Doing Business in Rwanda
Kingdom
Kingdom of the Netherlands
DOING BUSINESS IN RWANDA
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Doing Business in Rwanda
Kingdom of the Netherlands
The Kigali Convention Centre is a convention centre in Kigali, the capital and largest city in Rwanda
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Doing Business in Rwanda
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Contents Information for Dutch Companies and Investors.................................... 04 Sustained High Growth................................................................................05 Business opportunities................................................................................. 07 Business registration.......................................................................................09
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Corporate Social Responsibility ...................................................................12 Tax System ......................................................................................................19 Support from the Netherlands Govertment .............................................24 Rwanda in Figures..........................................................................................29
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Doing Business in Rwanda
Kingdom of the Netherlands
Information for Dutch Companies and Investors Rwanda is a small, land-linked country in the heart of Africa of about 2/3rd the size of the Netherlands. Just like the Netherlands, Rwanda is a densely populated country. The country is known as “the land of a thousand hills” because of its mountainous character. The altitude ranges from 900 meters above sea level in the south and 4,500 meters in the northwest. Rwanda is also known for its political stability, high security level and the continuous improvements of the business climate. The World Bank Doing Business 2018 Report ranked Rwanda’s Business Climate second best in Africa, after Mauritius only. The country’s sustained progress resulted in significant achievements on a social level, e.g. a sharp decrease of the poverty rate, a literacy rate of 71%. Notwithstanding the successful modernization, Rwanda is still predominantly an agricultural economy. Close to 80% of the population earns its income mainly from agriculture, with coffee and tea as the major export crops. Rwanda’s long-term development goals are defined in a strategy entitled “Vision 2020”. The strategy seeks to transform the country from a low-income country to a middle-income status by 2020 which was recently amended to 2050. Political context Rwanda has a semi-presidential system with two houses of parliament. The Rwandan government is formed by a coalition of political parties. The last parliamentary elections saw around 65% of seats taken by female candidates. President Paul Kagame is serving his third term after having won the August 2017 elections.
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Doing Business in Rwanda
Kingdom
Sustained High Growth – an average 8% GDP year-on-year growth since 2006, stable inflation and exchange rate; highest GDP growth among major African economies
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Doing Business in Rwanda
Kingdom of the Netherlands
Key data on Rwanda
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Capital:
Kigali (1.3 million inhabitants)
Languages:
English, Kinyarwanda, French
Area:
26.338 km2 (2/3rd the Netherlands)
Population:
appr. 12 million
Density:
Over 490 / km2
Currency:
Rwandan Franc (RWF)
GDP per capita:
EUR 624
GDP growth rate:
8% per year on average since 2006
Inflation rate:
7.1%
Doing Business in Rwanda
Kingdom
Business opportunities in Rwanda Rwanda offers extensive business opportunities. The country has significant import flows of equipment, supplies and consumables to accommodate its development. There is serious agriculture and horticulture potential in Rwanda, mainly for coffee, tea, fruits, vegetables and flowers. This offers opportunities for both aim porters and for investors. Investors in agriculture find good conditions in Rwanda. The climate is temperate, with two rainy seasons offering opportunities for multiple growing cycles per year. The government is willing to provide agricultural land to private investors too. Special Economic Zones The Rwanda Government has put in place free economic zones on the outskirts of Kigali. Phase 1, which is in operation, sits on 98 hectares. Phase 2, currently under development, will occupy 178 hectares. Facilities include asphalt roads and access to the road network, optic fiber internet access and water. These zones have been designed to accommodate large scale industries, heavy and light manufacturing industries, commercial wholesalers, chemicals, pharmaceuticals and plastics, warehousing, service industries and ICT companies. Other key investment sectors are tourism, ICT, real estate, construction and water infrastructure. because of its membership of the EAC single market of over 140 million consumers and its location just east of Congo DRC, Rwanda has an important hub function in sub-regional trade.
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Doing Business in Rwanda
Kingdom of the Netherlands
Can I get land in Rwanda for my project? Yes land can easily be obtained for projects and this is done in two ways; • Privately purchasing land from the private sector • RDB can apply for public sector land on behalf of the investor for special considerations to cabinet, should RDB deem the project to be a significant business or strategic importance What is the cost of land in Rwanda? There is no fixed price for land in Rwanda; this entirely depends on the location and the bargaining power between the buyer and the land owner. For more information on land aquisition in rwanda for investment please go to; http://rnra.rw/index.php?id=67 More information on investment opportunities can be found on the website of the Rwandan Development Board (RDB): www.rdb.rw The Rwanda business climate Although the business climate and private sector are in the very early stages of development, both the World Bank Doing Business Index and the World Economic Forum Global Competitiveness Index (GCI) rank Rwanda as the best performing country in East and Central Africa. Your Rwandan business can be established and registered within only 6 hours. Rwanda has a well-developed infrastructure for facilitating inviting for start-ups and scale-up companies. Rwanda has low petty crime and corruption rates. The country offers a safe, peaceful, green and attractive location for expatriates.
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Doing Business in Rwanda
Kingdom
RDB is a one-stop centre for business registration; registration in 6 hours, online and manual business
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Doing Business in Rwanda
Kingdom of the Netherlands
Effective free trade area, Easy Access to the 150 million strong East African Common Market and Customs Union; 24hour border operations in place at Gatuna and La Corniche.
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Doing Business in Rwanda
Kingdom
Setting up a business in Rwanda The Rwanda Development Board (RDB) is the one-stop-shop for all investors’ needs. This includes business registration, investment promotion, licenses and permits, privatization and specialist support for priority sectors, for SMEs and for human capacity development in the private sector. In the continued effort to ease business registration, RDB has introduced mandatory online registration for businesses. This makes business registration free of charge, much quicker (within 6 hours is possible), easier and more convenient. See www.rdb.rw The Government of Rwanda has initiated a broad economic reform agenda from which ambitious targets have been set for growth and poverty reduction. One of the key pillars of Rwanda’s Vision 2020 is “private sector-led development”, spearheaded by competitiveness and entrepreneurship. The Ministry of Trade and Industry (MINICOM) has summarized its vision, mission and interventions to achieve this objective through implementing PSD skills and business development support programs. http://www.minicom.gov.rw/
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Doing Business in Rwanda
Kingdom of the Netherlands
Sustainable economic development issues Corporate Social Responsibility (CSR) The ministry of Public Service and Labour is the responsible ministry for labour issues. Rwanda has ratified all the 8 fundamental International Labour Organization (ILO) conventions. Not all the ILO priority governance and technical conventions were ratified by Rwanda. Rwanda has a government-mandated minimum wage, and no worker in Rwanda can be paid less than this mandated minimum rate of pay. The larger local and foreign (multi-national) companies have specific social responsibility policies and implementation programs that accompany the implementation of their investment projects. Possible CSR risks in doing business with Rwanda – depending on the type of business and sector – may be checked using the CSR risk analysis tool from MVO (www.mvorisicochecker.nl)Local Content The government of Rwanda is committed to promote economic growth through national initiatives such as Made in Rwanda. The Made in Rwanda initiative is based on the March 2015 Domestic Market Recapturing Strategy that identifies priority projects in several industries, such as construction materials, agro-processing and light manufacturing. More information can be found at the website of the Ministry of Trade and Industry (www.minicom.gov.rw)
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Doing Business in Rwanda
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Rwanda has a governmentmandated minimum wage, and no worker in Rwanda can be paid less than this mandated minimum rate of pay.
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Doing Business in Rwanda
Kingdom of the Netherlands
Effective use and management of land is vital amid the rapidly growing population for sustainable development
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Doing Business in Rwanda
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Land consolidation and resettlement Law N° 43/2013 of 16/06/2013 is the governing Land Law in Rwanda which has been gazetted in the Official Gazette no Special of 16/06/2013. The Land law takes into account all aspects of the land policy, which was adopted in 2004. The Rwanda Land Management and Use Authority is responsible for land registration. http://rlma.rw/home/ Specifically for agriculture the government has launched an Agriculture Land Information System (ALIS) in 2016 which helps potential investors to identify available land. http://www.minagri.gov.rw/index.php?id=16 Public Private Partnerships law This Law governs public private partnerships abbreviated as “PPP” and the current Law is found in Official Gazette nᵒ 22 of 30/05/2016. This Law applies to the following PPP arrangements: 1. Management contract, whereby a Contracting Authority awards a partner the right to manage and perform a specific service with respect to an infrastructure facility or other asset for an agreed time period. 2. Build-Operate-Own” “BOO”, whereby a private partner finances, designs, constructs, owns and operates an infrastructure facility or other assets to provide public services. 3. Build-Operate-Transfer” or “BOT”, whereby a partner finances, designs, constructs an infrastructure facility or other asset to provide public services and maintain it for an agreed time period after which a transfer of the infrastructure facility or other asset is made to the Government. 4. “Lease-Operate-Develop”“LOD”, whereby the Contracting Authority grants a Partner a lease to operate and develop an existing infrastructure facility or other asset for an agreed time. In the infrastructure sector several BOT projects are under implementation such as the new airport and the bulk water supply of Kigali. For further and additional information to the Law, read “Law governing public private partnerships Nº 14/2016 du 02/05/2016
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Doing Business in Rwanda
Kingdom of the Netherlands
Visa and immigration procedures Visas for Rwanda can either be obtained on arrival at Kigali at the airport as from 1 Janauary 2018/online (www. migration.gov.rw) or at the Rwandan Embassy in The Hague. Overall lead time is a few days only. Rwanda also participates in the EAC Single Tourist Visa system, together with Kenya and Uganda. A tourist visa obtained for any of these three EAC countries provides access to the other two countries as well. Validation is 90 days. With regard to work permits, there are two categories of permits: • Temporary Residents Permits with a validity that varies from 2 to 3 years for Investors. • Permanent Resident Permit with a duration exceeding 5 years than can be given to key staff of multinational companies. Taxes and fiscal Incentives Rwanda has a favourable tax regime for foreign investors, such as lower taxation on profits and duty-free imports of raw materials and machinery. Rwanda has various taxes. The most important ones, Personal and Corporate income tax are paid on a quarterly basis and VAT is paid on a monthly or quarterly basis. As specific tax regulations and payment methods change regularly in Rwanda and high fines are given easily, it’s advisable to hire a local accountant to help you with your tax declarations and communication with the Rwanda Revenue Authority (RRA). For foreign investors tax incentives include; a lower taxation on profits, corporate income, tax holidays, accelerated depreciation and import duties exemption.
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Doing Business in Rwanda
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Robust Governance: Political stability, well functioning institutions, rule of law and zero tolerance to corruption (Highest rating from World Bank Governance Indicator)
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Doing Business in Rwanda
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Rwanda’s tax regime is managed by a variety of legal instruments. Prominent among them are laws, ministerial orders and Commissioner General’s rulings.
Doing Business in Rwanda
Kingdom
Preferential corporate income tax rates: A preferential corporate income tax rate of fifteen percent (15%) can be accorded to investors that fulfill the requirements. For international companies having their headquarters or regional office in Rwanda a preferential corporate income tax rate as low as zero per cent (0%) is possible. Corporate income tax holidays: A registered investor investing an equivalent of at least fifty million US Dollars (USD 50,000,000) and contributing at least thirty percent (30%) of this investment in form of equity in qualified sectors will be entitled to a maximum of seven (7) year corporate income tax holiday. Microfinance institutions approved by competent authorities will be entitled to a tax holiday of a period of five years (5 years), renewable upon fulfilling conditions prescribed in the Order of the Minister in charge of finance. Exemption of Capital Gains Tax: A registered investor shall not pay capital gains tax. However, income derived from the sale of a commercial immovable property shall be included in the taxable income of the investor. Accelerated depreciation: A registered investor shall be entitled to a flat accelerated depreciation rate of fifty per cent (50%) for the first year for new or used assets if he/she meets the criteria. Immigration incentives: A registered investor who invests an equivalent of at least two hundred fifty thousand US Dollars (USD 250,000) may recruit three (3) foreign employees without necessarily demonstrating that their skills are lacking or insufficient on the labor market in Rwanda. www.rra.gov.rw/
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Doing Business in Rwanda
Kingdom of the Netherlands
ICT, mobile and Internet Rwanda enjoys a wide coverage of both fixed broadband and 4G networks. Three major international mobile phone operators offer services in Rwanda: MTN Group, Tigo and Airtel. Mobile-cellular telephone density has increased sharply the past 15 years and now exceeds 40 telephones per 100 persons. Rwanda’s Internet usage is around 34%. Water transport Rwanda is a landlocked country and serviced by the sea ports of Dar es Salaam and Mombasa. The country is serviced by the seaports of Mombasa and Dar Es Salaam. The development of Lake Kivu will be a good modality for transport of goods between Rwanda and DRC, which offers significant opportunities for future growth in transport and trade. Road transport Rwanda has a good quality, well-maintained asphalted national roads network, which links all four Eastern African countries. Also the internal national transport network that connects Kigali to secondary cities is well organized. Cross border trade is also facilitated with a good road network leading to DRC, Uganda, Burundi and Tanzania. However District roads are mainly unpaved. Sub- regional transport and logistics have improved over time. Costs for shipping a container to Rwanda have dropped by 50% over time.
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Doing Business in Rwanda
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Untapped Investment Opportunities in Agro-Processing, ICT, Infrastructure, Tourism, Energy, Mining, Services, Real Estate and Construction
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Doing Business in Rwanda
Kingdom of the Netherlands
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Doing Business in Rwanda
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Air Transport Kigali International Airport offers direct flights to 31 international destinations. Rwanda’s national airline is Rwandair. The main foreign airlines flying to Kigali are KLM, Brussels Airlines, Ethiopian Airlines, Kenya Airways, Qatar Airways and Turkish Airlines. Currently a new, larger airport is being constructed some 30 km south of Kigali in Nyamata. Specifically for cargo, Kigali airport has cold storage facilities. Airfreight tariffs of Rwandair are competitive.
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Doing Business in Rwanda
Kingdom of the Netherlands
Dutch companies already active in Rwanda A few multinational companies such as Unilever, Heineken, DSM and KLM are operating in Rwanda. In recent year we see a growing number of Dutch SME’s setting up their business in Rwanda, such as Holland Greentech (representing 7 Dutch horticulture companies), Hollanda Fairfoods (producing potatoe crisps) and WakaWaka (solar energy). Support from the Netherlands Dutch companies interested in doing business or investing in Rwanda can count on support from the Dutch government and the Embassy of the Kingdom of the Netherlands in Kigali. The embassy can help to connect Dutch companies to other companies in Rwanda, but also to develop programs or RVO instruments. Furthermore we can support companies with market analyses, government contacts, visa, trade missions, the organization of networking events etc.
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DEVELOPING THE NEXT STEPS IN RWANDAN HORTICULTURE Doing Business in Rwanda
Kingdom
Holland Greentech strengthens the horticulture business of (mainly) Dutch horticulture suppliers in Rwanda, Uganda, Zambia and Kenya. HGT sells inputs and provides technical support for the high-quality horticulture sector. HGT provides state-of-art technology and expertise on cultivation and handling of vegetables. HGT’s technology has been adapted to conditions in Rwanda and other parts Africa. The efficient and effective use of inputs, water and energy are key to the sustainable development of the horticultural sector. The HGT team cooperates closely with the NL Embassy in Rwanda, University of Delft and SNV (INGO) to form public-private partnerships, thereby creating a favorable environment for development of Horticulture.
Norbert Van der Straaten of Holland Greentech offering an integrated portfolio of the best horticulture products and services with Dutch knowledge, skills and technology to Rwandan Farmers
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Doing Business in Rwanda
Kingdom of of the The Netherlands Queen Maxima Netherlands welcomes President Paul Kagame of Rwanda for an audience at the KingÕs residence De Eikenhorst in Wassenaar
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Doing Business in Rwanda
Kingdom
The Netherland’s embassy in Kigali implements a sizeable bilateral aid program in the Food Security, Water and Justice sectors. Bilateral aid expenditures amount to more than ₏ 40 million per year. Aid financed projects include market-led horticulture value chain development, feeder road maintenance & rehabilitation, water basin catchment planning and nutrition & early childhood development. Where possible financial de-risking tools such as innovation and investment funds are used to encourage private sector investments in Rwanda. Special emphasis is given to the agribusiness sector. Dutch investments and financial participations exist in the water supply, agriculture, food-processing, beer brewing and energy sectors. Dutch consultants provide advice in the infrastructure, water , energy, logistics and transport sectors. The Netherlands Enterprise Agency RVO encourages entrepreneurs in sustainable, agrarian, innovative and international business. It helps with grants, finding business partners, know-how and compliance with laws and regulations. The aim is to improve opportunities for entrepreneurs and strengthen their position. The Netherlands Enterprise Agency is part of the Ministry of Economic Affairs and works at the instigation of ministries and the European Union. The Agency works in The Netherlands and abroad with governments, knowledge centers, international organisations and countless other partners. For more information please visithttp://english. rvo.nl/subsidies
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Doing Business in Rwanda
Kingdom of the Netherlands
What a breeze it is to do business in Rwanda.
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Doing Business in Rwanda
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7.1 Rwanda’s annual inflation rate
52 African countries Rwanda leaves behind World Bank Doing Business Report
11.2 Percentage that tourism contributes to Rwandan GDP
RWANDA IN FIGURES 8% Average annual GDP growth rate between 2006 and 2016
65 Million consumers within 400 km from Kigali
Less than 6 Hours to establish and register your business
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Doing Business in Rwanda
Kingdom of the Netherlands
Important Websites In Rwanda Rwanda Development Board
Directorate General of Emigration and Immigration
Ministry of Finances and Economic Planning
www.rdb.rw
www.migration.gov.rw
www.minecofin.gov.rw/
Ministry of Agriculture www.minagri.gov.rw Rwanda Revenue Authority www.rra.gov.rw/ Rwanda Standards Board www.rsb.gov.rw Rwanda Energy Group www.reg.rw
Rwanda Utilities Regulatory Authority www.rura.rw Rwanda Environment Management Authority
www.rema.gov.rw
Rwanda Natural Resources Authority www.rnra.rw National Bank of Rwanda www.bnr.rw Embassy of the Kingdom of the Netherlands
In the Netherlands
www.rwanda.nlembassy.org
Central Bureau of Statistics
www.cbs.nl
Netherlands Foreign Investment Agency
www.nfia.nl
Netherlands Enterprise Agency www.rvo.nl
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Doing Business in Rwanda
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Disclaimer: This publication has been prepared solely for informational purposes. While the Embassy of the Kingdom of the Netherlands has endeavored to ensure the accuracy of the information, it does not guarantee or give any warranty as to the accuracy, timeliness or completeness of any information or material in this publication. We accept no liability for its content, or for the consequences of any actions taken on the basis of the information provided. All information expressed herein is current as of publication date and subject to change without notice.
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Doing Business in Rwanda
Kingdom of the Netherlands
Embassy of the Kingdom of the Netherlands, Kigali / Rwanda
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T + 250 280 280 281 | kig@minbuza.nl | www.netherlandsandyou.nl Agriculture office : T+250788309056 | agricultural office : KIG-LNV@minbuza.nl