HomeReportsBureau of Economic and Business Affairs2019 Investment Climate Statements...Rwanda

# 					2019 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 policy reforms intended to improve Rwanda’s investment climate and increase foreign direct investment (FDI).  In 2018, the GOR implemented additional reforms to decrease bureaucracy in construction permitting, improve the timely provision of electricity, and reduce customs processing times for exporters.  The GOR also introduced online certification processes for certificates of origin and phytosanitary approvals. The country presents a number of FDI opportunities, including: manufacturing, infrastructure,energy distribution and transmission, off-grid energy, agriculture and agro-processing, low cost housing, tourism, services, and information and communications technology (ICT).  The Investment Code includes equal treatment between foreigners and nationals with regard tocertain operations, free transfer of funds, and compensation against expropriation; this treatment is reinforced in the 2008 U.S.-Rwanda Bilateral Investment Treaty (BIT). .

According to the National Bank of Rwanda (BNR), the country’s Central Bank, Rwanda attracted USD 342.2 million in FDI inflows in 2016 (the most recent data available), representing 4 percent of gross domestic product (GDP).  Rwanda had a total USD 1.68 billion of FDI stock in 2016, the latest year data is available. In 2018, the Rwanda Development Board (RDB) reported registering more than USD 2 billion in new investment commitments, mainly in manufacturing, mining, agriculture, and agro-processing, 47 percent of which were FDI.  In pursuit of Rwanda’s goal to become a regional hub for tourism, services, and logistics, the GOR has plans for a number of high-profile infrastructure projects, including Kigali Innovation City in Kigali’s Special Economic Zone (SEZ), which will accommodate technological universities and companies working in the tech sector.  Construction of Kigali Innovation City is ongoing, with the new campus of Carnegie Mellon University Africa set to open in 2019. Construction of Bugesera International Airport began in 2017, with completion of the first phase planned for 2021, although delays are probable. The GOR is also discussing a rail line to connect with Tanzania.

In February 2019, Standard and Poor’s affirmed Rwanda’s “B/B-” long and short-term foreign and sovereign credit ratings.  The GOR has developed an export promotion program called “Made in Rwanda.”  This campaign seeks to diversify exports, ease exchange rate pressure, and reduce the country’s trade deficit.  Government public debt has rapidly increased over the past few years to more than 50 percent of GDP, but most of these loans are on highly concessionary terms.  A 2017-2018 investor perception survey by the International Finance Corporation (IFC) found that the majority of existing large companies in Rwanda have plans to invest further in the country.  According to the same survey, the most frequently perceived obstacles for current company growth are: access to working capital, shortage of qualified labor, tax levels, tax predictability, and lack of reliable electricity and water (particularly for mining and manufacturing).  In the same report, investors suggested that RDB should focus more on after-care services and improving coordination among government institutions. 

Many companies report that although it is easy to start a business in Rwanda, it can be difficult to operate a profitable or sustainable business due to a variety of hurdles and constraints.  These include the country’s landlocked geography and resulting high freight transport costs, a small domestic market, limited access to affordable financing, payment delays with government contracts, and inconsistent enforcement of laws and regulations.  Government interventions designed to support overall economic growth can significantly impact investors, with some expressing frustration that they were not consulted prior to the abrupt implementation of government policies and regulations that affected their business.  A number of investors have said that tax incentives included in deals signed by RDB are not honored by the lead tax agency, the Rwanda Revenue Authority (RRA). Similarly, some investors stated that Rwanda’s immigration authority does not always honor the employment and immigration commitments of investment certificates and deals.  Some investors reported difficulties in registering patents and having rules against infringement of their property rights enforced in a timely manner.  There are neither statutory limits on foreign ownership or control, nor any official policies that discriminate against foreign investors, though some complain about competition from state-owned enterprises (SOEs) and ruling party-aligned businesses.

General labor is available, but Rwanda suffers from a shortage of skilled workers, including accountants, lawyers, electricians, and technicians.  Higher institutes of technology, private universities, and vocational institutes are improving. The establishment of Carnegie Mellon University Africa and the opening of a regional Andela office could boost the supply of qualified software developers in the coming years.  While electricity and water supply have improved, businesses may continue to experience intermittent outages, especially during peak times, due to distribution challenges. Some investors report difficulties in obtaining foreign exchange from time-to-time, which may be caused by the country running a persistent trade deficit. 

Rwanda promotes women and gender equality in all walks of life.  Rwanda pioneered a number of projects to promote women entrepreneurs.  Both men and women have equal access to investment facilitation and protections. 

*Table 1: Key Metrics and Rankings*

Note: 

- According to the National Institute for Statistics for Rwanda (NISR), GDP per head in current USD was USD 787 in 2018
- According to BNR, stock of U.S. FDI in the country stood at USD 87.4 million in 2016, however many American investments are via subsidiaries from third countries

							1. Openness To, and Restrictions Upon, Foreign Investment					

**Policies Towards Foreign Direct Investment**

Over the past decade, the GOR has undertaken a series of policy reforms intended to improve the investment climate, wean Rwanda’s economy off foreign assistance, and increase FDI levels.  Rwanda enjoys strong economic growth, averaging over 7 percent annually over the last decade, high rankings in the World Bank’s Doing Business report (29 out of 190 economies in 2019 (and second best in Africa) compared to 41 in 2018), and a reputation for low corruption.  The Rwandan economy grew more than 8 percent in 2018 as higher global prices for traditional exports, improved agricultural output, growth in transport and tourism, and a rebound in construction activities helped the country to recover from drought and a cyclical downturn in 2016.  The Rwandan economy will continue to be susceptible to the whims of climatic conditions and fluctuation in global commodity prices for coffee, tea, and minerals. 

Potential and current investors cite a number of hurdles and constraints to doing business in Rwanda, including its 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.  In order to support export growth, the GOR subsidizes transportation costs for agricultural products. Given Rwanda’s landlocked geopolitical situation, the country must rely on strong levels of economic diplomacy with countries that offer access to ports. Any serious breakdown in political relationships with Kenya, Tanzania, or Uganda, could impinge investors’ ability to obtain the necessary inputs required for sustained levels of commerce in Rwanda. 

RDB was established in 2006 to fast track investment projects by integrating all government agencies responsible for the entire investor experience under one roof.  This includes key agencies responsible for business registration, investment promotion, environmental compliance clearances, export promotion and other necessary approvals.  New investors can register online at the RDB’s website and receive a certificate in as fast as six hours, and the agency’s “one-stop shop” helps investors secure required approvals, certificates, and work permits.  RDB took steps to enhance investor after-care in 2017, launching a weekly Investor Open House and quarterly investor dialogues, events where RDB senior management officials meet and engage with business leaders. RDB states its investment priorities are innovation and technology, particularly ICT and green innovation; tourism and real estate; agriculture and food security; energy and infrastructure; and mining.  

In 2018, the GOR implemented improvements designed to stimulate investments.  Examples of these reforms include reducing the time required to obtain construction permits and to clear exports through customs by exporters and enabling a more timely provision of electricity.  The GOR also introduced several online certification processes, including for certificate of origin and phytosanitary approvals. RRA started issuing electronic certificates of origin free of charge.  The National Agricultural Export Board issues certificates of origin for tea and coffee free of charge. Rwanda Energy Group (REG) reports that reforms, including a new online application process, have reduced the time for new connections to the electricity grid from an average of 34 days to 20.  REG claims that newly introduced automation systems will enable it to better monitor frequency and duration of outages, improving grid stability and uptime. According to RDB, certain construction projects will no longer require geotechnical studies. RDB also says that construction permit applications will no longer require a commencement date.  

Investors broadly express satisfaction with RDB’s investment facilitation efforts.  However, some foreign investors complain that implementation can be less smooth due to delays in government payments for services or goods delivered.  Other investors complain that they perceived there were GOR efforts to change contracts or memoranda of understanding after such items were negotiated.  Others have faced surprising tax assessments with little notice. Some investors have faced difficulty in obtaining or renewing work visas, perhaps a result of the GOR’s demonstrated preference for hiring local or East African Community (EAC) residents over other expatriates.  Rwanda’s Directorate General of Immigration and Emigration does not always honor the employment and immigration commitments of investment certificates and deals, according to some investors.  

A number of investors have said a top concern affecting their operations in Rwanda is that tax incentives included in deals signed by the RDB are not fully honored by the RRA.  Investors further cite the inconsistent application of tax incentives and import duties as a significant challenge to doing business in Rwanda. For example, a few investors have said that local customs officials have attempted to charge them duties based on their perception of the value of an import, regardless of the actual purchase price.  Under Rwandan law, foreign firms should receive equal treatment with regard to taxes, as well as access to licenses, approvals, and procurement. Foreign firms should receive VAT tax rebates within 15 days of receipt by the RRA, but firms complain that the process for reimbursement can take months, and occasionally years. RRA introduced new software in 2018 that should allow these refunds to be processed and delivered in a more timely manner.  VAT refunds may also be held up pending the results of RRA audits. RRA aggressively enforces tax requirements and imposes punitive fines for errors – deliberate or not – in tax payments, according to some investors.

Based on Article 15 of Law no 76/2013 of 11/09/2013, the Office of the Ombudsman has the authority to request that the Supreme Court reconsider and review judgments rendered at the last instance by ordinary, commercial, and military courts, if there is any persistence of injustice.  More information on the review process can be found at https://ombudsman.gov.rw/en/?Court-Judgement-Review-Unit-1375  .  

**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 GOR has continued to privatize state holdings, although the government, ruling party, and military continue to play a dominant role in Rwanda’s private sector.Foreign investors can acquire real estate but with a general limit on land ownership.  While local investors can acquire land through leasehold agreements that extend to a maximum of 99 years, foreign investors are usually restricted to leases up to 49 years with the possibility of renewal.  The government published a new Investment Code in 2015 aimed at providing tax breaks and other incentives to boost FDI.  The Investment Code includes equal treatment for foreigners and nationals with regard tocertain operations, free transfer of funds, and compensation against expropriation. 

**Other Investment Policy Reviews**

In February 2019, The World Trade Organization (WTO) published a Trade Policy Review for the EAC covering Burundi, Kenya, Rwanda, Tanzania and Uganda.  The report is available at: https://docs.wto.org/dol2fe/Pages/FE_Search/FE_S_S006.aspx?Query=(@Symbol= percent20wt/tpr/s/*) percent20and percent20(( percent20@Title= percent20rwanda percent20) percent20or percent20(@CountryConcerned= percent20rwanda))&Language=ENGLISH&Context=FomerScriptedSearch&languageUIChanged=true#  

The Rwanda annex to the report is available at:  https://docs.wto.org/dol2fe/Pages/FE_Search/ExportFile.aspx?Id=251521&filename=q/WT/TPR/S384-04.pdf 

**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 in Kigali.  Once a certificate of registration is generated, company tax identification and employer social security contribution numbers are also generated automatically.  The RDB “One Stop Center” assists firms in acquiring visas and work permits, connections to electricity and water, and support in conducting required environmental impact assessments.  

In 2018, RRA distributed a new electronic billing software and electronic billing machines that should improve efficiency and introduce additional flexibilities for customer-facing businesses.  This should also support all customers by allowing vendors to issue official VAT invoices from any computer with the new software. The system submits VAT refund claims directly through the RRA E-Tax Portal, which should reduce the time required to process VAT refunds. To reduce the number of cases subjected to audit, RRA is implementing an automated audit case selection process using a risk-based approach to select taxpayers subjected to audit based on compliance history.  The official announcement of these changes is available at: https://www.rra.gov.rw/index.php?id=286&tx_news_pi1 percent5Bnews percent5D=166&tx_news_pi1 percent5Bcontroller percent5D=News&tx_news_pi1 percent5Baction percent5D=detail&cHash=dfd263b497338982e0a9ebff74d52fdb  

The RDB is prioritizing additional reforms to improve the investment climate.  By 2020, it hopes to amend the land policy to merge issuance of free hold titles and occupancy permits; introduce online notarization of property transfers; implement small claims procedure to allow self-representation in court and reduce attorney costs; launch electronic auctioning to reduce time to enforce judgments, reducing court fees and allowing payments electronically; and establish a commercial division at the Court of Appeal to fast-track commercial dispute resolution. 

Rwanda promotes women and gender equality and has pioneered a number of projects to promote women entrepreneurs, including the creation of the Chamber of Women Entrepreneurs within the Rwanda Private Sector Federation (PSF).  Both men and women have equal access to investment facilitation and protections.     

**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					

**Bilateral Investment Treaties**

Rwanda is a member of the WTO, the EAC, Economic Community of the Great Lakes, the Economic Community of Central African States, and the Common Market for Eastern and Southern Africa (COMESA).  Rwanda ratified the African Continental Free Trade Area agreement in March 2018, but its implications for the region remain unclear. 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 in the region.  Rwanda takes part in EAC negotiations with other trading partners.  

The United States and Rwanda signed a Trade and Investment Framework Agreement (TIFA) in 2006 and a BIT in 2008.  Rwanda has active bilateral investment treaties with Germany (1969), Belgium-Luxemburg Economic Union (1985), and the Republic of Korea (2013).  Rwanda signed bilateral investment treaties with Mauritius (2001), South Africa (2000), Turkey (2016), Morocco (2016), the United Arab Emirates (2016), and Qatar (2018), but these treaties have yet to enter into force.  Rwanda signed the Economic Partnership Agreement between the EAC and the European Union; this agreement has not yet entered into force. 

**Bilateral Taxation Treaties**

Rwanda does not have a bilateral taxation treaty with the United States.  Rwanda has double taxation agreements with Barbados, Mauritius, the Belgium-Luxembourg Economic Union, the Bailiwick of Jersey, Singapore and South Africa.

After Rwanda implemented new higher tariffs on imports of secondhand clothing and footwear in 2016, the U.S. government partially suspended African Growth and Opportunities Act (AGOA) benefits for apparel products from Rwanda, effective May 2018.  Many other Rwandan exports to the United States are still eligible for trade preferences under the Generalized System of Preferences and AGOA.

							3. Legal Regime					

**Transparency of the Regulatory System**

The GOR generally employs transparent policies and effective laws largely consistent with international norms.  Rwanda is a member of the U.N. Conference on Trade and Development’s international network of transparent investment procedures.  The Rwanda eRegulations system is an online database designed to bring transparency to investment procedures in Rwanda*.*  Investors can find further information on administrative procedures at:  https://businessprocedures.rdb.rw/.  Rwandan laws and regulations are published in the Government Gazette and/or online at http://primature.gov.rw/index.php?id=97  .  Government institutions generally have clear rules and procedures, but implementation can sometimes be uneven.  Investors have cited examples of receiving conflicting information from different officials in one or more government departments.  Investors have also cited breach of contracts and incentive promises, and the short time given to comply with changes in government policies, as hurdles to comply with regulations. 

For example, the GOR submitted a 2019 draft law to Parliament banning single use plastic containers.  Investors in the beverage and agro-processing sectors expressed concern that the law would have a serious impact on their operations, that alternative packaging was not available in some cases, and that the GOR did not consult effectively with stakeholders before submitting it.  The law would build on a ban on the manufacture and use of polyethylene bags introduced in 2008.

There is no formal mechanism to publish draft laws for public comment, although civil society sometimes has the opportunity to review them.  There is no informal regulatory process managed by nongovernmental organizations. Regulations are usually developed rapidly in an effort to achieve policy goals and sometimes lack a basis in scientific or data-driven assessments.  Scientific studies, or quantitative analysis (if any) conducted on the impact of regulations, are not generally made publicly available for comment. Regulators do not publicize comments they receive. Public finances and debt obligations are generally made available to the public in reasonable time but only after budget enactment.  Finances for SOEs are not publicly available but may be requested by civil society organizations with a legitimate reason.  

There is no government effort to restrict foreign participation in industry standards-setting consortia or organizations.  Legal, regulatory, and accounting systems are generally transparent and consistent with international norms, but are not always enforced.  The Rwanda Utility Regulation Agency (RURA), the Office of the Auditor General (OAG), the Anticorruption Division of the RRA, the Rwanda Standards Board (RSB), the National Tender Board, and the Rwanda Environment Management Authority also enforce regulations.  In recent years, the OAG’s annual reports to parliament have prompted 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 PSF, a business association with strong ties to the government.  In some cases, the PSF has welcomed foreign investors which organized other investors to positively affect government policies. However, some investors have criticized the PSF for advocating to businesses about government policies rather than advocating business concerns to the government.  

**International Regulatory Considerations**

Rwanda is a member of the EAC Standards Technical Management Committee.  Approved EAC measures are generally incorporated into the Rwandan regulatory system within six months and are published in the National Gazette like other domestic laws and regulations.  Rwanda is also a member of the standards technical committees for the International Standardization Organization, the African Organization for Standardization, and the International Electrotechnical Commission.  Rwanda is a member of the International Organization for Legal Metrology and the International Metrology Confederation.  RSB represents Rwanda at the African Electrotechnical Commission. Rwanda notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade. 

**Legal System and Judicial Independence**

The Rwandan legal system was originally based on the Belgian civil law system.  However, since the renovation of the legal framework in 2002, the introduction of a new constitution in 2003, and the country’s entrance to the Commonwealth in 2009, there is now a mixture of civil law and common law (hybrid system).  Rwanda’s courts address commercial disputes and facilitate enforcement of property and contract rights.  Rwanda’s judicial system suffers from a lack of resources and capacity, including well-functioning courts, with some cases allegedly backlogged up to five years.  Investors occasionally cite what they perceive as the government’s casual approach to contract sanctity and say the GOR sometimes fails to enforce court judgments in a timely fashion.  In August 2018, the GOR created a Court of Appeal in an attempt to expedite the appeal process without going to the Supreme Court and to reduce backlogs. The new Court of Appeal arbitrates cases handled by the High Court, Commercial High Court, and Military High Court.  The Supreme Court continues to decide on cases of injustice filed from the Ombudsman Office and on constitutional interpretation. 

A Tax Court is yet to be established in Rwanda.  The RDB announced the government’s intent to create a commercial division at the Court of Appeal to fast-track resolution on commercial disputes. 

**Laws and Regulations on Foreign Direct Investment**

National laws governing commercial establishments, investments, privatization and public investments, land, and environmental protection are the primary directives governing investments in Rwanda.  Since 2011, the government reformed tax payment processes and enacted additional laws on insolvency and arbitration. The 2015 Investment Code establishes policies on FDI, including dispute resolution (Article 9).  The RDB keeps investment-related regulations and procedures at: http://businessprocedures.rdb.rw  .

According to a WTO policy review report dated January 2019, Rwanda is not a party to any countertrade and offsetting arrangements, or agreements limiting exports to Rwanda. 

A new property tax law was passed in August 2018.  The new law removes the provision that taxpayers must have freehold land titles to pay property taxes.  Small and medium enterprises (SMEs) will receive a two-year tax trading license exemption upon establishment.  Under the new law, the income threshold reserved for maintenance and upkeep of rented property has increased from 30 percent to 50 percent, and interest rates on loans are subtracted in the calculation of the taxable value.  For residential houses (in excess of the first family home), owners pay 0.25 percent in the first year, 0.5 percent in the second year, 0.75 percent in third year, and graduate to 1 percent from the fourth year onwards.  Commercial buildings are taxed 0.2 percent of the property market value in the first year, 0.3 percent in the second year, 0.4 percent in the third year, and 0.5 percent from the fourth year onwards.  For industry, the rate is maintained at a flat rate of 0.1 percent of their market value to support the “Made in Rwanda” campaign to promote local manufacturing. 

In April 2018, the GOR passed a new law to streamline income tax administration and to clarify the law.  A number of items were added to the list of activities giving rise to taxable income. For example, the sale, lease, and free transfer of immovable assets allocated to the business now constitute taxable income.  All payments made by a resident of Rwanda on services performed abroad, other than those consumed abroad, constitute taxable income. New articles were added to address transfer pricing rules, preconditions to participate in public tenders, and taxation rules for liberal professionals and consultants.  The new law can be accessed here: http://www.primature.gov.rw/media-publication/publication/latest-offical-gazettes.html?no_cache=1&tx_drblob_pi1 percent5BdownloadUid percent5D=464  . 

**Competition and Anti-Trust Laws**

Since 2010, a Competition and Consumer Protection Unit was created at the Ministry of Trade and Industry (MINICOM) to address competition and consumer protection issues.  Rwanda has legislation in place to regulate competition. The government 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 RSB will continue to set quality standards for goods.  To read more on competition laws in Rwanda, please visit: http://www.minicom.gov.rw/index.php?id=136 .

Market forces determine most prices in Rwanda, but in some cases, the GOR intervenes to fix prices for items considered sensitive in Rwanda.  RURA, in consultation with relevant ministries, sets prices for petroleum products, water, electricity, and public transport. MINICOM and the Ministry of Agriculture have fixed farm gate prices, or the market value of a cultivated product minus the selling costs, for agricultural products like coffee, maize, and Irish potatoes  from time to time. On international tenders, a 10 percent price preference is available for local bidders, including those from regional economic integration bodies in which Rwanda is a member.

Some U.S. companies have expressed frustration that while authorities require them to operate as a formal enterprise that meets all Rwandan regulatory requirements, some local competitors are informal businesses that do not operate in full compliance with all regulatory requirements.  Other investors have claimed unfair treatment compared to ruling party-aligned or politically connected business competitors in securing public incentives and contracts.

More information on specific types of agreements, decisions and practices considered to be anti-competitive, or abuse of dominant position, in Rwanda can be found here: https://rura.rw/fileadmin/Documents/docs/ml08.pdf 

**Expropriation and Compensation**

The 2015 Investment Code forbids the expropriation of investors’ property in the public interest unless the investor is fairly compensated.  A new expropriation law came into force in 2015, which included more explicit protections for property owners.  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.  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.

A 2017 study by Rwanda Civil Society Platform argues that the government conducts expropriations on short notice and does not provide sufficient time or support to help landowners fairly negotiate compensation.  The report includes a survey that found only 27 percent of respondents received information about planned expropriation well in advance of action.  While mechanisms exist to challenge the government’s offer, the report notes that landowners are required to pay all expenses for the second valuation, a prohibitive cost for rural farmers or the urban poor.  Media have reported that wealthier landowners have the ability to challenge valuations and have received higher amounts. 

Political exiles and other embattled opposition figures have been involved in taxation lawsuits and “abandoned properties” that led to the auctioning of properties, allegedly at below market values. 

**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. 

Rwanda ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 2008. 

*Investor-State Dispute Settlement*

Rwanda is a member of the East African Court of Justice for the settlement of disputes arising from or pertaining to the EAC.  Rwanda has also acceded to the 1958 New York Arbitration Convention and the Multilateral Investment Guarantee Agency convention.  Under the U.S.-Rwanda BIT, U.S. investors have the right to bring investment disputes before neutral, international arbitration panels.  Disputes between U.S. investors and the GOR in recent years have been resolved through international arbitration, court judgments, or out of court settlements.  Judgments by foreign courts and contract clauses that abide by foreign law are accepted and enforced by local courts, though they lack capacity and experience to adjudicate cases governed by non-Rwandan law.  There have been a number of private investment disputes in Rwanda, though the government has yet to stand as complainant, respondent, or third party in a WTO dispute settlement. Rwanda has been a party to two cases at ICSID since Rwanda became a member in 1963; one of these cases is an ongoing case brought by an American investor against Rwanda.  SOEs are also subject to domestic and international disputes. In 2018, SOEs party to a suit both 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 100 cases worth USD 50 million in claims involving petitions of 18 different nationalities since 2012.  Some businesses report being pressured to use the Rwanda-based KIAC for the seat of arbitration in contracts signed with the GOR. Because KIAC has a short track record and the location of its domicile, these companies would prefer arbitration take place in a third country, and some have reported difficulty in securing international financing due a KIAC provision in their contracts. 

**Bankruptcy Regulations**

Rwanda ranks 58 out of 190 economies for resolving insolvency in the World Bank’s 2019 Doing Business 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 cents on the dollar, with judgments typically made in local currency. 

The 2009 Insolvency Law clarified 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 establishing additional safeguards for creditors in reorganization proceedings.

In April 2018, the GOR instituted a new Insolvency and Bankruptcy Law.  One major changes is the introduction of an article on “pooling of assets” allowing creditors to pursue parent companies and other members of the group, in case a subsidiary is in liquidation.  Article 121 states that “On application of the liquidator, creditor or shareholder, the court may order that: 

1) any company that is or has been a related company of the company in liquidation must pay to the liquidator the whole or part of any or all of the claims made in the liquidation; 2) where two or more related companies are in liquidation, the liquidations in respect of each company must proceed together, as if they were one company, to the extent the court so orders and subject to such terms and conditions as the court may impose.”  

The new law can be accessed here:  http://org.rdb.rw/wp-content/uploads/2018/06/Insolvency-Law-OGNoSpecialbisdu29April2018.pdf 

							4. Industrial Policies					

**Investment Incentives**

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

For an international company with its headquarters or regional office in Rwanda, a preferential corporate income tax rate of 0 percent; 

- For any investor, a preferential corporate income tax rate of 15 percent;
- Corporate income tax holiday of up to seven years;
- Exemption of customs tax for products used in Export Processing Zones (EPZ);
- Exemption of capital gains tax;
- VAT refund;
- Accelerated depreciation; and
- Immigration incentives.

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

Poorly coordinated efforts between the RDB, RRA, MINICOM, and the Directorate of Immigration and Emigration can lead to inconsistent application of incentives, according to investors.  Investors reported that tax incentives included in deals signed by the RDB are not honored by the RRA in all cases or sometimes not in a timely manner. Additionally, investors continue to face challenges receiving payment for services rendered for GOR projects, VAT refund delays, and/or expatriation of profits.  In 2016, the GOR instituted a law governing public-private partnership (PPPs) as a step toward courting investments in key development projects.  The law provides a legal framework concerning establishment, implementation, and management of PPPs. Detailed guidelines for the law can be accessed here:  http://rdb.rw/wp-content/uploads/2018/08/PPP-Guidelines.pdf 

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

Rwanda has established the KSEZ, which was set up through the merger of former Kigali Free Trade Zone and the Kigali Industrial Park projects.  SEZs in Rwanda are regulated by the SEZ Authority of Rwanda (SEZAR), based at the RDB.  Land in KSEZ is acquired through Prime Economic Zone Secretariat, a private developer, under the regulations of SEZAR.  The price per square meter is USD 62, and the minimum size that can be acquired is one hectare.  Bonded warehouse facilities are now available both in and outside of Kigali for use by businesses importing duty-free materials.  The GOR has established a number of benefits for investors operating in the SEZs, including tax and land ownership advantages. A company basing itself in the SEZ can also opt to be a part of the Economic Processing Zone.  A number of criteria must be satisfied in order to qualify, such as extensive records on equipment, materials and goods, suitable offices, security provisions, and a number of property constraints. Holding an EPZ license will exempt a company from VAT, import duties, and corporate tax.  The company is then obliged to export a minimum of 80 percent of production. Even after considering savings due to these government incentives, a few investors reported that land in the SEZs was significantly more expensive than land outside the zones. The GOR has stated that there are no fiscal, immigration, or customs incentives beyond those provided in the 2015 Investment Code, though media has occasionally speculated that certain investors received additional incentives.  The negative list of goods prohibited under the EAC Customs Management Act applies in SEZs. In November 2018, the GOR approved the Bugesera Special Economic Zone (BSEZ), located 45 minutes from Kigali. 

Procedural information and cost involved in operating in SEZs can be accessed here: https://businessprocedures.rdb.rw/procedure/238/189?l=en  

The SEZ policy was revised in 2018.  The new policy introduces performance incentives to include indicators such as exports, full time jobs, local supply contracts, and domestic market recapture.  Under the new policy, foreigners and locals may only lease land (formerly, foreign investors were able to purchase land outright in SEZ). To read more on the new policy, please see:  http://www.minicom.gov.rw/fileadmin/minicom_publications/documents/SEZ_Policy_-_January_2018_v2.pdf 

Rwanda created the Export Growth Facility (EGF) in 2015, with an initial capital of RWF 500 million, administered by the Development Bank of Rwanda (BRD).  German KfW Development Bank injected €8.5 million in support of the fund.  The pilot program targets SMEs with export sales below USD 1 million.  Priority sectors include horticulture, agro-processing, and manufacturing.  The facility has three windows: an investment catalyst fund, a matching grant fund for market entry costs, and an export guarantee facility.  Investment catalyst funds support private sector investments in export-orientated production through a 6.5 percent subsidy on market interest rates (normally between 16-20 percent).  The matching grant fund provides grants (50 percent of the need) for expenditure on specific market entry costs (export strategy elaboration, export promotion, compliance with standards, etc.).  The export guarantee fund provides short-term guarantees to commercial banks financing exporters’ pre- and post-shipment operations. The export guarantee component is not yet operational. The facility supports both locally and foreign-owned companies in Rwanda; at least one American company has already received a loan. 

Rwanda created the Business Development Fund (BDF) in 2011 to provide support to SMEs in credit guarantees, matching grants, asset leasing, and advisory services.  BDF works with banks to provide guarantees between 50-75 percent of required collaterals. The maximum guarantee is RWF 500 million for agriculture projects and RWF 300 million for other sectors, for a maturity period of up to 10 years. 

The GOR also manages the Rwanda Green Fund (FONERWA) to spur investment in green innovation.  The UK Aid Department for International Development, KFW, and other donors have invested in the fund.  FONERWA claims projects it supports have created more than 137,000 green jobs to date.

**Performance and Data Localization Requirements**

There is no legal obligation for nationals to own shares in foreign investments or requirement that shares of foreign equity be reduced over time.  However, the government strongly encourages local participation in foreign investments. 

There is no requirement for private companies to store their data in Rwanda.  Under the National Information and Telecommunication Infrastructure plan, Rwanda is pushing to become a regional ICT hub and has constructed a National Data Center.  The facility acts as the country’s central data storage facility and houses 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 it outside Rwanda or transfer it without GOR approval. 

Some investors have cited the GOR’s reluctance to support visas for expatriate staff as a significant limitation on doing business in Rwanda.  There is no formal requirement that a certain number of senior officials or board members be citizens of Rwanda. Under the 2015 Investment Code, the government allows registered those who invest a minimum of USD 250,000 to hire up to three expatriate employees, without the need to conduct a labor market test in Rwanda.  Investors who wish to hire more than three expatriate employees must conduct a labor market test, unless the available position is listed on Rwanda’s “Occupations in Demand” list. The Directorate General of Immigration and Emigration does not always honor the employment and immigration commitments of investment certificates and deals, according to a number of investors.  Investors should be aware that applicants from other EAC countries are given hiring preference over other expatriates.

While the government does not impose conditions on the transfer of technology, it does encourage foreign investors, without legal obligation, to transfer technology and expertise to local staff to help develop Rwanda’s human capital.  There is no legal requirement that investors must purchase from local sources or export a certain percentage of their output, though the government offers tax incentives for the latter. Unless stipulated in a contract or memorandum of understanding characterizing the purchase of privatized enterprises, performance requirements are not imposed as a condition for establishing, maintaining, or expanding other investments.  Such requirements are imposed chiefly as a condition to tax and investment incentives. The GOR is not involved in assessing the type and source of raw materials for performance, but the RSB determines quality standards for some product categories. 

Rwanda requires that all U.S. citizens possess a visa to enter Rwanda.  A 30-day tourist visa can be purchased for USD 30 upon arrival at Kigali International Airport or at a land border.  Accepted forms of payment include cash (Rwandan francs or U.S. dollars printed in 2006 or later) and credit cards (Visa or MasterCard).  Rwanda requires proof of yellow fever vaccination for travelers coming from a country where yellow fever is endemic or where there is an outbreak of yellow fever.  U.S. citizens planning to remain in Rwanda for more than 30 days must apply for a permit within 15 days of arrival. Departures after the visa ending date are fined on a daily basis.  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 (over 60 days) has become onerous.  Immigration authorities frequently request extra documentation detailing applicants’ qualifications and, at times, have taken several months to adjudicate work permit cases. Applicants for work permits may facilitate the process by ensuring that they travel with a) original police background checks, preferably notarized, b) educational documents on original letterhead, and c) 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 99 years, the lease period for foreigners cannot exceed 49 years, in most cases.  Such leases are theoretically renewable, but the law is new enough that foreigners generally have not yet attempted to renew a lease. Mortgages are a nascent but growing financial product in Rwanda, increasing from 770 properties in 2008 to 13,394 in 2017, according to the RDB. 

**Intellectual Property Rights**

The 2015 Investment Code guarantees protection of investors’ intellectual property rights (IPR) related to technology transfer.  As a member of the Common Market for Eastern and Southern Africa (COMESA), Rwanda is automatically a member of African Regional Intellectual Property Organization.  Rwanda is also a member of the World Intellectual Property Organization (WIPO) and is working toward harmonizing its legislation with the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  Rwanda has yet to ratify the WIPO internet treaties.

The Rwanda Development Board (RDB) and the Rwanda Standards Board (RSB) are the main regulatory bodies for Rwanda’s IPR laws.  The RDB registers IPR and provides a certificate of ownership title. Every registered IPR title is published in the Official Gazette. The fees payable for substance examination and registration of IPR apply equally for domestic and foreign applicants.  Since 2016, any power of attorney granted by a non-resident to a Rwandan-based industrial property agent must be notarized (previously, a signature would have been sufficient). The RSB 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 timely manner.  It is the responsibility of the copyright holders to register, protect, and enforce their rights where relevant, including retaining their own counsel and advisors.  Through the RSB and the Rwanda Revenue Authority (RRA), Rwanda has worked to increase protection of IPR, but many goods that violate patents, especially pharmaceutical products, still make it to market.  As many products available in Rwanda are re-exports from other EAC countries, it may be difficult to identify counterfeit goods without regional cooperation.

Several investors reported difficulties in registering patents and enforcing their IPR against infringement in a timely manner.  A few companies have expressed concern over inappropriate use of their IP.  While the government has offered rhetorical support, enforcement has been mixed.  In some cases infringement has stopped but, in other cases, companies have been frustrated with the slow pace of receiving judgment or in receiving compensation after successful legal cases.

IPR legislation covering patents, trademarks, and copyrights was approved in 2009.  The Registration Service Agency, which is part of the RDB, was established in 2008 and has improved IPR protection by registering all commercial entities and facilitating business identification and branding.  Rwanda conducts anti-counterfeit goods campaigns on a regular basis, but statistics on IP enforcement are not publicly available.

Rwanda is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.  

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**

Rwanda’s capital markets are relatively immature and lack complexity.   Many U.S. investors express concern that local access to affordable credit is a serious challenge in Rwanda.  Interest rates are high for the region, banks offer predominantly short-term loans, collateral requirements can be higher than 100 percent of the value of the loan, and Rwandan commercial banks rarely issue significant loan values.  The prime interest rate is 16-18 percent. Large international transfers are subject to authorization. Investors who seek to borrow more than USD 1 million must often engage in multi-party loan transactions, usually leveraging support from larger regional banks.  Credit terms generally reflect market rates, and foreign investors are able to negotiate credit facilities from local lending institutions if they have collateral and “bankable” projects. In some cases, preferred financing options may be available through specialized funds including the Export Growth Fund, BRD, or FONERWA.

Only eight companies have publicly listed and traded equities in Rwanda.  Rwanda Capital Market Authority was established in 2017 to regulate the capital market, commodity exchange and related contracts, collective investment schemes, and warehouse receipts.  Most capital market transactions are domestic. While offers can attract some international interests, they are rare. Rwanda is one of a few sub-Saharan African countries to have issued sovereign bonds.  Four new local currency bonds for USD 61.8 million in total were issued in 2018, with an average annual yield of 12.1 percent. BNR has implemented reforms in recent years that are helping to create a secondary market for Rwandan treasury bonds.  In November 2018, the IMF completed its tenth review of Rwanda’s economic performance under the Policy Support Instrument, which can be found here: https://www.imf.org/en/Publications/CR/Issues/2018/11/30/Rwanda-Tenth-Review-Under-the-Policy-Support-Instrument-Press-Release-Staff-Report-and-46407

**Money and Banking System**

Rwanda’s financial sector remains highly concentrated.  Around 76 percent of all bank assets are held by five of the largest commercial banks (Bank of Kigali, BPR Atlas Mara, I&M Bank, COGEBANQUE, and Equity Bank).  The largest, partially state-owned Bank of Kigali (BoK), holds more than 30 percent of all assets. The banking sector holds around 65 percent of total financial sector assets in Rwanda.  Non-performing loans constitute 6.9 percent of all banking sector assets as of June 2018. Foreign banks are permitted to establish operations in Rwanda, with several Kenyan-based banks in the country.  Atlas Mara Limited acquired a majority equity stake in Banque Populaire du Rwanda (BPR) in 2016. BPR/Atlas Mara has the largest number of branch locations and is Rwanda’s second largest bank after BoK. In total, Rwanda’s banks have assets of USD 3 billion, according to the BNR, the country’s Central Bank.  The IMF gives the BNR high marks for its effective monetary policy. BNR introduced a new monetary policy framework in 2019, which shift its tools toward inflation-targeting monetary framework in place of a quantity-of-money framework.

The private sector has limited access to credit instruments.  Prospective account holders are expected to provide proof of residency.  Most Rwandan banks are conservative and risk-averse, trading 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. Most financial services in Rwanda are VAT-exempt. 

BNR reported that commercial banks made a total net profit of USD 26 million in 2018, but their liquidity ratio was 49 percent (compared to BNR’s required minimum of 20 percent), suggesting reluctance toward making loans.  Local banks often generate significant revenue from holding government debt and from charging a variety of fees to banking customers. Credit cards are becoming more common in major cities, especially at locations frequented by foreigners, but are not used in rural areas.  Rwandans primarily rely on cash or mobile money to conduct transactions.  

In 2018, the capital adequacy ratio grew to 21.4 percent from 20.8 percent over the year, well above the minimum of 15 percent, suggesting the Rwanda banking sector continues to be generally risk averse. The number of debit cards in the country grew 8 percent year over year to 945,000 (only 18 percent of Rwandans have bank accounts), and the number of mobile banking customers grew 22 percent to 1,266,000. 

**Foreign Exchange and Remittances**

*Foreign Exchange*

In 1995, the government abandoned a dollar peg and established a floating exchange rate regime, under which all lending and deposit interest rates were liberalized.  BNR publishes an official exchange rate on a daily basis, which is typically within a 2 percent range of rates seen in the local market. Some investors report occasional difficulty in obtaining foreign exchange.  Rwanda generally runs a large trade deficit, estimated at 10 percent of GDP in 2018. The Rwandan franc depreciated against the U.S. dollar by 8.9 percent in the fiscal year ending June 2017, and 3.5 percent in the fiscal year ending June 2018, according to BNR.

Transacting locally in foreign currency is prohibited in Rwanda.  Regulations set a ceiling on the foreign currency that can leave the country per day.  In addition, regulations specify limits for sending money outside the country; BNR must approve any transaction that exceed these limits.  

Most local loans are in local currency.  In December 2018, BNR issued a new directive on lending in foreign currency which requires the borrow to have a turnover of at least RWF 50 million or equivalent in foreign currency, have a known income stream in foreign currency not below 150 percent of the total installment repayments, and the repayments must be in foreign currency.  The collateral pledged by non-resident borrowers must be valued at 150 percent of the value of the loan. In addition, BNR requires banks to report regularly on loans granted in foreign currency.  

Full guidance can be accessed here: https://www.bnr.rw/fileadmin/AllDepartment/FinancialStability/lawsandregulations/DIRECTIVE_No_09-2018.pdf 

*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.  A withholding tax of 15 percent to repatriate profits is considered high by a number of investors given that a 30 percent tax is already charged on profits, making the whole tax burden 45 percent.  Additionally, there are some restrictions on the outflow of export earnings. Companies generally must repatriate export earnings within three months after the goods cross the border. Tea exporters must deposit sales proceeds shortly after auction in Mombasa, Kenya.  Repatriated export earnings deposited in commercial banks must match the exact declaration the exporter used crossing the border. Rwandans working overseas can make remittances to their home country without impediment. It usually takes up to three days to transfer money using SWIFT financial services.  The concentrated nature of the Rwandan banking sector limits choice, and some U.S. investors have expressed frustration with the high fees charged for exchanging francs to dollars.

**Sovereign Wealth Funds**

In 2012, the Rwandan government launched the Agaciro Development Fund (ADF), a sovereign wealth fund that includes investments from Rwandan citizens and the international diaspora.  In November 2018, the fund was worth USD 58.8 million.  The ADF operates under the custodianship of BNR and reports quarterly and annually to the Ministry of Finance and Economic Planning, its supervisory authority.  ADF is a member of the International Forum of Sovereign Wealth Funds and is committed to the Santiago Principles.  ADF only operates in Rwanda.  In addition to returns on investments, citizens and private sector voluntary contributions, and other donations, ADF receives RWF 5 billion every year from tax revenues and 5 percent of proceeds from every public asset that is privatized.  The fund also gets 5 percent of royalties from minerals and other natural resources each year.  The government has transferred a number of its shares in private enterprises to the management of ADF including those in the BoK, Broadband Systems Corporation (BSC), Gasabo 3D Ltd, Africa Olleh Services (AoS), Korea Telecom Rwanda Networks (KTRN), and the Dubai World Nyungwe Lodge.  ADF invests mainly in Rwanda. While the fund can invest in foreign non-fixed income investments, such as publicly listed equity, private equity, and joint ventures, the AGDF Corporate Trust Ltd (the fund’s investment arm) held no financial assets and liabilities in foreign currency, according to the 2017 annual report. 

							7. State-Owned Enterprises					

Rwandan law allows private enterprises to compete with public enterprises under the same terms and conditions with respect to access to markets, credit, and other business operations.  Since 2006, the GOR has made efforts to privatize SOEs; reduce the government’s non-controlling shares in private enterprises; and attract FDI, especially in the ICT, tourism, banking, and agriculture sectors, but progress has been slow.  Current SOEs include water and electricity utilities, as well as companies in construction, ICT, aviation, mining, insurance, agriculture, finance, and other investments. The government continues to own significant and sometimes controlling interests of companies in mining, construction, banking, hotels, food production, and other sectors.  Some investors complain about competition from state-owned and ruling party-aligned businesses. SOEs and utilities appear in the national budget, but the financial performance of most SOEs is only detailed in an annex that is not publicly available. The most recent budget report of the OAG also covers SOEs and has sections criticizing the management of some of the organizations.  That public report can be found here: (http://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 line ministry. 

The GOR supports some public enterprises directly from the national budget through net lending estimated at about 2 percent of the GDP in 2018.  About 1 percent of GDP is a subsidy to RwandAir for its operational and capital expansion, and the rest of lending includes support to export promotion activities and debt-servicing costs for other public enterprises.

State-owned non-financial corporations include Ngali Holdings, Horizon Group Ltd, Rwanda Civil Aviation Authority, REG, Water and Sanitation Corporation, RwandAir, National Post Office, Rwanda Printery Company Ltd, King Faisal Hospital, Muhabura Multichoice Ltd, Prime Holdings, Rwanda Grain and Cereals Corporation, Kinazi Cassava Plant, and the Rwanda Inter-Link Transport Company.  State-owned financial corporations include the NBR, Development Bank of Rwanda, Special Guarantee Fund, Rwanda National Investment Trust Ltd, ADF, BDF and the Rwanda Social Security Board.

The GOR has interests in the BoK, Rwanda Convention Bureau, BSC, CIMERWA, Gasabo 3D Ltd, AoS, KTRN, Dubai World Nyungwe Lodge, and Akagera Management Company, among others.  

Ruling Party (Rwandan Patriotic Front) investment arm Crystal Ventures has subsidiaries such as Inyange Industries, NPD Ltd., Bourbon Coffee, ISCO Security, Ruliba Clays, Real Contractors, East African Granite Industries, Nexus, and Stone Craft. 

**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, 56 companies have been fully privatized, seven were liquidated, and 20 more were in the process of privatization by 2017 (latest data available).  The RDB’s Strategic Investment Department is responsible for implementing and monitoring the privatization program. 

Some observers have questioned the transparency of certain transactions, as a number of transactions were undertaken through mutual agreements directly between the government and the private investor, some of whom have personal relationships with senior government officials, rather than public offerings.  In February-March 2017, the government sold its 19.8 percent stake in I&M Bank to help finance its equity stake in the Bugesera Airport, currently under construction.  

In 2016, the OAG produced a report criticizing RDB’s management of the privatization program. The report can be accessed here: http://www.oag.gov.rw/fileadmin/user_upload/Performance_Reports/STRATEGIC_MANAGEMENT_OF_PRIVATIZATION_ACTIVITIES.pdf 

							8. Responsible Business Conduct					

There is a growing awareness of corporate social responsibility (CSR) within Rwanda, and several foreign-owned companies operating locally implement CSR programs.  Rwanda implements the OECD’s Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas.  Rwanda also implements the International Tin Supply Chain Initiative tracing scheme.  In 2016, the Better Sourcing Program 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 2018 Corruption Perception Index putting the country among Africa’s four least corrupt nations and 48th in the world.  The government maintains a high-profile anti-corruption effort, and senior leaders articulate a consistent message emphasizing that combating corruption is a key national goal. The government investigates corruption allegations and generally punishes those found guilty.  High-ranking officials accused of corruption often resign during the investigation period, and many have been prosecuted. Rwanda has ratified the UN Anticorruption Convention. It is a signatory to the OECD Convention on Combating Bribery. It is also a signatory to the African Union Anticorruption Convention.  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 for 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 OAG 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, RURA, and the NSB also enforced regulations regarding corruption. 

A new corruption law was passed in September 2018, extending definitions of corruption and embezzlement and removing the statute of limitations on such crimes.  It also removes criminal liability for a person who gives or receives an illegal benefit and informs the justice organs before the commencement of criminal investigation by providing information and evidence.

The new law can be accessed here: http://www.rlrc.gov.rw/fileadmin/user_upload/Laws2/ percent5BHOME percent5DMOST percent20RECENT percent20LAWS/New percent20law percent20fighting percent20against percent20Corruption percent20 percent282018 percent29.pdf 

There are no local industry or non-profit groups offering services for vetting potential local investment partners, but the Ministry of Justice keeps judgments online, making it a source of information on companies and individuals in Rwanda at www.judiciary.gov.rw/home/  .  The Rwanda National Public Prosecution Authority issues criminal records on demand to applicants at www.nppa.gov.rw  . 

*Resources to Report Corruption*

Contact at government agency or agencies are responsible for combating corruption:

Mr. Anastase MurekeziChief OmbudsmanOmbudsman (Umuvunyi)P.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

Contact at “watchdog” organization

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

							10. Political and Security Environment					

Rwanda is a stable country with relatively little violence.  According to a 2017 report by the World Economic Forum, Rwanda is the ninth safest country in the world.  Investors have cited the conducive political and security environment as an important driver of investments.  A strong police and military provide a security umbrella that minimizes potential criminal activity. 

The U.S. Department of State recommends that U.S. citizens exercise caution when traveling near the Rwanda-Democratic Republic of the Congo (DRC) border, given the possibility of fighting and cross-border attacks involving the Democratic Forces for the Liberation of Rwanda (FDLR) and other armed groups in the region. The FDLR includes former soldiers and supporters of the regime that orchestrated the 1994 Genocide against the Tutsi.  Relations between Burundi and Rwanda are tense. There is a risk of cross-border incursions and armed clashes, and accusations in both directions contend that the countries harbor their neighbor’s rebel forces.  In 2018, there were a few incidents of sporadic fighting in Nyaruguru district and Nyungwe National Park. 

Grenade attacks aimed at the local populace occurred on a recurring basis between 2008 and 2014 in Rwanda.  There have been several cross-border attacks in Western Rwanda on Rwandan police and military posts reportedly since 2016.  Despite occasional violence along the Rwanda-DRC border 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.  Relations with Uganda are also increasingly tense, but leaders continue to emphasize they are seeking a political solution.

Please see the following link for State Department Country Specific Information: https://travel.state.gov/content/travel/en/international-travel/International-Travel-Country-Information-Pages/Rwanda.html

							11. Labor Policies and Practices					

General labor is available, but Rwanda suffers from a shortage of skilled labor, including accountants, lawyers, engineers, tradespeople, and technicians.  Higher institutes of technology, private universities, and vocational institutes are improving and producing more and better-trained graduates each year. In 2017 and 2018, the Ministry of Education (MINEDUC) closed several colleges due to sub-standard practice allegations.  The Rwanda Workforce Development Authority sponsors programs to support both short and long-term professional trainings targeting key industries in Rwanda. Carnegie Mellon University opened a campus in Kigali in 2012–its first in sub-Saharan Africa–and currently offers a Master of Science in Electrical and Computer Engineering   and Master of Science in Information Technology.  In 2013, the nonprofit university program, Kepler, was established for students to work toward a U.S.-accredited degree through online learning and in-person seminars.  Oklahoma Christian University offers an online Master of Business Administration program with on-site support in Kigali. In 2012, the government extended basic compulsory education from nine to 12 years.  In 2009, the government designated English, rather than French, as the language of instruction for students from grade four onwards. 

Investors are strongly encouraged to hire Rwandan nationals whenever possible.  According to the Investment Code, a registered investor who invests an equivalent of at least USD 250,000 may recruit three foreign employees.  However, a number of foreign investors reported difficulties importing qualified staff in accordance with the Investment Code due to Rwandan immigration rules and practices.  In some cases, these problems occurred even though investors had signed agreements with the government regarding the number of foreign employees.  

Companies find skill deficits in many sectors when hiring.  The Rwandan education system continues to struggle with a shortage of resources and capacity, including due to a shortage of teachers qualified to teach in English after the 2009 transition away from French.  A study of dropout and repetition rates conducted in collaboration with MINEDUC and UNICEF published in 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 higher secondary level).  The official 2018 literacy rate for individuals aged 15 and above is 69.5 percent for women and 77.6 percent for men, according to the GOR. Functional literacy rates are lower according to independent evaluations, particularly in rural areas.  

Rwanda has ratified all of the International Labor Organization’s eight core conventions.  Policies to protect workers in special labor conditions exist, but enforcement remains inconsistent.  The government encourages, but does not require, on-the-job training and technology transfer to local employees.  The law restricts voluntary collective bargaining by requiring prior authorization or approval by authorities and requiring binding arbitration in cases of non-conciliation.  The law provides some workers the right to conduct strikes, subject to numerous restrictions, but strikes are very rare.  There is no unemployment insurance or other social safety net programs for workers laid off for economic reasons.  The legal framework for employment rights for disabled persons is not as strong as in the United States, but the government and some employers are making efforts to offer reasonable accommodations. 

In 2000, the government revised the national labor code to eliminate gender discrimination, restrictions on the mobility of labor, and wage controls.  NISR’s 2016/2017 Fifth Integrated Household Living Conditions Survey, released in December 2018, found that approximately 10.4 percent of children in Rwanda ages 6-17 are engaged in economic activities, 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 sector, primarily on small, family-owned farms that sell harvests to larger cooperatives. The U.S. Department of State have no evidence that children are employed by either tea producers or tea cooperatives in Rwanda.  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 and Rwanda Social Security Board pension contributions. For full-time workers, these payments amount to more than 30 percent of take-home pay, which can be a disadvantage if competing firms are in the informal economy and not compliant with these requirements. 

Labor laws are not waived in order to attract or retain investment.  There are no labor law provisions in SEZs or industrial parks, which differ from national labor laws.  Collective bargaining is not common in Rwanda. Few professional associations fix minimum salaries for their members and some investors have expressed concern that labor law enforcement is uneven or opaque.

In 2018, a new labor law was passed.  The law states the Ministry of Labor may establish a minimum wage by ministerial order but does not specify an amount.  Among changes in the new law, an employer can now suspend an employee in writing for a period not exceeding 30 days without pay, but the salary will be repaid if the employee proves innocence after the administrative investigation.  The minimum working age remains 16, with an exception for 13-15 year olds to perform light work only in the context of an apprenticeship. Damages paid for an employee victim of unfair dismissal cannot go below three months of salary nor exceed six months of salary.  For employees with more than ten years of experience with the same employer, damages cannot exceed nine months of net salary. The new law imposes a requirement that both parties consent to any amendment to an employment contract, if the amendment results in changes in salary or other benefits.  The probation period has been reduced from six months to three. An employee dismissed for economic or technical reasons and whose dismissal does not last more than six months is entitled to be reinstated without competition when he or she meets the profile required for the position to which the employer seeks to fill. 

More information on major changes can be at the Rwanda Law Reform Commission website here: http://www.rlrc.gov.rw/index.php?id=82&tx_news_pi1 percent5Bnews percent5D=61&tx_news_pi1 percent5Bcontroller percent5D=News&tx_news_pi1 percent5Baction percent5D=detail&cHash=b69f6019dcb0ff868f7ef72b5b034de1  

Full the new labor law, see: https://www.mifotra.gov.rw/fileadmin/news_import/New_Labour_Law_2018.pdf 

							12. OPIC and Other Investment Insurance Programs					

The Overseas Private Investment Corporation (OPIC) has provided financing and political risk insurance to more than a dozen 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 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; Rwanda and the United States are discussing potential updates to this agreement. 

							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*

Inward Direct Investment according to IMF’s Coordinated Direct Investment Survey (http://data.imf.org/CDIS  ).  Data on Rwandan outward FDI is not available.

*Table 4: Sources of Portfolio Investment*

Data not available; data on Rwanda equity security holdings by nationality is not available.  According to a 2017 BNR report, portfolio investment remains the lowest component of foreign investment in Rwanda mainly due to the low level of financial market development.  Portfolio investment stock increased to USD 100.5 million in 2016, a 3 percent increase from 2015 levels. In 2016, Rwanda recorded foreign portfolio inflows of USD 3 million compared to USD 2.5 million in 2015.  There is no more recent data available for portfolio investment.

							14. Contact for More Information					

Matthew SteedEconomic and Commercial OfficerUnited States Embassy2657 Avenue de la Gendarmerie, P.O. Box 28 Kigali, Rwanda+250-252-596-538KigaliEcon@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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