table 4: Sources of Portfolio Investment*

Data on Rwanda equity security holding by nationality is not available. According to a 2015 BNR report, portfolio investment remains the lowest component of foreign investment in Rwanda mainly due to the low level of financial market development. Its stock increased to USD 97.5 million in 2015, a 4.7 percent increase from 2014 levels. In 2015, Rwanda recorded foreign portfolio inflows of USD 2.5 million compared to USD 5.5 million in 2014.

							14. Contact for More Information					

Mike LurieEconomic and Commercial OfficerUnited States Embassy2657 Avenue de la Gendarmerie, P.O. Box 28 Kigali, Rwanda+250-252-596-538LurieM@state.gov

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### On This Page

                    -  Executive Summary 
                    -  1. Openness To, and Restrictions Upon, Foreign Investment   
                    -  2. Bilateral Investment Agreements and Taxation Treaties   
                    -  3. Legal Regime   
                    -  4. Industrial Policies   
                    -  5. Protection of Property Rights   
                    -  6. Financial Sector   
                    -  7. State-Owned Enterprises   
                    -  8. Responsible Business Conduct   
                    -  9. Corruption   
                    -  10. Political and Security Environment   
                    -  11. Labor Policies and Practices   
                    -  12. OPIC and Other Investment Insurance Programs   
                    -  13. Foreign Direct Investment and Foreign Portfolio Investment Statistics   
                    -  14. Contact for More Information   

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