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Rwanda announces new doing business reforms

The Rwanda Development Board on Tuesday announced the latest Doing Business Reforms that were completed over the last seven months, aimed at further improving Rwanda’s doing business environment for stronger private sector growth.

The reforms were guided by the global benchmarking tool, the World Bank Doing Business rankings, which ranks 190 economies on the ease of Doing Business. The ranking tracks 11 indicators that measure the environment within which businesses operate. Rwanda is currently ranked as the 2nd easiest place to do business in Africa and 1st in East Africa.

This year, 14 reforms were implemented in seven indicators, such as; Dealing with construction permits, Protecting minority investors, Starting a business and Paying Taxes. The new reforms are expected to contribute significantly in the effort to attract increased private local and international investment.

The key reform that was completed this year is the passing of the new company law. The Company law of 2009 was repealed and replaced to incorporate global best practice trends in corporate regulation. The provisions of the new law will enhance the rights of minority shareholders. For instance, shareholders owning 5% shares in a company are now able to call for a shareholder meeting and place items on the agenda.

The law introduces flexible reporting obligations and lean management structures for SME’s. Small private companies are not required to have a company secretary, accountant or auditor. They are also permitted to opt out of the requirement to prepare audited accounts and other disclosure requirements. This is extremely important as small businesses which make up the vast majority of Rwandan businesses and are vital component in building a strong economy, often do not have the resources to undertake complex financial and accounting reporting. We therefore need to make sure that they can focus on growing their business rather than completing unnecessarily detailed paperwork.

The law also enhances corporate disclosure and transparency. Directors and majority shareholders must disclose any personal material interest that they might have in a transaction that a company is undertaking, and directors must disclose their remuneration and benefits to the shareholders.

An additional important reform for SME’s is the streamlining of criteria for businesses that are required to purchase an Electronic Billing Machine. The Ministerial Order that governs the use of EBMs was amended to clarify that only VAT registered businesses are required to purchase an EBM. This further reduces the cost burden on SME’s.

Another significant reform that was introduced is a reduction in the time and costs to obtain a construction permit. The requirements for businesses to get construction permits have been streamlined and modernized. The online Construction Building Permitting System (BPMIS) has been upgraded with new and improved features that will facilitate quicker processing of applications and easier access to information. The reforms will also address the common complaint raised by businesses of the high costs involved in getting a construction permit. A risk based assessment has been introduced which will see low risk buildings benefitting from abridged permit requirements. As such, costly requirements such as geotechnical tests will be waived for this low risk category.

Other key reforms will lead to; reduction in the time to transfer commercial and industrial properties from 30 days to 1 day through the use of the online land system, reduction in the number of procedures and documents required to trade across borders, reduction in the Electricity tariffs for industries and free access to Judicial decisions on the judiciary website.

Most of the reforms this year built on gains made in the Government’s continuing business reforms agenda, with a continued strong adaptation of automation and online services to enhance efficiencies in the delivery of public services by reducing cost, time and procedures.

Hon. Clare Akamanzi, the Chief Executive Officer at the Rwanda Development Board speaking at the press conference said that, “Rwanda has consistently implemented bold reforms to make our business environment even more attractive for investment and to establish Rwanda as one of the most competitive economies globally” She also added that, “We are strongly committed to continue implementing such reforms as we aim to provide a strong foundation for the growth of SMEs, which are the backbone of our economy.”

Over the course of the next few months, Rwanda Development Board will engage key stakeholders to create awareness on the reforms, encourage use of the reforms and identify further areas for future reforms.

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