A plenary sitting of the Chamber of Deputies has approved the relevance of the draft law governing partnerships, which seeks to fill the gap caused by lack of a regulatory framework.
The absence of the framework has been cited as an impediment to investors wishing to use partnership structures.
The bill will be examined by a standing committee before it's brought back to the plenary for final discussions.
Presenting the basis of the bill on Monday, November 30, 2020, Clare Akamanzi, the chief executive, Rwanda Development Board (RDB), said that many stakeholders who were consulted noted that a partnership law would be an important addition to efforts to further improve the business environment in the country.
She said that the proposed partnership framework would avail an alternative for companies to engage in strategic alliances involving commercial partners. Therefore, she added, there is a need for a clear framework that regulates how parties could join forces to develop a working partnership.
"The adoption of the law on partnerships (general, limited and limited liability partnerships), will facilitate investments out of Rwanda through structures domiciled in Rwanda as these structures are familiar to international investors," she observed.
The proposed partnership law, she said, is also particularly relevant to the financial facility that Rwanda has started developing under the Kigali International Financial Centre (KIFC) since partnerships are often treated as tax transparent bodies and are relevant to fund structures.
Partnerships, Akamanzi noted, are often used on knowledge-based businesses such as fund managers, law firms, or medical experts. She said such professional services are, under the current legal regime, registered as corporate entities, which may not work for some of them.
"The envisaged law on partnerships is one of the key instruments that we hope to use to attract more businesses that want to invest in Rwanda," she said, explaining that this is a much-needed framework because, normally, when investors want to establish funds, they register as partnerships, not as ordinary companies.
'A boost for Kigali International Financial Centre'
Akamanzi further noted that for Rwanda to achieve its Vision 2050, it needs to establish a system that would allow it to grow into an international financial centre which enables international finances to be wired through the country.
"That will help us, especially in terms of creating high-profile jobs, including accountants, lawyers, tax experts, and fund managers," she said.
Akamanzi said that studies had indicated specific conditions Rwanda needed to meet to turn into an international financial centre.
"What we have realised is that when investors want to invest in Africa, they often channel their money through Dubai, Casablanca, or Mauritius, because they have financial centres that help them invest elsewhere," she said.
Rwanda wants to join the likes of these countries and be able to provide the environment that investors need to channel their funds through here as well" she said.
She said that it also requires specific skills, adding that there is a plan to work with the Rwanda Bar Association, law firms, accountants and fund managers to create conditions necessary for Rwandans to get jobs on offer following the establishment of the financial centre.