Rwanda armed forces' shop (AFOS) has been granted authority to make investments under a bill that was passed by the Lower House on May 2. According to the Ministry of Defence, the move intends to enable the entity to achieve its objective in a sustainable way.
AFOS' current beneficiaries are members of RDF (except Rwanda Reserve Forces), Rwanda National Police, and Rwanda Correctional Service (RCS) - as principal beneficiaries, and their families (spouses for those who are married, and children) which the existing law describes as other beneficiaries.
Its beneficiaries buy, from it, tax and duty-free items, including foodstuffs.
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As per the new bill establishing Rwanda armed forces' shop - as a specialised organ - AFOS will enjoy powers to do business activities for it to be able to fulfill its responsibilities in a sustainable way.
MP Alice Muzana, the Deputy Chairperson of the Committee on Foreign Affairs, Cooperation and Security which analysed the bill, said that AFOS must have sustainability and achieve self-financing, without relying on government support, pointing out that the government's contribution to AFOS has been exempting it from taxes.
"Making investments will therefore help it to achieve sustainability at the same time attaining its goal, especially because its beneficiaries may increase," she said, indicating that the bill provides that an order of the minister [in charge of defence] can determine its new beneficiaries.
MP Jean-Pierre Hindura wondered whether granting AFOS the powers to make investments, and its entry into the market might not interfere with its mandate to support the improvement of its beneficiaries' welfare through lowering costs for their shopping.
He urged caution to prevent a situation where AFOS might compete with other entities on the market for similar products because it enjoys tax exemption which others do not.
"This implies that there would be an imbalance in the competition on the market between AFOS and others," he argued, citing a scenario where AFOS might bid for a public tender to supply [foodstuffs] to correctional facilities or schools.
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The Minister of Defence, Juvenal Marizamunda, said that AFOS was given an initial or starting capital to enable its function, but it is not given a budget annually, rather receives government support in terms of tax exemption on a list of eligible products.
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Through the process, he pointed out, it makes some profits. When it is not using such money, it is saved in the bank as redundant funds - without profit.
"Based on projections it made, there is a way it takes a given parentage of it and invests it in [treasury] bonds or [bank] deposits such that they generate proceeds for the entity's sustainability," he said.
Meanwhile, he told lawmakers that it will not be trading products for which it enjoys tax exemption, but rather small amounts of money that have been accumulated, adding that if it ventures into taxable activities, it will pay due taxes.
Hindura said that if AFOS makes investments in other areas different from trading duty-free products it gives to its beneficiaries, it would be fine, underscoring that such should be indicated in the bill.
While justifying the relevance of the bill to the Lower House on March 14, Marizamunda said AFOS was already making investments, but that was not provided for by the already existing law.
Its investments are in cash deposits in banks and buying [government] treasury bonds, he indicated.
AFOS was established by the law of 2012 establishing Rwanda Defence Forces and Rwanda National Police Shop and determining its mission, organisation and functioning.
It started as a shop for the army, and later extended access to police personnel, and Rwanda Correctional Service staff.
