13 November 2017

Rwanda: Doing Business - Govt to Introduce 15 New Reforms

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Rwanda plans on making business links easier by introducing a further fifteen reforms.

The government plans to roll out 15 new reforms across various sectors over the next six months, as a means to ease doing business in the country.

The development follows recent World Bank Doing Business Report that ranked Rwanda 41st globally and second in Africa out of the 190 economies globally.

The reforms are informed by the report and attempt to address key concerns of investors across the World Bank Doing Business report's indicators.

For instance, under access to electricity, Rwanda ranked 119th globally and under this indicator, government plans to introduce five reforms by May next year, to ensure adequate and constant energy supply to investors.

Rwanda Energy Group (REG) is working on a system that will monitor outages and record frequency and durations of power outages so that it is predictable for people running factories.

The Government also seeks to reduce the time for connection from the current 34 days to 20 days as well as revising tariffs to introduce preferential rates for productive users.

Other reforms under the indicator include introducing electricity quality service codes and reducing the cost of connection.

Under the quality service codes, Karim Tushabe, the head of doing business unit at Rwanda Development Board (RDB), said that the reform will ensure that scheduled power outages do not affect investors' productivity.

If an outage goes beyond the agreed time, REG will be required to compensate firms that loose productivity.

"This is a rule from RURA saying that should people get a power outage, which goes past the agreed outage time, they should be paid as it is a deterrence, it is sort of checking the Rwanda Energy Group to protect investors from losing due to outages," he said.

Another indicator scheduled for reforms is dealing with construction permits which featured at 112th position globally.

The government is planning to introduce a risk based approach for Environmental Impact Assessment whereby projects will be evaluated in accordance to their risk factor.

This, the Government says, is likely to reduce time and cost incurred by contractors as well as eliminate numerous procedures cited by the report's authors.

Tushabe said RDB is in disagreement with the way the report's authors captured a previous reform under the building permits systems.

He said that despite the permitting system being online and reducing the time taken to acquire a permit, the authors have probably not understood its impact.

"We are inviting them on ground; take them through how the system operates so that they can really see how it works. It's partly because of communication and understanding of the reform and impacts to the targeted investors," he said.

"We will also employ someone in communication to ensure users have a good understanding of reforms."

Starting business

The starting a business indicator, which ranked at 78th position in the last report, is scheduled to have three reforms which could influence a change in position.

Under the indicator, three reforms are set to be introduced, including free application of online electronic billing machines, exemption of payment of trading license 'patente' for startups that are small and medium enterprises as well as simplified process of employee benefits registration.

Previously investors spent time registering their employees benefits at the Rwanda Social Security Board, however, under the new system, it can be done when one is registering their business on the RDB portal.

Property registration which is at the moment second globally is scheduled to have two new reforms which include combing due diligence and notarisation into one step as well as introduction of electronic titles.

This is expected to reduce the time and costs taken up in the process as well as improving the quality of land administration.

Paying taxes, for which Rwanda was ranked 30th globally, could also improve as Rwanda Revenue Authority (RRA) moves to put up a tax appeals board, introduce an online single declaration and payment of Pay As Your Earn and pension contributions.

RRA is also expected automate reconciliation of Value Added Tax input and output to reduce time taken to repay investors.

Contracts enforcement are set to be improved as commercial courts are working on establishing small claims procedure as well as introduce an improved insolvency law.

The reforms are quite ambitious in that the government has a six months window to roll them out ahead of May 2018 for the report to consider them in the next ranking.

The Minister for Trade and Industry, Vincent Munyeshaka, told The New Times that they were not oblivious to the fact that the timelines involved were quite ambitious but they are positive they will achieve the reforms.

"We are very ambitious but we are also very realistic, we can commit that we will do all we can to make sure that we have the 15 reforms implemented in the remaining timeline," he said.

RDB chief executive Clare Akamanzi said there will be strong emphasis on areas where the country did not perform well such as getting electricity, getting construction permits and resolving insolvency.

"Naturally, we would want to prioritise where we rank the least and that is where we will focus our energies, we hope that we will not have any ranking beyond 100, we are going to be focusing a lot on electricity, permits and insolvency. We also need to consolidate where we have done well such as property registration," she said.

Commenting on the planned reforms, Private Sector Federation chairperson Benjamin Gasamagera said that if implemented, they would go a long way to improve business conditions in the country.

He said among the areas that require urgent reforms from a private sector perspective are getting credit and electricity.

Rwanda rose 15 ranks in the 2018 World Bank Doing Business Report to feature in in position 41 globally.

Rwanda featured 2nd in the continent behind Mauritius. Last year, Rwanda featured in 56th position and 62 in the previous year.

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