Over 90 per cent of businesses register online; but will this boost growth?

Early this year, the government through Rwanda Development Board (RDB) made it mandatory for all businesses to register online. The move was aimed at easing the process to reduce the cost of doing business in the country.
Online business registration has already been embraced by over 90 per cent of the total targeted businesses. (File)
Online business registration has already been embraced by over 90 per cent of the total targeted businesses. (File)

Early this year, the government through Rwanda Development Board (RDB) made it mandatory for all businesses to register online. The move was aimed at easing the process to reduce the cost of doing business in the country. Previously, it would take about six days to register a business but now it requires just a few hours for to register their business online.

According to the company registrar’s office at RDB, today the procedures one requires to undergo, including obtaining all necessary licences and permits and completing any required paperwork takes just six hours at RDB desk, and less than three hours when one does it online.

According to Karim Tushabe, the RDB legal consultant and doing business unit co-ordinator, the initiative has so far seen more than 90 per cent of the total targeted businesses in the country registered online.

He said the number of businesses registered online has increased from 473 businesses in 2011 to 6,584 to date. On the other hand, the number of businesses registering using the traditional system has reduced to 1,349 this year from 8,598 in 2011.

The cost of registering a business online has also reduced from Rwf15,000 to zero, allowing many Rwandans and foreign investors to formalise their businesses.

Despite these achievements, there is a mixed reaction on whether the increase in number of registered enterprises will have an impact on the economy.

According to Tushabe, 90 per cent of the small-and-medium enterprises sector have been registered online since the exercise started.

“In fact, most businesses in Kigali have registered online and been able to acquire registration certificates through emails on registration. Fifty eight per cent of these have done it free of charge at our centres countrywide,” said Tushabe.

Rwanda was ranked the most competitive economy in the region by the Global Competitiveness report 2014/2015. It was ranked the second-best country in which to do business in Africa by the World Bank doing business report 2014.

The two reports hailed the country’s well-structured reforms on business sophistication and innovation as one of the best in the region. The country’s Gross Domestic Product (GDP) bounced back from 4.7 per cent during last year to 7.4 per cent during the first half of 2014.

Experts attribute all these achievements to the reforms and innovations undertaken by the government such as online business registration.

Benefits of online business registration

Louise Kanyonga, the head of investment promotions department at RDB, said previously, registering a business was known for its lengthy paperwork.

“ICT innovations like online business registration have helped us to eliminate the paperwork and reduce time wasting procedures,” Kanyonga noted.

“Registering a business also ensures that your the enterprise benefits from protection provided for by the laws, such as limited liability and accessing credit easily from financial institutions,” Tushabe pointed out.

Benjamin Gasamagera, the chairman of the Private Sector Federation, noted that the number of entrepreneurs is increasing, bringing on board new innovations and products.

“One could rightly attribute this to the ever-improving business environment. Besides registering businesses online, there are other reforms government has put in place across sectors to support the private sector,” Gasamagera noted.

He argued that reforms such as the ease of registering business or paying taxes and access to finance have a direct and positive impact on the economy.

Venuste Nsabimana, a motor spare parts dealer in Kigali, said online services have reduced institutional bureaucracy and eased way of doing business. “It’s always less stressful … I can now pay taxes using my mobile phone. It is critical that the business community takes advantage of innovations such as online business registration.”

Challenges

Theobard Ngarambe, a business owner in Kigali, says the online enterprise registration does not cater for computer illiterates, which means they have no choice but to seek assistance from RDB outlets across the country, which consumes time and resources.

“It’s a big challenge that RDB should address either by organising computer training sessions for the business community or through other means,” Ngarambe notes.

Robert Iryumugabe, a businessman and consultant, said there is need to monitor the businesses being registered across the country.

“It is important for RDB to track how these businesses are performing to gauge their contribution to the economy.”

Iryumugabe pointed out that one can register a business but fail to sustain it, and “this is where the problem is”.

“Addressing constraints facing businesses will attract more people to start businesses,” Iryumugabe said.

High electricity and water tariffs, taxes, transport and logistics inconsistencies, limited access to credit or markets are some of the major constraints affecting local businesses.

However, Tushabe said RDB and other government agencies are working hard to ensure an attractive environment for businesses because it is important to support the private sector, especially SMEs, for any economy to achieve sustainable growth.

“We encourage the private sector to take advantage of the reforms to grow their enterprises,” Tushabe added.

 

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