The New Times (Kigali)

25 December 2012

Rwanda: Business Recap for a Momentous 12 Months

In this year's World Bank's Doing Business Report, Rwanda emerged the third easiest place to do business in Sub-Sahara Africa and second five year top global reformer.

The report shows that the country leaped from 58th last year to the 45th position this year in ease of doing business, globally. The business reforms are part of the government's extensive efforts to promote the country as an attractive business and investment destination in order to drive the growth of the private sector and generate wealth.

Some of the select sectors that the country improved include the following:

Starting a business: Rwanda was the eighth easiest in the world from ninth last year. This was eased by shortening required procedures and introducing free online registration.

Getting credit: Rwanda ranked eighth in the world, from 32nd last year, after putting in place a fully functional private credit reference bureau.

Paying taxes: The country jumped from 43rd last year to 19th easiest place to pay taxes in the world.

Enforcing contracts: Rwanda is the 39th easiest in the world; this 39th position remains unchanged from last year.

"2012 has been a good year in terms of investment in the country and we are optimistic about the economic development," Clare Akamanzi, acting CEO of RDB told Business Times in an interview.

In spite of the the progress made, the private sector identified a number of challenges. .

"You are the captains of industry and if your issues are not addressed, then we can't achieve that much from the proposed East African Common Market," said Hannington Namara, the Chief Executive Officer of the Private Sector Federation during the course of 2012.

Incidentally the country particularly blamed and threatened to take Uganda to court over failure to get rid of weigh bridges as well as work permits which serve as non tariff barriers which affect the cost of doing business in the region.

The year also saw the launch of Rwanda's first international arbitrational centre settle business disputes. Kigali International Arbitration Centre (KIAC) is currently supervised by the Private Sector Federation, (PSF) but plans are underway to ensure the institution is independent, non profit and of international stature.

During the year, also, at least three trade fairs were held at Kigali's Gikondo expo grounds with the Prosperity Expo the latest one to be held as part of event's to mark the ruling Rwanda Patriotic Party's silver jubilee.

The trade exhibitions served as a platform for Rwandan businesses to showcase their products while further reflecting the growth of the country's private sector.

Telecom and ICT

The telecom sector exhibited a rather dismal outlook for failure to meet Rwanda Utilities Regulatory Agency's target of 60 percent penetration by December 2012.

Experts say that there is need for telecom operators to attract more new subscribers into their networks rather than struggle to split the current subscribers, something that has lowered their penetration this year. The network coverage accounts for 99.79 percent of the country and the current subscriber base is 48.1 percent (5,155,697 subscribers as of September 2012). The long term outlook of growth in these numbers is 7,437,196 by the fourth quarter of 2016.

During the year, the sector attracted a new player; India's Airtel, the third largest player in the globe. The country's other mobile telephony providers are MTN Rwanda and TIGO.

According to RDB, Rwanda continues to be one of the fastest growing countries in Africa in terms of ICT.

During the year, telecom regulator, Rwanda Utilities Regulatory Agency, made a pronouncement to switch off counterfeit mobile phones off the country's networks thereby joining Uganda, Kenya and Tanzania which did so this year. "It's an initiative that has been agreed upon within the East African Communications Organisation (EACO) and for the case of Rwanda, we are still working out a plan, soon we shall announce the directive to switch the fake phones off the networks," RURA said. The regulator said the fake mobile phone handsets were affecting the quality of communication and posing a health risk to the users, warning that very soon; they would be switched off the networks.

The year further saw the inking of a trendsetting smart solutions partnership deal with the Government. The agreement is geared at facilitating the rollout of information technology solutions. The partnership between the Rwanda Government and Samsung Electronics is expected to play a key role in bridging the digital divide in the fast growing country while boosting its Vision 2020 long term economic and social development plan.

Manufacturing

The year saw the country's leading food processing firm Inyange Industries Ltd take over the Nyatagare based Savannah Diaries Ltd. The move followed an assessment that revealed managerial and financial challenges facing the latter. Inyange Industries also introduced milk dispensers in the market. The introduction of the dispensers was in direct response to consumer's demands to make their pasteurised milk products more accessible and affordable to every Rwandan. The automated vending machines are strategically located at: City Plaza (Quartier Mateus), Kigali City Market, and Kisimenti (Ndoli's Supermarket). The company also introduced new products including UHT milk, cocktail juice among others.

As a means to ensure rural development, President Paul Kagame unveiled a Rwf 6 billion cassava processing factory in Kinazi, Ruhango District in the Southern Province. The Kinazi Cassava plant, which was fully funded by Rwanda Development Bank (BRD) has a production capacity of 144 tonnes of cassava and an output of 45 tonnes of (cassava) flour per day. The Southern Province is the leading cassava producer in the country that is either consumed in raw form locally or sold to Kigali or other towns.

The year also saw the formation of Rwanda Grain and Cereals Corporation (RGCC). Among other duties, it manages national grain reserves and distribution of grain and cereals in zones with scarcity. This is co-owned by government with 54 per cent shareholding and Cevital, a leading Algerian manufacturer of food products with 40 percent shares (about US$4million), and the local private sector.

Real Estate

This year saw the long standing DN international saga finally put to rest when the government through the Ministry of Justice and Rwanda Development Board (RDB), struck a deal with an investor, B$B heritage who agreed to buy out the controversial firm's loan from Fina Bank.

As part of the deal, B$B Heritage acquired 33.8 hectares of prime land in Kagugu, Kigali City. The land was initially sold at Rwf 400 million to DN International by two prominent businessmen, Uzziel Iyamuremye and Paul Muvunyi, however, the developer was left with a balance of Rwf 160 million. The two businessmen accepted Rwf 80 million as balance of for the land in Kagugu, with FINA bank contributing Rwf 60 million, RDB 10 million and B$B Heritage the remaining Rwf 10 million.

"DN paid us only Rwf 240 million. The outstanding debt was Rwf 160million of which we had to forego 50 percent to have this issue settled," Muvunyi said. Rwanda Revenue Authority waived the penalties and interest accrued from the tax debt that had accumulated to Rwf 300 million. The Chief Executive Officer of DN International, Nathan Lloyd, is believed to have fled the country after jumping bail. DN International's debts had by then accumulated to Rwf1.2 billion.

Assorted

The national carrier Rwandair took delivery of two brand new CRJ900 NextGen regional jets aircraft from Canadian manufacturer Bombardier as well as a new Boeing 737-800NB plane from American manufacturer Boeing. This is part of the carrier's fleet expansion programme that would see own a fleet of 18 planes within the next six years. Currently, it owns seven planes.

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