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1st Edition

PSF ADVOCACY ACHIEVEMENTS “Fueling Business Growth in Rwanda”

www.psf.org.rw

www.psf.org.rw

Fueling Business Growth in Rwanda

Contents Statement 4 Foreword 5 Understanding how PSF Advocacy works

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Achievement #1 9 Achievement #2 11 Achievement #3 13 Achievement #4 17 Achievement #5 17 Achievement #6 18 Achievement #7 19 Achievement #8 20 Achievement #9 21 Other selected psf Advocacy Achievements

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PSF ADVOCACY ACHIEVEMENTS

Statement of Rwanda for the support and understanding in the establishment of the Public-Private Dialogue (PPD) Secretariat—a framework for Private Sector and Government to engage in a dialogue on high level issues.

Benjamin GASAMAGERA Chairman - PSF

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steemed members of PSF and entire business fraternity, Government and development partners, I wish to convey my sincere gratitude for the unwavering support that you provide in our continued efforts to advocate for a better business environment.

Experience has taught us that business advocacy is such a resource-driven activity. Resource in terms of time, expertise or skills and money. I must confess none of the above has ever been in adequate supply at PSF but we have managed to achieve a lot as showcased in this publication. It is at this moment that I commend the Government

Through the PSF structures, we have managed to gather pertinent high level issues affecting doing business.

As a result, there is now constructive dialogue and it takes considerably lesser time to reach a consensus. As the Commissioner General of RRA explains in this publication, our business people ought to appreciate and understand the process it then takes to put in practice a given decision. Patience is all we are asking from them, much as we acknowledge the notion that to them “time is money”.

This publication highlights what is largely regarded as major breakthroughs in PSF Advocacy agenda in the recent past; Among the major achievements has been the boost to Rwanda’s transport sector— an important aid to trade; lifting the ban on importation of Right Hand Drive Trucks and the parallel removal of import duty of 5% and VAT of 18%.

As the business community anxiously waits for this decision to be officially

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gazetted into law, PSF commends the Government for this development.

The Establishment Census of 2012 indicates that over 80% of businesses in Rwanda are Micro Small and Medium Enterprises (MSMEs), majority of which operate out of Kigali, in the countryside.

Their growth suffers humps and bumps.

To this end, PSF has strengthened advocacy at the grassroots by lobbying the local government and this saw the appointment of a member from the business community to the District Executive Council to represent the interests of the private sector.

Going forward, I wish to commend staff, members of the PSF Board and District representatives for their tireless efforts in fostering the advocacy tools, including but not limited to; Research, position papers, communication tools, meetings, conferences and targeted workshops.

Finally, I call upon all business people to seize opportunities that emerge as a result of advocacy breakthroughs. In most cases there are trade-offs made by Government in anticipation of bigger impact, counting on a vibrant private sector to rise to the occasion and seize the opportunities.

Looking forward to your continued support

Fueling Business Growth in Rwanda

Foreword

Gerald MUKUBU Ag. CEO - PSF

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irst and foremost, I wish to extend my sincere gratitude to all staff that form the PSF Advocacy team for their tireless efforts in making sure that the concerns, opinions and aspirations of the business people are persued and concluded with a big vision of steering Rwandan economy to be private sector driven.

Without support from our esteemed stakeholders, we could only achieve negligible results. The PSF Board has been very instrumental in providing strategic guidance especially on advocacy issues of national interest.

As PSF, we are mandated to represent the views and interests of the private sector. We are the voice and channel through which Rwandans and foreigners who choose to do business in Rwanda,

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regardless of their sizes and type, use.

This is an obligation one would describe as “bigger than life�. Without support from our esteemed stakeholders, we could only achieve negligible results. The PSF Board has been very instrumental in providing strategic guidance especially on advocacy issues of national interest.

Thanks to all PSF leaders at District and Province levels for the good representation of the Federation. Among other reasons that fuelled the success is the tremendous government support. Our Advocacy efforts are made alot easier with the support from government.

I wish to single out institutions like; MINICOM, MINECOFIN, RRA, RBS, MINEAC, RDB, among others. The Development partners, notably; Trade Mark East Africa (TMEA) Rwanda and GIZ. Chambers and member associations are very important components of PSF Advocacy agenda, especially in generating sector specific issues of national interest and addressing some of them. Special recognition goes to those chambers and associations that have taken up the challenge of representing and advocating for their members.

PSF ADVOCACY ACHIEVEMENTS

PSF second Vice chairman, MR. Francois RUTAYISIRE, presents views of the private sector during a round table of top business leaders(PSF Members) with Right Hon. Prime Minister at Serena Hotel, Kigali. Coordinating the session, in the background is Mr. Antoinne MANZI, the Director of Advocacy and institution’s relations.

Understanding how PSF Advocacy works

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is represented by the PSF and public sector by Rwanda Development Board (RDB). The Joint PPD Secretariat was established to manage the PPD process. This new structure provides consistent organizational leadership of the PPD which was missing in all previous attempts to establish a functioning PPD. It is a platform between the private and public sector in Rwanda that fosters discussion on business issues through dialogue. It is also an ample space for splendid ideas that can spur economic development.

SF undertakes persuasive activities in special forms called Advocacy Tools intended to change laws, regulations, and business attitudes and the approach of government policies and strategies geared towards creating a hospitable business climate for all its members.

PSF conducts its advocacy through the Private-Public Dialogue (PPD). In October 2012, following several attempts to better structure public-private dialogue, a new PPD structure was created to address the prior challenges to PPDs and provide a framework for Private Sector and Government to engage in a dialogue on high level issues. In PPD the Private Sector

The users or beneficiaries of PPD are; Business owners, Cooperatives and Associations, Chambers of PSF and

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Public Institutions also use this mechanism as a channel of economic policies for business reforms. It is intended to; build consensus through dialogues, avoiding duplication of efforts in solving similar business issues and thus to ease doing business in Rwanda.

As the need for EAC integration grows more pressing, each member country needs to secure the most favorable position possible. The Government of Rwanda has a very intensive regional advocacy Programme at different levels. Country expert teams are constantly engaged in negotiations with other EAC countries and lobbying activities at regional institutions in Arusha. These activities are shaping regional legislation and facilitating its implementation so as to be as beneficial as possible for the Rwandan economy.

The business community and particularly Private Sector Federation an important role to play in this process. PSF represents the business community, identify research and propose key priorities for EAC integration to government negotiators. PSF also advocates actively through the regional business organisations and sector specific regional cooperation. To this end, many possibilities have been raised by businesses, of which many are still pending.

For example, PSF suggested allowing the unrestricted movement of grains (maize, rice, wheat) across East Africa.

PSF member presents her business concerns.

ideas on a given policy issue and prepare strong arguments either for or against it. The aim of advocacy research is to prepare a high quality document.

PSF also hosts “recognition events� such as banquets, lunches, or other special events where policymakers, key members and representatives from development partners and other organizations that support PSF cause are invited.

In doing this, PSF issues press releases that commend policymakers for their work and support. Also, PSF organizes periodic meetings that bring together key players who do not normally interact on a particular issue such as national, regional and local representatives or officials from diverse departments or regulatory agencies related to the issues.

PSF Advocacy Process In the preparation for advocacy, PSF starts with the design of the Advocacy Programme and Action Plan. The Advocacy Programme is a general document describing the advocacy approach for a certain period of time.

PSF conducts Advocacy Research once the priority issues have been identified. Here, an elaborate policy solution is defined and a detailed position document is developed, clearly stating the rationale and supporting evidence for the proposed solutions. This document helps in structuring

In organizing roundtable meetings PSF develops an issue paper which is distributed prior to the event. During the meeting itself, attendants are encouraged to actively participate by giving their opinions.

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PSF ADVOCACY ACHIEVEMENTS

Measuring Success

addressing advocacy issues, describing the progress made and the current status.

The efficiency of every Advocacy Programme needs to be periodically assessed. This helps to ensure that the goals and objectives of advocacy efforts are achieved in a reasonable time frame. The advocacy committee accurately assesses the effectiveness of their strategy and then makes the necessary changes. Before any suggested modification is implemented, consideration is given to how the change might affect other components of the advocacy strategy. At the level of each advocacy issue PSF monitors and reports on the implementation of the advocacy plan.

Reporting Progress PSF reports any positive results from the assessment to members and other key stakeholders through e-mails, terminal reports (annual activity report) e-newsletter, briefs to demonstrate the success of advocacy efforts. Usually, the PSF advocacy report include the following: List of planned vs. implemented advocacy activities per prioritized advocacy issue; The narrative section for each advocacy issue explaining the reasons why the issue was prioritized and Advocacy channels and tools utilized to address the issue; The status of the issue before and after the advocacy issue; the Role of main stakeholders; Table detailing cost of advocacy effort

Another way that PSF measures success is the use the Advocacy Issue Tracker. The Advocacy Issue Tracker is used to monitor the Advocacy Programme. It provides background information on advocacy, recommendations made for

A cross section of top PSF members following an advocay session aimed at presenting their challenges to policy makers.

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Fueling Business Growth in Rwanda

Achievement #1 The Single Customs Territory: Northern Corridor States Save Over US$25million

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Presidents; Yoweri Kaguta Museveni, Paul Kagame and Uhuru Kenyatta inspecting the operations of the Port of Mombasa recently during the regional infrastructure summit.

arly estimates based on just a 20ft container indicate that the tripartite “Single Customs Territory” (SCT) including; Rwanda, Uganda and Kenya may save well over USD25million per year, as confirmed by the Rwanda Finance Minister, Ambassador Clever Gatete in a telephone interview.

of Mombasa plus many others that have chosen to enter into partnerships with Kenyans. Just recently, under the auspices of Kenya Revenue Authority (KRA) and Rwanda Revenue Authority (RRA), over 80 Freight Forwarders benefited training on the Single Customs Territory (SCT) System. “This has happened because there is mutual recognition of Clearing Agents under the tripartite trade arrangement under the Northern Corridor Integration Projects,” said Mr Seka.

According to RRA, the cost of clearance, excluding transport, of 20-feet containers will reduce by 50 per cent from $383 to $193. Traders will, therefore, save about $45m annually from reduced clearance costs, basing on 2012 statistics which show that over 237,000, 20-feet containers destined to Rwanda and Uganda, were cleared through Kenya.

The Private Sector Federation (PSF) and Trademark East Africa (TMEA), have been very supportive in terms facilitating members of the private sector of various disciplines to partake in the negotiations and implementation of the Single Customs Territory.

Practically, a Single Customs Territory is trade facilitation stretching beyond borders of individual member states, entailing simulating common practices, procedures and procedures. Ordinarily, countries will maintain their own tax systems and procedures but they will be harmonized under the SCT regime. Individual customs divisions of each member states in the tripartite arrangement shall maintain their independence and sovereignty but their practices, procedures shall get harmonized.

Once fully implemented, it is expected to eradicate barriers to trade by adopting a central model of clearance of goods, whereby taxes and assessments will be done only at the first point of entry and, thus, ensure faster clearing of goods as well as reduction in the cost of doing business. The ultimate objective is to facilitate trade within the three partner states.

Mr Seka Fred, the Chairman of Rwanda Clearing and Freight Forwarders Association (ADR) observes that despite of a few challenges, the implementation of the Single Customs Territory between Uganda, Rwanda and Kenya is making positive headways. He cites the recent allowing of over 30 private Rwandan clearing and forwarding firms to operate at the Port

In the Tripartite arrangement between the three countries along the northern corridor, Rwanda was given responsibility of overseeing the expeditious implementation of; single customs

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territory, the single tourist visa, and the Regional ID Projects.

She then automatically became the Chair of the Task Force spearheading the Single Customs Territory.

corridor. At each entry point (a 20ft container) would spend about US$100, making it around US$400 for Rwandan destined cargo.

Of course not mentioning the delays that as well translate into costs. With SCT there will be single clearance at the first point of entry (at Mombasa Port) and then transit cargo will move unhampered with way up to its destination. An electronic cargo tracking system has also been embedded to ensure safety and seamless movement of all transit cargo.

Why is it Important?

In trade, experience has shown that the biggest constraints which traders; particularly importers and exporters face are; both tariff-related barriers and non-tariff barriers (NTBs). For Tariff Barriers, this is an area that EAC has registered tremendous achievements over the last 10 years of implementing the customs union. Commodities produced within the EAC now enjoy zero import duty when crossing borders—but, strictly upon presentation of the certificate of origin.

Stakeholders Speak Out Mr. Fred Seka the Chairman of Rwanda Freight Forwarders and Clearing Agents is quite optimistic. He says systems opens up bigger opportunities for Rwandan Clearing and Forwarding Agents. “We happy about the single customs territory. It definitely exposes us to constructive competition in the region. Financially, it means that our members (of ADR) will make much money and the cost of doing business will hopefully reduce eventually. And of course the duration of time release is getting reduced, meaning the increased turnover”, he clarified. He dispels fears that with the introduction of the system clearing agents will be driven out business. “Legally, it is still a requirement by RRA for importers and exporters to use clearing ad forwarding agents. There won’t be any business loss. In fact, they use us even more in a more efficient manner, meaning we are making more money”. Seka calls on Governments for more investment in warehousing facilities—calling for expeditious execution of the Rwanda Hub Project; which aims at developing Rwandan plots abroad like; in Mombasa, Isaka Dry Port and Djibouti.

For NTBs, that is where the biggest problem lies. Studies indicate that the cost of doing business within EAC is largely escalated by delays of transit cargo as a result of; weighbridges, customs checkpoints and lengthy procedures and documentation, police roadblocks etc. Outdated and inefficient border procedures, inadequate infrastructure and lack of reliable logistics services often mean high transaction costs and long delays, for particularly landlocked economies of EAC; Uganda, Rwanda and Burundi. Moreover, the more costly and time-consuming it is to export or import, the more difficult it is for local companies to be competitive and to reach international markets. A study on Sub Saharan Africa show that reducing inland travel time by 1 day increases exports by 7%.

SCT aims to eliminate both tariff and non-tariff related trade barriers to reduce the cost of doing business.

Gerald Mukubu, the acting CEO of the Private Sector Federation said the initiative would turn around the fate of many crossborder businesses by making them more efficient and profitable.

“Traders have complained about the congestion and lack of space at the Port of Mombasa and Dar, which bring about unnecessary increases in tariffs. The single customs territory is definitely going to solve many of these barriers suffered by the business community,” Mukubu said.

Notably, traders will make huge amounts of savings at the end of the day because expenses like Bond Declaration, which even involves locking up operating capital, will be scrapped.

Additionally, SCT eliminates multiple declarations of goods in transit—this saves both time and money for traders. Before, a Rwandan importer would be subjected to multiple declarations at every entry border point while moving across the northern

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Fueling Business Growth in Rwanda

Achievement #2 Scrapping VAT for Higher Telephony Penetration VAT (18%) on Bonus Airtime

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mmanuel Dusenge (photo withheld on request), aged 20, is a street vendor of Tigo, MTN and Airtel airtime and Modems. He operates in Kabeza at the outskirts of Kigali City. He dropped out of school in form two due to lack of school fees. “My father died. My mother looks after our family with the meager income she derives from a market stall selling dry beans in Kimironko Market. Time reached when she could not afford my school fees not even scholastic materials. I decided to quit,” Emmanuel narrates his ordeal. Life became harder after he spent over a year at home doing literally nothing. “I realized I was a useless citizen, just eating and sleeping “. One day, a friend inspired him into vending airtime and his mother gave her startup capital of only Rwf50, 000. That is exactly 3 years ago.

Today, Emmanuel’s operating capital has grown to over rwf1.5million. He returns a profit of between 100,000Rwf and 250,000rwf a month on just the sale of airtime and modems. He is indeed proud of his job.

Vendors of telecom service providers will benefit form scrapping of VAT on Bonus Airtime.

telecoms would re-think giving out such freebies in promotional campaigns.

In a bid to increase on mobile penetration in Rwanda, Telecommunication companies were innovative enough to create an incentive for its clients. This incentive came in form of bonus airtime which was awarded to clients after buying airtime and the amount of bonus given depended on the amount of airtime bought by the client.

However, the bonus airtime awarded to clients attracted taxes in form of VAT and Excise duty yet it is technically categorized as a discount. Therefore taxes should have only been charged on the airtime sold as it is an income excluding bonus airtime that is categorized as a discount.

This is further supported legally by Article 6 of Law No.26/2006 of 27/05/2006 which states that “while on locally manufactured products, (tax) shall be calculated to selling price”.

He explains that promotions rolled out by Telecoms are a very big factor in determining his daily turnover. “Recently all telecoms introduced the promotion of offering bonus airtime to their buyers. Bonus airtime varies per telecoms depending on their intentions and sales targets. This alone can increase my daily sales to almost double”.

Happy days of Emmanuel could be short lived if Government introduced VAT and excise duty on bonus airtime, as

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PSF ADVOCACY ACHIEVEMENTS

The charging of VAT and Excise duty on bonus airtime did not only reduce on the mobile penetration margins but also increased the cost of doing business for Telecommunication companies. This discouraged the telecommunication companies from investing in other incentives thus affecting mobile penetration and usage levels and in a long-run leading to tax reductions with low levels of penetration.

both regional and international hence affecting revenues.

This is part of what causes exorbitant roaming charges.

With the mandate of advocating for businesses for profitability and private sector development purposes, PSF engaged key stakeholders that included; regulatory bodies (RURA), concerned government departments and their supervisory ministries in a bid to advocate for the total removal of taxes levied on Bonus airtime.

RRA Commissioner General, Mr Tusabe Richard.

It is through dialogues initiated and facilitated by PSF that the resolution of removing any tax (VAT and Excise) on Bonus airtime was adopted for implementation. In that regard, Telecommunication companies that had already paid taxes related to bonus would get a tax credit to compensate them.

In an exclusive interview with RRA Commissioner General, Mr Tusabe Richard to assess the progress so far made on both issues, he said: “We are still in discussion with industry players and partners and the progress is quite impressive.

In the event that VAT on bonus airtime and international calls is scrapped, it will definitely deepen ICT penetration in the country. Today, penetration stands at over 60% for voice, but considerably lower for data—in the region of about 20%. For instance, as RRA we managed to roll-out ITbased tax administration initiatives because of the good ICT infrastructure across all the territorial boundaries of Rwanda.

We acknowledge the fact that Telecoms have invested in strong networks and now possess massive capacity at their disposal. Such investment will yield lesser returns if usage or uptake is low. The bigger picture lies in projecting higher economic benefits in the future other than suffocating the blossoming sector players. These are policy trade-offs in the interest of sustainable growth in the long-run. For international calls the cheaper it is to call, the higher the volume of traffic and thus revenues from “interconnection levy”. Clearly, as the CG illustrates, this is projected to be a win-win for both Government and Private Sector.

VAT (18%) on International Calls In a related development, the domestic tax law provides for taxation of International calls whereas according to international best practices, international calls should not attract taxes. Furthermore, the issue was addressed under the DUBAI treaty on International Telecommunication Regulation awaiting Rwanda’s ratification so that it is applied retroactively.

This act has led to an increase in the cost of doing business with the Telecom companies as well as derailing the strategy of facilitating business operations across borders and internationally.

It has led to clients adapting to foreign networks for easier and cheaper ways of facilitating their business transactions

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Fueling Business Growth in Rwanda

Achievement #3 Lifting Ban on RHD Trucks, and Removal of VAT and Import Duty: Owners, Drivers Upbeat

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wanda banned importation of Right Hand Drive (RHD) vehicles hoping that by today completely be phased off the roads of this landlocked East African nation.

Government cited safety as the major reason for this decision in 2005. In contrast, as we all see, the majority of foreign trucks that come to Rwanda carrying our imports are RHD since Kenya, Uganda and Tanzania drive on the left.

Latest RRA vehicle registration data shows that 44% of the total truck fleet is still RHD vehicles; 35% of those crossed Rwanda’s borders in 2012.

Trucks crossing Gatuna Border.

that they buy expensive LHD Trucks from Europe. That, more and more accidents are emanating from changed steering RHD wheels so as to comply with the LHD since it is cheaper and affordable. That, there is significant loss of revenue from import duties. That, trucks travel longer distance on the left side regionally in the East African area. According to RRA customs statistics, the biggest percentage of the Cargo imported to Rwanda and Cargo exported out of Rwanda is transported by foreign registered vehicles compared to Rwanda’s registered vehicles.

So this ban is clearly not increasing safety substantially in the international (heavy) trucking sector, though it may do so in the domestic sector. In fact, this actually compromises the safety of Rwanda’s international transporters, as the majority of their journey to the ports is spent on the left hand side of the road. This is 95% of the distance travelled in the Northern Corridor (Kigali-Mombasa route) and 89% of that travelled in the Central Corridor (Kigali- Darer salaam route). The ban on registration of RHD vehicles in Rwanda was not achieving its safety aims in the international transporter segment of the market, and was compromising the cost competitiveness of business operators in this particular sector.

Since 2008, PSF has persistently lobbied the Government to lift the ban. The good news is that the ban has been lifted, although pending passing into law when it finally gets gazetted. This is projected to improve on the competitiveness of Rwandan Transporters in cross borderlogistics handling which will increase revenues and reduce on the cost of doing business as RHD vehicles are cheap and more affordable.

Over the years, the ban sparked off debates and a number of related issues have made Rwandese transporters uncompetitive compared to the other East African Community member countries. Transporters have relentlessly argued

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Removal of 5% Import Duty, VAT on Imported Trucks

The difference in VAT treatment means that the cost of importing trucks is at least 18% lower in the other EAC countries, relative to Rwanda. This is yet another reason; together with the issues of the road toll and RHD trucks that gives transporters an inspiration of setting up their businesses in neighboring countries.

In a related development, under the new Road Freight Industry Competiveness policy as approved by the Cabinet, the 5% import duty was removed to level the playing field for Rwandan transporters with their counterparts in neighboring EAC member states.

PSF tirelessly engaged RRA and the Ministry of Trade and Industry in removing the VAT levied on Trucks for transportation and logistics so as to promote the sector and give it an edge to compete with other transporters from the region. The 18% decline in cost of truck translates into a decrease in the overall operational cost.

Furthermore, services transporting goods by road were exempted from VAT back in 2010. While the exemption means that transporters do not need to charge VAT on their services, this also means that their inputs are not VAT deductible. So when a Rwandan firm imports trucks, the cost is increased by a further 18% in the form of VAT which cannot be recovered against revenues. The means that Rwandan firms still face a heavy VAT burden, as the cost of trucks is a significant cost in the operation. This affects the user of transport services too since the importer (of trucks) would still recover it (VAT) as input tax. The resulting higher costs for the transporter will be passed on to the consumer of the services.

TESTIMONIES Mr. Theodore MURENZI, the Secretary General of Rwanda Long Distance Truck Owners Association (ACPLRWA)

The treatment in the other Partner States on the corridor is better. Uganda, Kenya and Tanzania have all set the transportation of transit goods are zero-rated. The three countries differ in terms of how they treat import/export transport – Uganda sets them zero-rated, while Kenya and Tanzania leave them at the primary VAT rate. However, this does not matter at all, since the consumers of these services are always able to reclaim the VAT from the revenue authorities against their VAT-able supplies. Where the consumer of the services is outside of the countries (e.g. a Rwandan firm contracting a Kenyan firm to deliver goods to Rwanda), no VAT is charged. There are also various other exemptions and zero-ratings relating to vehicles in Kenya and Uganda, but these are of little consequence to transporters that can already reclaim VAT inputs.

The 5% import duty and 18 % VAT on trucks 20 tonnes or more have been removed completely, so we thank PSF for that advocacy and the leadership of our country.

We anticipate a 23% benefit, which will certainly motivate the players in the transport sector to boost their capital to improve their fleets I estimate that this ban of RHD in Rwanda has affected the transport sector by about 40%. Imagine a LHD Truck second truck costing double compared to RHD!

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Fueling Business Growth in Rwanda

Transporters are upbeat about this development. They are asking me if they can go ahead and start placing orders for trucks…I advise them to wait until official gazette is finally published.

We project that Rwandan transporters who had for so long registered their trucks in neighboring countries will immediately consider registering them home (Rwanda) and start paying taxes here.

Hon Francois KANIMBA, Minister of Trade and Industry (MINICOM)

We anticipate a more competitive business environment because now Rwandans are going to start buying trucks with latest technology, with very efficient fuel consumption, and not as heavy on weigh bridges yet carrying adequate tonnage that allows any Rwandan transporter to compete favorably with counterparts in other EAC partner states. The difference between both trucks saves a transporter over 300kms worth of fuel along the northern corridor (KigaliMombasa Port)

“On the Issue of lifting the ban on Right Hand Drive (RHD) Trucks, there are pertinent considerations to look at. For instance, along these trade routes to the ports of Dar el Salaam and Mombasa over 90% of the journey transporters drive on the left, thus making it

more convenient for them to buy RHD Trucks.

Apparently, as Government, the decision to lift the ban was motivated more by a very good dynamic market of second hand RHD Vehicles. We hope this will improve the competitiveness of Rwanda’s transport sector.

We have been receiving reports that many Rwandans register their trucks in neighboring countries. They can still benefit from this development since they can now benefit VAT refund on spare parts.

However, having suffered for such a long time we anticipate playing catch-up game with our counterparts in EAC who have enjoyed such benefit for such a very long time.

Transport is a capital intensive sector, thus we call upon PSF and Government to support us in accessing affordable lines of credit from financial institutions now that the business is quite convincing.

Statistics indicate that the share of Rwanda in regional transport has been declining steadily since 2007. It means that we are losing out on huge opportunities given the fact the markets are becoming more integrated in the EAC framework. Besides, we also are losing a lot in terms of foreign exchange when we continuously demand for transport services and other related logistics from foreign suppliers.

Two, the lifting of the ban of (RHD) is silent about the trailers—we wonder if that was an oversight. It is very insufficient to waive taxes on the truck and ignore the trailer that carries the load; it makes less business sense. In fact one of our members who recently imported 10 trucks with trailers is grappling with customs officials because of this controversy.

My hope is that the Rwandan transporters can now get better organized to harness the enormous opportunities in regional transport. They will need to be more competitive though to match the already grown (transport sector) in partner states. We are aware of the constraints that they may face in the interim such as limited support from

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PSF ADVOCACY ACHIEVEMENTS

financial institutions. But the decision to waive taxes should enable them engage banks to negotiate for better deals.

of the support we extend to them in terms of building capacities, both as an institution and human resource. That way, we are sure of better implementation of the projects in our midst as TMEA.

Transport is a very critical sector for our economic development but players will have to pull-up their socks; to be more organized and build capacities of their members.

Usually, international shipping lines offer big consignments to well established transport and logistics companies that have sizeable fleet of Trucks.

Very important to note here, with TMEA’s support private sector has been able to establish a strong position in the EAC integration agenda. Notably, active participation in rolling out the single customs territory…which involved unrelenting advocacy with the shippers council at Mombasa to allow Rwandan clearing and freight forwarders to operate from the port. Additionally, with the introduction of the electronic single window, enabling all public players (such as REMA, RBS, RRA, RAB, RDB etc) in the clearing and forwarding system to electronically operate under one roof is a big breakthrough for the Private sector. This has not only lowered their transaction costs but has also brought about immeasurable convenience.

As Government, we are ready to listen and support private sector development but we need to see more life, more proactive-ness from the business fraternity. We need to see more evidence-based advocacy, intended to improve the business environment”

Happy thus Far, but expect a lot more—TMEA Rwanda Country Director

Mr Hannington NAMARA-TMEA Rwanda Country Director

The lifting of the ban on the importation of RHD Trucks appeals so much to TMEA because it goes to underpin the competitiveness of the transport sector. For so long, players in this sector complained of higher importation costs in comparison with their counterparts in other EAC member states—in a rage 30 per cent or more.

TMEA’s support is aligned to its three strategic objectives, namely; access to markets; enhance trade environment; and business competitiveness.

Under these, we continue to be very proactive in areas such as; physical infrastructure

Generally, we envisage a standing where the private sector among other institutions we support can effectively engage the partners locally, regionally and internationally so they can be able to adequately comprehend and defend their cause.

This explains why we are very keen on supporting research and communication as key tools of advocacy. A case in point among many others, TMEA supports PSF’s communication function notably the “Enterprise Magazine”—a very important tool for disseminating information.

development, port modernization, fighting NTBs (Non- Tariff Barriers), Policy and Regulatory Framework enhancement, trade facilitation—including projects like; electronic single window, one-stop border post, electronic cargo tracking system, single customs territory to mention bust a few.

Finally, as TMEA we are happy with what PSF has managed to achieve thus far but expect a lot more to become (private sector) a driver of Rwanda’s economic development.

As TMEA, we are happy about what PSF has managed to achieve in its advocacy agenda. It reflects the effectiveness

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Fueling Business Growth in Rwanda

Achievement #4

Achievement #5

RRA Targets 15 Days on Exportsrelated VAT Late reimbursement of VAT to coffee exporters

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ifferent versions of stories are told on how coffee processors and exporters suffer impediments in regards exporting to destinations of Europe, America, Middle East and Asia. Among these is the delay by the Tax Administrator to refund VAT to exporters. This holds up huge amounts of liquid which affects their cash-flows, an unfortunate situation that usually pushes them to acquire bank loans to manage their operations.

The issue is late reimbursement of VAT to coffee exporters and Payment of taxes (VAT) on coffee bought from Partner states for re-export by Local entrepreneurs. Following PSF’s lobbying it was agreed that RRA would reimburse VAT to Coffee exporters immediately without delay after the exporters have presented their proof of export.

Jean Malic Kalima, the Chairman of Rwanda Mining Association (RMA)

Mr. Tusabe Richard, the Commissioner General reports that delays in VAT refunds, it highly depends on the nature of the sector. For the coffee sector, it is very easy to have a quick refund mechanism for exporters as opposed to the local players who actually have big inputs and outputs. “In the new investment code, we challenge ourselves with a service level agreement of handling refunds within 15 days in case of no significant risk associated with the taxpayer.

Again, with the Electronic Billing Machines it simplifies the whole VAT reconciliation and refund process”

Removal of 18% VAT on Mineral exports.

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AT payments on minerals are refundable but as all minerals traded are always exported in raw form, there should be a VAT exemption on minerals sales because it ties up a huge amount of cash given the high value of minerals. As Malic Kalima (in picture), the Chairman of Rwanda Mining Association (RMA) explains, this has led a Cash flow problem jeopardizing growth of the sector and resulting into low production and reducing

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PSF ADVOCACY ACHIEVEMENTS

Achievement #6

mineral export volumes.

“On the issue of VAT exemption on mineral exports, it will be a big relief to buyers of Rwandan minerals given the fact that huge amounts of money get held-up in the process for a long time which significantly affects their cash-flows,” remarked the RMA Chairman.

Removal of import duty on vehicles (buses and coasters) of seat capacity above 30

RRA Commissioner General says…”when you critically observe the mining sector there is hardly any value addition.

Almost everything is exported in its raw form. Meaning that all the VAT paid, the exporter claims it. We have tried to reduce the refund period to now about 28 days, hoping to reduce it further down,” promised Mr. Richard Tusabe.

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igh importation costs on Vehicles meant for public transport (Buses and Coasters) which is due to customs duties of 5% and VAT of 18%: This particular issue was considered in the preparation of the national budget for the financial year 2013-2014

On the other hand, RMA Chairman reports two big pertinent challenges facing the sector. “We envisage addressing the challenge of illegal miners. In this endeavor, we shall need enforcement support from PSF, Police, Army and local authorities. It creates very unfair competition in the sector and is proving to be breeding ground for corruption.

Secondly, we need support from PSF to make financial institutions understand and appreciate mining as a lucrative sector like others. The Government is now supportive in a way that it provides long-term mining concessions but most banks are still hesitant to finance mining projects”

and the ramification of it to follow.

The recent development is that Vehicles meant for public transport attract 0% customs duty. Mr. Antoinne Muzindutsi, the Executive Director of Rwanda Transporters Association appreciates this development. “Cost of doing business is steadily decreasing in the public transport sector and this will certainly increase the importation of busses and coasters in the near future. Consumers will be the winners since competition will bring down the fares eventually.”

Mining has proven to be a critical sector for Rwanda’s rapid socioeconomic development—for it employs many Rwandans in rural areas, generates very high tax revenues and develops physical and social infrastructure and services in areas of operation.

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Fueling Business Growth in Rwanda

Achievement #7 Scrapping of VAT on Service Exports

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n the case of most VAT jurisdictions around the globe, the export of a service qualifies for zero-rating - subject to satisfactory documentary evidence- when the beneficiary of the supply is a foreign customer. However this is not the case for Rwanda because of the way the VAT law is currently worded.

Through consultations and fruitful dialogues with the key stakeholders mainly the Tax Administrator (RRA) the decision to review the VAT law and adopt the destination principle was reached. Specifically, paragraph (e) of Article 5 of the VAT law should be amended. A definition of exported services should be introduced under Article 2 of the VAT law and cross- referenced to Paragraph 1 of Article 5 aligned with international guidelines.

The Rwandan VAT law (law n0 37/2012) in its current form requires that VAT should be charged at the rate of 18% in respect of services provided to foreign customers if that service is provided from within Rwanda. If a business charges VAT to a foreign customer at the rate of 18%, this VAT cannot be recovered by that customer, effectively increasing the cost of Rwandan services to foreign based clients. This requirement is affecting the international competitiveness of Rwanda’s service sector and is undermining efforts by the Government to grow a vibrant services export sector particularly for services exports under the Services offered across the border.

The Commissioner General RRA said: “It will require some amendment of the law, but the new draft investment code has adequately captured that to make Rwanda a more competitive market for Foreign Service providers,” Mr Tusabe rightly argued.

Finally, in his general remarks, the Commissioner General said: “The Government Policy and Strategy in EDPRS II underpinning the importance of private sector as the engine of sustainable economic growth what we are trying to do as a country in which private sector is the engine. This mandates us to be good listeners to private sector. However, our business people should also appreciate the process involved to honor their demands. Sometimes it requires empirical evidence and a study has to be commissioned or deeper consultations made which take time to internalize and benchmark. Again you don’t want to be changing your policies and laws every now and again. Good policies serve for long, for purposes of predictability and sustainability”.

By imposing VAT on exported services, this means for a VAT jurisdiction with a VAT reverse charge mechanism e.g.

Uganda, for every US $100 paid to a Rwandan business, the Ugandan Business would have to pay US $36 in VAT (US $18 Rwandan VAT +US $18 Ugandan VAT reverse charge). This makes Rwandan services uncompetitive in foreign markets and results in foreign buyers opting to source from service providers based in other jurisdictions that don’t charge VAT on exported services.

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PSF ADVOCACY ACHIEVEMENTS

Achievement #8 Representation of Private Sector at Districts Executive Councils

Instruments of Power Handover Ceremony of PSF leaders in Nyarugenge District, Kigali

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or long, private sector was never consulted in formulation of policies and laws on Business related issues at district level. This hampered the growth of business operations at the grassroots. Some of the policies led to the closure of businesses. There is need for private sector participation at every level from grassroots if the country’s economy is destined to be led by the private sector.

In HUYE District, there has been introduction of taxation categories according to business size leading to reduction for small, but increase for bigger companies. Also, there has been a reduction of business closure cases due to renovation of the town hence reduction of negative effects during renovation phase.

With confidence building amongst business communities in districts through consultations on business related issues before major decisions are taken that might derail and hamper businesses, is a key component to all inclusive economic development and eradicating poverty at the grassroots.

In BUGESERA, there has also been the introduction of differentiated categories of taxes for different business based on the locations.

In MUHANGA and MUSANZE districts, Private Sector representatives lobbied and succeeded in enforcing the reduction of Parking Fees (- 80%) for business owners in front of their shops.

Without the involvement of the Private Sector, district executive councils have been able to make detrimental decisions that have affected business operations like; increasing local fees; closure of business centers for not complying with the set district standards etc...

In the Districts of MUSANZE and RUBAVU private sector representatives lobbied for elimination of informal business in foreign exchange (money changers) business by grouping them into cooperatives to give room for formal Forex Bureaus.

PSF consulted and lobbied extensively at the local government. As a result, it was resolved that every district should appoint a member from the business community to the district executive council to represent the interests of the private sector as well giving them the technical knowledge required in handling business issues.

In RUBAVU District, representatives there provided guidance and support for informal cross-border women traders for formalization (cooperatives).

Finally, in NYABIHU, PSF representatives succeeded in advocating for the reduction of the time lost in attending meetings with Local Government.

These are some of the achievements registered in selected districts since this decision was implemented

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Fueling Business Growth in Rwanda

Achievement #9

containers to be handled, huge amounts are held up by the Shipping line. As a result, many Freight Forwarders have delayed to pick their containers from the port, thereafter get transferred to ICDs (Inland Container Depots) and start accumulating various port handling and storage charges.

Tackling the Barrier of “Shipping Lines”

This partly explains why the cost of importation among the landlocked partner states of EAC is unreasonably high. High transport costs account for nearly half of the value of import and export commodities. Numerous measures have been put in place to address this problem but these seem to bear very little impact.

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here is a big Non-Tariff Barrier (NTB) affecting landlocked partner states of EAC that needs urgent attention or else they continue to grapple with high cost of doing business rendering them so uncompetitive in the trade bloc. Attempts to find sustainable solutions have been marred by unfounded excuses and blame games.

In the mix of all these development, there were media reports early this year of fears of massive loss of jobs in the Kenya’s shipping sector after 500 Kenyan companies claimed they have been denied access to the Single Customs Territory (SCT) system. The Kenya International Freight and Warehousing Association ( Kifwa) in Mombasa claimed that following the new arrangement, business belonging to Kenyan clearing and forwarding agents had been paralyzed since they could no longer clear goods destined to Uganda, Rwanda and Tanzania.

The Issue is; Shipping Lines argue they lease containers and where such containers are lost, damaged, delayed or dirtied, they are have to meet resultant costs. This explains the rationale behind imposing an array of charges which Freight Forwarders claim are very high, thus increasing the cost of doing business and are being counterproductive in the efforts of implementing the Single Customs Territory (SCT).

In such circumstances, the issue could possibly go beyond just exorbitant charges to ‘protectionism’.

Freight Forwarders (of landlocked EAC partner states)’s concern lies in heavy container deposit charged by the shipping lines and delay in reimbursement of the deposits upon return of the containers. Moreover, these charges are being applied one-sidedly thereby causing imbalances in the market. The situation gets worse when Freight Forwarders bills are again increased by other charges such as; container cleaning, demurrage charges etc. As they rightly argue, this is simply driving them out of business.

Container Deposit fee range between US$2,500 to US$4,500 per container plus other handling charges depending on the size of container and the shipping line you’re dealing with. For the container deposit, it is refunded upon return of the container but the process delays so much thus holding up Freight Forwarders cashflow. Where there are many

With the support of Trademark East Africa (TMEA), the Private Sector Federation (PSF) Rwanda at the beginning of this year (2014) organized two strategic missions to both Ports of Mombasa and Dar el Salam intended to ignite talks with various stakeholders concerned, particularly the Shipping Lines.

Analyzing outputs of both meetings in Mombasa and Dar el Salam, point to one fact that—there is an urgent need for the involvement of Governments rather than leaving it just to the affected Freight Forwarders Associations to battle it out with the Shipping Lines.

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PSF ADVOCACY ACHIEVEMENTS

Two personalities have been central to these engagements.

Mr. Seka Fred, the Chairman of Rwanda Freight and Forwarders (ADR) and. Mr. John Bosco Rusagara is the Chairman of Rwanda Shippers Council (RSC).

Mr. John Bosco Rusagara, Chairman RSC.

contractor, haulage, ship broker, ship breaker, ship chandler, cargo consolidator, ship repairer, maritime training or such other service as the Minister may appoint under section 2.

(2) Any person who contravenes the provisions of subsection (1) commits an offence and shall be liable to a fine not exceeding one million shillings or to imprisonment for a term not exceeding three years, or to both such fine and imprisonment.

Kenya Maritime Authority (KMA) which steered the development of the Merchant Shipping Act acknowledges this violation by Shipping Lines in which vertical integration by shipping lines is not allowed. Shipping lines had however secured court orders blocking implementation of the Act. KMA is in the process of getting the orders lifted.

KMA has a watchdog role to guard against imposition of unjustified charges. As soon as the Kenyan court overturns this ruling on the implementation of the Act KMA can ably reign on such malpractices by Shipping Lines.

Mr. Seka Fred, Chairman, ADR

According to Mr. Rusagara the mission of both visits was to convince Shipping Lines to either; accept blanket waiver on container deposit or allow container revolving deposit account to indigenous Rwanda clearing agents.

However, as recommended, Rwanda will have to craft up and start implementing the Merchant Shipping Act in consonant with those of Kenya or Tanzania.

Mr Seka Fred observes that despite of a few challenges, the implementation of the Single Customs Territory between Uganda, Rwanda and Kenya is making positive headways.

He cites the recent allowing of over 30 private Rwandan clearing and forwarding firms to operate at the Port of Mombasa plus many others that have chosen to enter into partnerships with Kenyans. Just recently, under the auspices of Kenya Revenue Authority (KRA) and Rwanda Revenue Authority (RRA), over 80 Freight Forwarders benefited training on the Single Customs Territory (SCT) System.

“This has happened because there is mutual recognition of Clearing Agents under the tripartite trade arrangement under the Northern Corridor Integration Projects,” observed Mr Seka.

Violation of Law? It has emerged that, whatever Shipping Lines are doing now is unlawful, but are in some cases taking advantage of inexistence of the Merchant Shipping Act in some affected EAC member states.

Article 16 (1) of the Kenyan Merchant Shipping Act states that: “No owner of a ship or person providing the service of a shipping line shall, either directly or indirectly, provide in the maritime industry the service of crewing agencies, pilotage, clearing and forwarding agent, port facility operator, shipping agent, terminal operator, container freight station, quay side service provider, general ship

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Fueling Business Growth in Rwanda

cargo if volumes increase. Ubungo ICD could be set aside for this purpose. TICTS assured that services had improved and operations were being monitored and tracked in real time.

Finally, Mr Seka urges Governments to intervene in this matter expeditiously which has already proven a hindrance to the smooth implementation of the Single Customs Territory system.

Summary of Key Recommendations by Rwanda Shippers Council (RSC) Chairman, Mr. John Bosco Rusagara •

Negotiations with Liner Agents in Mombasa and Dar to waive Container deposit and other related unjustified charges.

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Advice to importers to change INCOTERMS from the current CIF Kigali to C&F Mombasa to enable them appoint the Clearing agent /transporter of their choice. This will not only help to avoid payment of container deposit but will also reduce transport and insurance costs tremendously.

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Exporters to change from FOB Kigali to CIF Final Destination. Cargo owners are losing USD 48m in insurance and USD 500m in transport to multinational companies every year. This will also save forex for the country, increase market share for local companies, increase Government revenue hence decrease of the consumer price index as purchasing power improves.

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Capacity building of the freight forwarders and drivers should be enhanced to ensure improved quality of services. Only professional operators should be allowed to operate in order to safeguard the interest of the shippers and Government.

Maombasa Port.

He calls upon shipping lines to be more flexible on the options presented to them during the meetings. He cites the following options; considering an affordable “revolving deposit” which the can deposit with the shipping lines as guarantee for their containers, or considering an insurance cover provided by reputable international insurers they can trust.

Mr. Rusagara singles out two shipping lines that have been more flexible and are considering the option of a ‘revolving deposit”, which are; Maersk and MSC. In a related development, the delegation to Tanzania was able to present other challenges facing Rwanda-bound cargo. These include; loss and theft of cargo, Double handling charges, Lack of segregation of Rwandan cargo.

The Tanzania International Container Terminal Services Ltd (TICTS) promised to designate area for Burundi and Rwanda

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PSF ADVOCACY ACHIEVEMENTS

Other selected psf Advocacy Achievements 1. Establishment of District Forums: In 2013 PSF completed establishment of PPD framework at local level comprised of; PSF District President, Business Development Services Consultant, DCO, JADF representative, and Business Development center representative. They are charged with identifying issues affecting business people in their respective districts as well as facilitating the public private dialogue to find solutions.

3. 21 Dialogue meetings in 14 Districts were carried out since June 2013 4. Average participation in Dialogue meetings: 26 people (20 Men, 6 Women) 5. Women Champions in 16 districts additionally trained on mobilization of business women for PPD Through regular engagements at local level, the following achievements have so far been registered;

2. PSF Annual Chairman’s Roadshow: Every year, PSF Chairman leads his team in countrywide roadshow with an aim of meeting with business people at the grassroots to create more awareness of PSF programs and also gather issues to feed into its advocacy agenda. In the most recent Roadshows, PSF reached out to 17 districts creating awareness of the new district PPD framework.

a. District authorities agreed to consult the private sector before closure of any business as well as carrying out consultations before levying any local fees in Huye District. b. In Nyagatare, local authorities agreed to expedite the process of issuing land titles, and solve all problems related to their businesses during Umuganda (community meetings).

Through the Rwanda Public Private Dialogue (RPPD) platform there has been concerted efforts aimed at building capacities among private and public sector structures at local level to do effective advocacy. These include;

c.

1. 133 out of 180 District Champions from all 30 Districts were trained on Moderation (87 men, 46 women)

District authorities agreed not to charge businesses parking fees at their areas of operation.

3. Tax Issues Forum Meeting: Tax Issues Forum is a platform that brings together the business community and tax regulatory body (RRA) to deliberate on business related issues originating from the tax policies, regulations and administration. These issues hamper the day to day operations of the businesses thus hampering the economic growth as well as being

2. 116 out of 180 Champions have been trained by local consultants in Multi Stakeholder Dialogues, equipped with capacity to properly conduct successful dialogues (71men and 41 women)

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Fueling Business Growth in Rwanda

Re-insurers; 15% withholding tax on construction materials bought from non-registered vendors and suppliers; late reimbursement of VAT to coffee exporters; payment of VAT on coffee bought from partner states for re-export by local entrepreneurs; high importation costs on vehicles meant for public transport; taxation of IT equipment which is exempted from paying taxes as part of the investment incentives and 15% WHT on mining. The following were key resolutions from this meeting:

an impediment to the government’s desire of having the private sector-led economy reflected in the Vision 2020.

Through TIF, the following activities were undertaken in the recent past, A dialogue was conducted between PSF Representatives, Representatives from the Associations of construction, Microfinance and RRA Representatives. This dialogue was held to discuss issues raised during the Prime Minister’s dialogue with the business community that took place on 20th March 2013 at Serena Hotel. The issues raised were:

Issue 1: Withholding Tax on the Premiums Ceded to ReInsurers: Premiums ceded to re-insurers attract WHT because they are sources of income. Reference was made to Article 4 & 9 of Law No.16/2005 where it’s clearly stated that the act of sourcing income from other tax jurisdictions is taxable according to the International Taxation Policy on sourcing of income. Commissioner General requested the business community to agree on the taxable base of reinsurance so that more discussions can be carried out to reduce on the tax burden as a result.

VAT charged on leasing, Withholding Tax of 15% on Construction materials bought from unregistered vendors and VAT on exonerated amount in tenders awarded with partial funding from the government. Among the resolutions that came out of the dialogue were; RRA to liaise with Banks and Microfinance institutions to clarify on the issue of VAT charged on leasing that makes loans expensive, and to urge the business community (construction sector) to always buy materials from registered vendors. However RRA promised to get in touch with local authorities to make sure the issue is resolved at the grassroots.

Issue 2: Taxation of IT equipment that is exempted from paying taxes: It was agreed that the IT equipment packages would be reviewed however there will be no more tax exemptions as per the new financial act.

Technical meetings were held in preparation for the High Level Forum. These meetings took place on 26th April and 6th June 2013 to deliberate and streamline issues solicited from the associations of Construction, Insurance, Maize Millers, Coffee, Transport, ICT and Mining. A total of 11 issues related to tax policy and administration affecting business operations were solicited from PSF members.

Issue 3: Backdated VAT: Rwanda Revenue Authority’s current imposition of backdated VAT on Equipment sold between the years 2008 to 2013, yet the Resellers did not levy the VAT while selling out the Equipment. It was observed that genuine taxpayers were affected whereas some of the business people schemed and took advantage of the process. However RRA would handle the issue through audits.

On 3rd July 2013 at Lemigo Hotel, the Tax Issues Forum attracted 50 participants from different sectors mainly Manufacturing, Mining, Coffee exportation, ICT, Transport, Insurance and Construction. Issues discussed included: withholding Tax (WHT) on the premiums ceded to

Issue 4: Inadequate sensitization of Rwanda Revenue Authority’s new policies. On a number of occasions like the Backdate VAT, use of E-Billing Machines, it is often found that

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PSF ADVOCACY ACHIEVEMENTS

less information is availed to the public to fully understand what needs to be done, when and how: RRA will carry out an extensive sensitization campaign in collaboration with PSF to educate and create awareness of the new RRA applications and products to the business community i.e. E-billing machines, online services etc.

The meeting took place on 20th March 2013 with a main objective of bringing together Heads of Association Committees, and private sector representatives of all provinces, districts, and Kigali City to discuss issues that are specifically geared towards rapidly stimulating economic transformation with the private sector. Afterwards, this saw a progressive partnership between public and private sectors; recognize and address constraints that are faced by entrepreneurial growth; and ensure that private sector development remains significantly at the heart of the country’s socio-economic growth.

Issue 5: Telecom Companies that ordered for IT equipment which are tax exempted prior to the preparation and approval of the national budget for the financial year 20132014 that removed tax exemptions: The Commissioner General promised to handle the issue from Telecoms on individual basis. It was also recommended that a meeting between RRA and Telecom companies be organized so as to discuss issues affecting the industry extensively.

5. National Dialogue on the Impact of Law Reforms in doing Business in Rwanda Since 2003, Rwanda has made tremendous progress in reforming the regulatory and administrative climate for business as measured by the World Bank’s Doing Business Index. A two day dialogue workshop was held from 24-25th October 2013 at which business community shared handson experiences with the parliamentarians on how the law reforms have impacted on doing business in Rwanda. Total number of participants was 200 of which 50 participants were from the Public sector and 150 participants from the Private sector. The dialogue intended to attract active participation from the key sectors of the economy that are immensely affected by business reforms and these include; (i) Financial services sector, (ii) Export and Import, (iii) Mining, Manufacturing and Construction and (iv) ICT.

Issue 6: 15% Withholding Tax on the mining sector: Differentiation of the taxation policy on cooperatives and associations to be reviewed.

Issue 7: The establishment of Royalty Tax of 4%: The law on mining that establishes the royalty tax of 4% to be applicable.

Issue 8: No applicability of Resolution No.6 from the Cabinet Meeting held on 11th June 2008 where Maize Millers are categorized into phases i.e. 1 & 2 and exempted from paying VAT: The Commissioner General promised the business community and in particular the association of maize millers that the issue is being handled as a matter of urgency and the outcome of the on-going discussions to be communicated soon. Playing field to be created or established for the maize millers.

The major resolution of the workshop was directed to Parliament to; consider amending some business laws and some acts of businesses to be reviewed and approved so as to create a more business-friendly environment.

4. Meeting with Right Honourable Prime Minister

6. Public Private Dialogue on EDPRS II During the comprehensive consultative excercise in the

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Fueling Business Growth in Rwanda

The following researches were tackled during 2013:

finalization of EDPRS2, the Government of Rwanda through Ministry of Finance and Economic Planning (MINECOFIN) in partnership with PSF hosted a dialogue on the Strategy aimed at engaging private sector and increasing their participation in Rwanda’s Economic Development agenda.

The meeting chaired by Hon. Minister of Finance and Economic Planning was characterized by interactive and honest discussions and questions and answers from the audience. During the presentations, presenters focused on opportunities embeded in the Strategy for private Sector to harness and what is expected of the business fratenity in general.

The presenters emphasized on developing the culture of dialoguing by creating specific platforms to get feedback from private sector members on challenges that hinder business with the aim of engaging Private Sector in EDPRS II implementation so as to increase Private sector participation in economic development.

•

Rwanda Prosperity Ecosystem Survey (Business Investment Climate Survey) (published);

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Challenges of Energy in Rwanda (published));

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EAC- SCT and trade related services(published);

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Trends and skills for Rwanda’s Tourism sector (published));

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Private Sector Baseline survey (published))

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Impact on Rwanda’s Regional competitiveness from Environmental Regulation on Use of polyethylene

8. B2B and Trade Missions Business-to-Business Sessions and Trade Missions are intended to expose the Rwandan business community to new markets, and also use the opportunity to promote Rwandan traditional exports. It is also a good opportunity for opening up to trade partnerships not only among the Rwandan businesses, but also with those beyond borders.

During 2013, PSF organized several inward and out-ward trade missions as follows:

Going forward, PSF called upon every government institution to show how they will partner with their stakeholders in Private Sector towards EDPRS II implementation. Public sector was well represented by officials from MINECOFIN, RDB, RRA, MINICOM.

7. Research and Position Papers for Effective Advocacy PSF remained committed to sustaining a conducive business environment through evidence-based advocacy. It is in this regard that various researches were comissioned. Research focused on key issues that affect our busines people, not only in Rwanda but also in the region. From the completed Researches listed below, the Federation prepared position papers and policy briefs which were used to lobby for concrete actions.

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B2B meetings organized in Mabiad (Turkey), Canada, Czechoslovakia, Netherlands, Poland and India. A total of over 728 PSF members participated.

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During the Rwanda Day between 19th-20th September 2014 celebrated in Atlanta, USA under the theme: “AGACIRO OUR CHOICE”, PSF organized B2B meetings that benefited 250 members.

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Outward Trade missions held in Mumbai (India), New Delhi (India), London, Istanbul (Turkey), Uganda, Malaysia, Singapore, Ghana, Congo Brazaville, Sweden, Belgium, Kenya, Sri-Lanka and Hangzhou (China). A total of over 640 PSF members participated in such outward missions.

Published by PSF Rwanda P.O. Box 319, Gikondo Kigali, Rwanda Tel. +250 570650/4/5/8 , +250 570660/2/4 Fax. +250 570651 Email info@psf.org.rw www.psf.org.rw Compiled and published by CLM Consult Ltd Contacts: +250 788 895 287 Copyright Š PSF Rwanda 2014. All rights reserved.

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