Business community calls for review of draft law on insolvency and bankruptcy

The Private Sector Federation (PSF) has called for a review of the 2017 draft law on insolvency and bankruptcy, saying it is silent on some key issues, like how to handle cases of bankruptcy among individuals and NGOs.

Deus Kayitakirwa, the director of advocacy at the Private Sector Federation (PSF), explained that the proposed law mainly focuses on business enterprises, but is silent on how an individual or a non-governmental organisation goes bankrupt.

“Therefore, we want the draft law to include provisions on how to handle all issues related to or arising from bankruptcy, not only traders, industrialists, banks or insurance firms, but also for individuals and NGOs, among others. 

“In addition, the draft law is not in the interest of the business community. For instance, it gives debtors more rights compared to creditors.

“We think this is not right and should be addressed to include these aspects to make the proposed law all-inclusive to serve every Rwandan, firms and organisations, which will ensure fairness for all,” Kayitakirwa said.

The PSF official was speaking on the sidelines of a consultative meeting on the proposed law on insolvency and bankruptcy on Tuesday.

The meeting brought together experts from banks, insurance companies, manufacturers, lawyers as well as traders to get their view on the draft law and make recommendations before a final draft by Rwanda Development Board (RDB).

After the consultation process involving all stakeholders, including the business community, the draft law will be sent to Cabinet and later to Parliament for approval. The proposed law was drafted by the Ministry of Trade and Industry.

Kayitakirwa said ongoing discussions on the draft law mainly concern the business community as the end users a reason why it is important to get their input to ensure the law is in “their best interest”.

Yves Sangano, who represented the Rwanda Bar Association, noted that the law should consider current trends in the business arena and cater for all segments, saying it is not yet clear how cases of insolvency and bankruptcy can be handled, especially those involving multinationals or companies involved in cross-border trade.

He added that some local firms operate across the region but the proposed law is silent on how cross-border insolvency can be handled in case it involves such ventures.

“Therefore, the draft law should also cover this section of businesses to serve the needs of all business community members,” Sangano said, who is also an advocate at Key Solutions and Partners.

He added that the role of the Commercial Court should also be made clear in the proposed law.

Joseph Mugire, the head of legal at BPR, said it is important for such laws to be friendly to business and investors.

He added that the draft law should create clear “rights and obligations” of all parties, saying that challenges of insolvency and receivership need proper guidance to ensure justice and fairness.


When eventually approved by Parliament, the law will create confidence and trust among the business community as it will ensure protection of enterprises and individuals, Sangano said, adding that the move will also attract more investor.

Insolvency in Rwanda

According to figures from the Registrar’s Office, about 100 cases of insolvency were registered in 2016.

However, many firms could be closing shop quietly without following due procedures as provided by law, according to legal experts.