What to know as govt sets deadline for factories to relocate to industrial zones

Factories operating outside designated industrial zones have been given up to 10 years to relocate to approved areas, under new ministerial instructions issued last week to bring order to industrial development and strengthen environmental protection. The country currently has 10 industrial parks and Special Economic Zones (SEZs), including two SEZs in Kigali and Bugesera, and eight industrial parks located in Musanze, Rubavu, Muhanga, Rusizi, Huye, Nyabihu, Rwamagana and Nyagatare. More than 320 factories operate within these parks, but the country is home to over 1,300 industries in total, most of them small and medium-sized enterprises. ALSO READ: Trade Minister summoned over inefficiencies in industrial parks Many are established outside areas zoned for industrial use under the national land-use and development master plan. The new instructions are based on recommendations from consultative meetings that examined challenges affecting industrial development, particularly the spread of factories into residential and other non-industrial areas. The rules are aligned with the National Industrial Policy for 2024–2034, which calls for clearer governance and management of industrial zones. The framework applies to heavy and light industries but excludes slaughterhouses, garages and warehouses. ALSO READ: Rising investor confidence fuels development of 10 industrial parks Under the new rules, industries must be established in areas zoned for industrial use, designated industrial parks, SEZs, light industrial zones, or other areas permitted for cottage industries. Any investor seeking to set up an industry in a non-industrial area must first apply for a change of land use, in accordance with the law governing land management. Location by industry category The location of an industry depends on its category and potential impact. ALSO READ: Bugesera industrial zone gets Rwf75bn finance boost Heavy industries, which is defined as large-scale manufacturing or processing facilities with significant environmental, infrastructural or social effects—must operate within designated SEZs or industrial parks. Specifically, these include the Bugesera Special Economic Zone and the industrial parks of Musanze and Muhanga. However, Phases III and IV of the Kigali Special Economic Zone are excluded from hosting heavy industries because of their proximity to residential neighbourhoods, according to the instructions. Light industries may be located in designated areas within the Kigali and Bugesera SEZs, as well as in industrial parks across the country, including those in Rwamagana, Nyagatare, Musanze, Muhanga, Huye, Rusizi, Nyabihu and Rubavu. They may also operate in light industrial zones identified in district and City of Kigali land-use master plans. ALSO READ: Rubavu Industrial Park designs await approval Cottage industries may be established within C1 mixed-use commercial zones and C3 city commercial zones. A cottage industry is defined as a factory employing no more than five workers, causing no pollution beyond its immediate location and not requiring expansion of existing infrastructure such as water, electricity or waste-treatment facilities. The Nyagatare and Nyabihu industrial parks are reserved exclusively for agro-processing industries. Authorisation and compliance Anyone wishing to establish an industry must obtain prior authorisation from the ministry. This requirement applies to investors seeking to operate in areas zoned for industrial use, designated industrial parks, light industrial zones and other areas permitted for cottage industries. Applicants intending to establish light or heavy industries within an SEZ must submit their applications to the licensed operator of the zone. Applications must include a formal request letter, a copy of the business registration certificate, a detailed business plan outlining the nature and scale of operations, estimated resource requirements, employment opportunities and impact on the local economy, a factory layout plan, and a full or partial environmental and social impact assessment certificate in line with environmental protection laws. Industries that were operating before the entry into force of the instructions are required to comply within 10 years. Monitoring and reactions The ministry is required to establish a monitoring system to ensure effective management of industry establishment and the sustainability of operations. The system will involve periodic inspections, and sanctions for non-compliance may include suspension or closure. If an industry permanently ceases operations, the owner must notify the ministry in writing. Williams Buningwire, acting spokesperson for the Rwanda Private Sector Federation (PSF), welcomed the 10-year grace period, noting that relocation requires time and capital investment. “Owners need to mobilise equipment and financing to relocate and build facilities. The transition period will help them prepare and avoid losses, while also allowing room for expansion in properly planned industrial zones,” he said. Environmental expert Abias Maniragaba said the decision would improve oversight of factories and enforcement of environmental standards but warned that the transition period could prolong pollution risks. “It was difficult to monitor factories scattered in residential areas, some of which use hazardous chemicals or cause serious noise and air pollution. While the move is timely, interim environmental audits are needed to mitigate risks during the 10-year transition,” he said.

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What to know as govt sets deadline for factories to relocate to industrial zones