Investors’ campaign for new tax reforms

Rwanda’s ambivalent tax system is still a major challenge for investors hindering the volume of business in the country, this was revealed by a group of businessmen who met with President Paul Kagame during his annual investors’ roundtable.
Robert Bayigamba.
Robert Bayigamba.

Rwanda’s ambivalent tax system is still a major challenge for investors hindering the volume of business in the country, this was revealed by a group of businessmen who met with President Paul Kagame during his annual investors’ roundtable.

The roundtable which took place in Village Urugwiro earlier this week is meant to promote and strengthen partnerships between the public and private sectors which Kagame has relentlessly pursued as necessary for Rwanda to achieve economic growth.

The investors led by Robert Bayigamba the Rwanda Private Sector Federation president said the high cost of transporting goods and services to the Rwandan market along with the absence of an effective tax rate are some of the issues that must be dealt with effectively if

Rwanda must attract more investments in the country. In an earlier interview Ms. Rachel Kyte a senior Vice President with the International Finance Corporation (IFC) said Rwanda as a land locked country needs a highly efficient transport and logistics network.

IFC is a private investment subsidiary of the World Bank (WB), and one of the leading investors in Rwanda today with strong interests in the tourism sector.

The investors’ concerns come at a time when Rwanda has just climbed several steps in the World Bank’s Doing Business index for 2008 from 148 in 2007 to 139 out of 175 countries surveyed.

The rise was made possible by several reforms that were undertaken in 2008 after the formation of the national Doing Business Unit, a task force under the Rwanda Investment and Export Promotion Agency (RIEPA), to identify and drive the implementation of reforms to improve Rwanda’s business climate.

The task force began its work in December 2007 and, within nine months had identified and successfully implemented 15 investment climate improvement projects, most of which were captured in the current survey that have resulted Rwanda to move several notches up.

These include; reduced cost of port and terminal handling by liberalizing the warehouse services sector, and new customs declaration points have accelerated trade. Furthermore, decentralization has speeded up the issuance of building permits.

The task force came into force at about the same time that the Ministry of Finance and Economic Development along with the Rwandan country office of the World Bank hired The Policy Practice a savvy consultancy firm to advise economic policy makers on business reforms to improve local private investments.

An independent survey by The New Times early in December showed some small scale investors in Kigali as being happy with the government’s improving conditions of accessing capital, reducing non tariff barriers and “a reasonable tax policy”.

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