EDPRS : Rwanda’s business reforms fuelling growth prospects

BY GODFREY NTAGUNGIRA There has been a dramatic push for economy diversification and development in Rwanda over the past few years. The development of Trade and Industry regime in Rwanda is making necessary long term policy initiatives to enable government to achieve the country’s roadmap into the future.

BY GODFREY NTAGUNGIRA

There has been a dramatic push for economy diversification and development in Rwanda over the past few years. The development of Trade and Industry regime in Rwanda is making necessary long term policy initiatives to enable government to achieve the country’s roadmap into the future.

As MINICOM envisions the future, it has demonstrated what has been achieved in formulating and implementing policies to harness future growth prospects for the purposes of laying the foundation for private sector led growth.

Currently Rwanda is the world’s top reformer, based on the number and impact of reforms implemented between June 2008 and May 2009. In times overshadowed by the global financial and economic crisis, business regulation can make an important difference for how easy it is to reorganize troubled firms to help them survive, to rebuild when demand rebounds, and to get new businesses started.

MINICOM Mission

The ministry of Trade and Industry has facilitated the transformation of Rwanda to a middle income economy by providing the strategic, policy, legal and financial framework for the rapid economic growth.

The key policy thrust is to enable the economy to embark on programs centered on internal and external economic liberalization to provide a better environment that will enable Rwanda’s economy to diversify Rwanda’s trade and industry sectors.

Vision

Facilitate and promote the development of a dynamic, competitive private sector through formulation of enabling policies, strategies, laws, regulations and innovative incentives.


Investment promotion

Rwanda’s leadership headed by President Paul Kagame realizes that economic growth must be driven by focused public and private sector investments as well as taking the necessary legislative and policy initiatives aimed at enhancing the country’s attractiveness as a base for business.

In 2008, the government of Rwanda established the Rwanda Development Board (RBD) which is a government institution in charge of leading the government’s efforts to accelerate Rwanda’s strategic growth and fast track  development.

RDB incorporates  eight different government agencies including RIEPA (the former Rwanda Investment and export Agency) and the former ORTPN ( Offfice Rwandais des Torismes et des Parcs Nationaux).

This reflects the Government seeking greater efficiency and productivity by providing increased strategic oversight and accountability.

MINICOM through RDB used global Road shows in strategic locations as a powerful tool to market Rwanda’s opportunities and to facilitate the penetration of foreign markets for Rwandan export products.

Successful Road shows included one to the Middle East that initiated the Rwanda-Middle East Agri-business Project, a pilot project that resulted in the export of Fruits and vegetables worth Rwf 150 Million to Oman.

Other Road shows covered several strategic countries and regions like North America, United Kingdom, South Africa, Malaysia, Singapore, China, Qatar, etc.

Improvement of the Rwanda business environment: MINICOM led the national effort in improving the Rwanda Doing Business ranking by the World Bank.

Many reforms have been initiated upping Rwanda’s ranking index rising from 139th position to 67th  from 2008 to 2009, the highest top reformer in Africa.

To achieve this target, Rwanda introduced major reforms in several areas:

• In 2004, The One Stop Centre has been launched and now is operational as one of the most efficient ways of reducing administrative bureaucracy that compromises business.

The One Stop Centre was comprised delegated officers from different government authorities including RRA/Customs, Immigration Department, Ministry of Labour, Notary Office, REMA and the Kigali City council.

• Currently incorporation of a company upon submission of all required documents takes on average 24 hours from 21 days in 2007.

• The registration of a company’s previously used to be done by court clerks. It was a cumbersome process. In May 2008, however, the Rwanda Commercial

Registration Services Agency (RCRSA) was created, whose modernized and computerized business formalization greatly simplified the procedure. And now it has been incorporated in RDB as the office of Registrar general in order to facilitate the investors who have to to start and to close their business.

• Trade Point and the Electronic Single Window Project has been launched . These are powerful tools specially designed to disseminate information on trade and eliminate cumbersome procedures by providing the business coommunity with an online access to trade and transport procedures and regulations.

• MINICOM led the government effort to establish a Free Trade Zone and and Industrial Park in Nyandungu, East of Kigali City. The infrastructure development of the Zone which will cost about US$20 Million is now in advanced stages. The zone will be managed by a company called Rwanda Free Trade Co, a local private company.

However, the Agency conducted several preliminary studies for the project including an EIA, a comprehensive feasibility study and master planning as well as the architectural and infrastructure design

Specialized commercial courts have finally been set up. Over the years, the business community has often complained about the lack of specialized laws, and especially courts that would help them settle business disputes.

In the past, commercial cases were heard by ordinary courts which; given the heavy case-load these courts were facing and often caused long delays.

This has also hampered the government’s efforts to attract foreign investors for whom the existence of a consistent law and specialized courts is often an important factor in their decision to do business in a country.

Currently, four commercial courts structure have been established and are now operational. Those are Huye, Musanze and Nyarugenge commercial courts and the high commercial court.

However, the government’s efforts of reforming the business law set the wheels in motion with the establishment of the business law reforms task force back in 2005, and now Companies Act, Business Registration law, Law on Insolvency and Law on Secured Transactions (both movable and Immovable) have been passed by Parliament.

Handicrafts

Rwanda’s handicraft sector has been one of the major success stories in recent years with the development of strong private sector companies, working with thousands of women to export Rwandan designed handicrafts to the United States and elsewhere.

The growth in such exports has shown testimony to the importance of a dynamic private sector and to dynamic entrepreneurs.

Further developments are also underway to build on the new cultivation of silk to establish Rwandan silk handicrafts as a diversification away from traditional baskets and jewellery.

A Handicraft Strategy and Law have been developed.

This strategic plan recommends the establishment of a Task Force to address issues of supervision and coordination of this strategic plan and streamline the operations of the sector.

The secretariat shall be responsible for the implementation of this strategic plan and ensure effective and efficient coordination.

The secretariat shall also offer necessary guidance and support to the Handicraft Umbrella Organization that shall take over the management of the sector after the life of the secretariat. The key tasks of the Task-Force shall be:
 
 • Coordination of all the stakeholders in the sector.
 • Oversee the smooth implementation of the 2008-2012 strategic plan.
 • Engage in fundraising activities, locally and internationally.
 • Sensitization and awareness generation at National, Regional & International levels.
• Oversee skills development in design & product development.
• Sector advocacy.

• Liaise with the Rwanda Cooperatives Agency to fast track the establishment of the Handicrafts Umbrella Organization.
• Sector export database development in collaboration with RDB department in charge of Export and Investment promotion and NISR.
• Provision of administrative support for sector operatives.
• Facilitate sector operatives establish credit support relationship with financial institutions.

• Management of Sector Umbrella Organization Website.
• Liaise with Fair Trade practitioners to enhance fair play in the sector.
• Closely work with Rwanda Bureau of Standards to enhance quality.
• Render direction and guidance in issues of protection: intellectual property rights and patents.

• Preparation of Handicraft promotion day
• Monitoring the delivery of the basic services to the cooperatives of craftsmen.
• Cooperative surveillance to track the impact of macroeconomic adjustment policies.
• Public expenditure tracking.

In line with capacity building of women who play a key role in the household and in development of small and medium enterprises in the country, a training programme for them  was implemented.

As a result 220 are now professional and export to the US market and are generating a turnover of RWF 9,000 per week per person.

In 2005, the govermnent initiated an aggressive support programme for the handicraft sector. In collaboration with other stakeholders including MINALOC, PSF, PPPMER II, CAPMER, GTZ, Producers, Traders and Exporters, MINICOM established handicraft production centres in the country.

The production centres aim at providing infrastructure support for the training of handicraft producers as well as demonstration centres.

And More than 480 women use these centres on a daily basis. However, there are more than 3,380 women involved in the production of the famous AGASEKE basket even if all of them cannot be accommodated in the centres.

Promotion of Trade and Industry

Outstanding to the geographic location of trade centers in Rwanda. MINICOM has design the National trade Map in order to improve the access to the demanders and suppliers of markets and trade centers already existing and this has important implications on the availability of tradable goods.

In addition to the poor and limited access to information regarding where production is available at affordable price a study on establishment an appropriate distribution channel for cassava has been conducted.

And 10 cooperatives operating in production of cassava has been supported to build fermentation, drying and storage facilities for the Cassava in Gisagara, Huye, Ruhango, Bugesera, Kamonyi and Nyanza where high demand is located.

The need for sustainable industrialization and urban-environmental management, as enshrined in the country’s vision 2020, prompted the government of Rwanda to review the industrial set-up with a view to relocating the industries out of wetland. Most industries are located in Gikondo valley.

It is within this context that MINICOM undertakes some studies to determine the value of Factories within the Gikondo wetland and analyze the various scenarios of compensation mechanisms in order to propose an option that provides a lasting and feasible solution that is acceptable by all involved parties.

The industrial policy are being harmonized with the Rwanda Industrial Master Plan

Management of petroleum prices

- Monthly meeting with petroleum dealers to set fuel prices organized;
- Government strategic fuel reserves purchased and managed
- Japanese fuel grant received and managed from 2004 up to now;
- Petroleum policy, standards and law drafted and ready for approval;
- Inspections of petroleum stations conducted;
- Petroleum stations operation procedures developed and now are operational;
- Bigogwe Petroleum depot has been rehabilitated and in operation;
- Subscription to international oil prices made in order to facilitate local price set up.

Promotion of cooperatives

The Government of Rwanda views cooperatives as a potential vehicle through which the cooperatives members could create employment and expand access to income-generating activities, develop their business potential, including entrepreneurial and managerial ca­pacities through education and training; increase savings and investment, and improve social well-being.

The cooperative is recognized as a legal form of a private enterprise, owned exclusively by its members who take the risk to establish it, to benefit from it and to bear its losses.

By stimulating the production and the fair distribution of wealth among its members, it contributes to the improvement of the community life conditions and welfare.

It constitutes a form of enterprise capable to succeed even at the base level and among the poor population.

In order to develop a viable cooperative sector:

1. The Law governing Cooperative Societies was published in the Official gazette (law n° 50/2007 of 18/09/2007)
2. Rwanda Cooperative Agency (RCA) established according to the law of 16/2008 on 11/06/2008 and fully operational on 01/01/2009

3. A national policy of promoting the cooperatives has been designed. this policy provides clearly goals, objectives and strategies for cooperatives to be managed in accordance with cooperative principles and practices for social and economic emancipation of the majority of citizens in Rwanda

4. Measures have been instituted to establish an auditing division and the national inspection organ of cooperatives which had suffered from corruption cases. This will help to redress the shortcomings such as mismanagement within the sector.

5. There’s an on going campaign to train cooperatives in management capabilities to ensure their competitiveness.

6. The credit and savings cooperatives greatly established in each sector (SACCOs UMURENGE) ensure the security of the savings and the distribution of the credits.

It is imperative to support the development of performing & profitable cooperatives and to help them to contribute better to the enhancement of the life conditions of their members.

The Tourism sector development

Rwanda is blessed with iconic tourist products including a range of fauna and flora, scenery, good climate, rich culture and history which could be all utilized to generate revenue from tourists.

Tourism sector had an EDPRS target to increase the total number of tourists to 50,000 in 2008 and the sector recorded a number of 980,000. The large discrepancy is because of the change in the methodology that counts ‘international visitors’ rather than just tourists. Under the new methodology, there were 826,000 of such visitors in 2007, so a 19% increase was recorded in 2008.

International visitors include 775,000 from neighboring countries, 13,000 from other African countries and 116,000 from outside of Africa. Of the latter, just 37,000 were coming to Rwanda on vacation, suggesting that the number of higher value visitors targeted by RDB/ORTPN facilities is likely to be much smaller than the 980,000 headline figure.

Furthermore, this figure is more comparable to the 2006 baseline recorded under the old methodology of 31,000 tourists.

The great increase in the accuracy of international visitor statistics is an extremely positive move. However, it has less accurate figures on revenues from tourism.

For each international visitor, an estimate of how much they spend in Rwanda has to be made. Without survey data on which to base this estimate, the choice can be almost arbitrary. As Figure 11 shows, the current break down is made by type of traveler.

The total revenue projected using these revenue estimates is over $200 million in 2008. However, it is unlikely that those visitors from Burundi and DR Congo citing tourism as their reason for entry to Rwanda will spend over$1,400 during their visit, hence further work needs to be done to categorise tourist visitors and project more accurately the average revenue of tourists from different countries, visiting for different attractions.

In order for the tourism sector to continue to increase its revenues, the industry needs to diversify its tourism products. Gorilla tourism is currently the primary source of revenues but it can only accommodate a set number of visitors with a maximum of 14,000 permits available per year.

The tourism sector has begun to develop new products and specifically has completed the following actions:
• Birding was launched as a new product with identification of a bird tourism circuit, including the ongoing construction of a canopy walk at Uwinka in Nyungwe National Park.
• Cultural tourism products including dance troupes and the city tour are being reinvigorated.
• A strategy for MICE tourism (Meetings, incentives, conferences and exhibitions/events) is being established.

•  A boat is now available for tourism activities on Lake Kivu.
•  An illustrated field guide to the plants of Nyungwe National Park has been produced.
• Task Force on Akagera Park set up and given mission to assess the        human wildlife conflict situation around Akagera Park

In 2008 Rwanda achieved a great deal of global recognition in tourism. The “Welcome to Rwanda” Concept was developed and disseminated to stakeholders. Rwanda was represented at five International Trade Fairs and Rwanda won “African Best Exhibitor” for the 3rd year running at International Turismus Borses (ITB).

Rwanda was also voted as one of the Top ten destinations by Lonely Planet (a leading global travel guide) and was profiled in over 350 international publications. Eight films/documentaries on Rwanda were shot in 2008.

In order to protect the mountain gorillas of Rwanda, Uganda, and DR Congo the Transboundary Executive secretariat of Great Virunga Massif Ecosystem was set up with memorandum of understanding signed between the respective tourism agencies. Other specific conservation activities include:

• Ten new species were added after the updated check list of orchids was completed.
• 12 ex-poachers associations comprising of 1000 members were formed and are at the forefront of preventing illegal activities inside the national parks.
• Ecological assessments (inventories) for Gishwati & Mukura forests reserves were conducted (by Great Apes Trust project and ARECO respectively), as initial steps for undertaking the legal process to upgrade their conservation status.
Government’s commitment to provide 10% of revenues from the National Parks to the local community has been upheld. In 2008 over 30 projects worth Rwf 460,522,154 were supported.

Furthermore, revenues generated by the Kwita Izina Ceremony has allowed the fully community owned Sabyinyo Silverback Lodge to be opened and its initial profits have been used to build 26 houses for vulnerable families living around the Volcanoes National Park. Several community based tourism projects such as home-stays and village walks near national parks were launched.

Environmental Management and Wildlife Management Curriculums and programmes were given accreditation by the High Council of Education and the first group of 12 students is going through the programme. Other specific planning and capacity building activities include:

• The Tourism Master Plan which is expected to identify potentiality and main challenges the country needs to overcome has been developed in order to develop a more sustainable and competitive tourism industry.

• The Wildlife Policy and Act are in the process of being developed.
• Criteria (standards) for classifications of hotels and other accommodation facilities were developed in collaboration with East African Community.

• A Business Plan for Akagera National Park was developed and agreed upon by ORTPN and Dubai World in the framework of investment through public and private partnership.

• Task Force on Akagera Park set up and given mission to assess the        human wildlife conflict situation around Akagera Park

Policies Under Development

Rwanda Tourism Policy

The overall objective of the Tourism Policy is to increase tourism revenues, profits for reinvestment and jobs through developing new distinctive, market-led products clearly positioned and promoted in the marketplace, bringing spatial and social balance to the distribution of tourism benefits.

The following strategic objectives will be achieved through the implementation of the Sustainable Tourism Development Master Plan for Rwanda.

Tourism and marketing

Rwanda through RDB_ORTPN is currently implementing a well planned and coordinated marketing and communications strategies to position and maintain tourism sub sector as a national priority. The country has experienced a tremendous growth in the hospitality sector.

Currently there is an exercise to undertake a general classification of hotels which MINICOM assert that upon its completion this move is expected to improve the quality of services in the sector.

The tourism policy direction is socially, culturally and environmentally acceptable to a vast majority of its stakeholders and today it has proved to become a vehicle for poverty alleviation.

Rwanda is a home of wildlife, eco-tourism, cultural and conference destination that is attractive to a high-value market, sensitive to the natural, cultural and social environment.

Through the strategy Rwanda has managed to improve on the quality of tourism products, services and supporting infrastructure capable of attracting and meeting the needs of international, regional and domestic visitors.

Again efforts were put in place to have a systematic high quality training, to create a skilled workforce in value jobs at every level of the tourism and hospitality industry. Channel tourism development into the identified Destination Management Areas (DMAs) and linking corridors.

These DMAs will be developed as tourism intensive zones, which will include visitor attractions, activities and services, accommodation, and supporting infrastructure.

Rwanda Hides and Skins Policy

Economic objectives of the policy are to increase level of formal industrial activity - 500 new jobs will increase total industrial employment by 7 per cent.

It’s also expected to increase foreign exchange earnings to enable greater government borrowing – export value should increase from $2.8 million to $12.6 million.

Promote rural development by creating employment in areas outside of Kigali – slaughterhouses, collection centers, a tannery and handicraft cooperatives will be located outside of Kigali providing approximately 350 of 500 new jobs.

Attract foreign investment and increase local investment – local investment by the private sector of $4 million is expected, with international investment of approximately $1 million in a finished goods production factory by 2012.

Expand local production of finished goods – substitution of imports of $0.2 million.
Contribute to viable economic activity outside of Kigali – besides the establishment of a tannery in the Butare area, the present policy calls for collection activities and centres in rural areas.

Rwanda Petroleum Policy

The overall objective of the policy is to ensure the availability of reliable and affordable supplies of petroleum products and also ensure that they are used in a rational and sustainable manner in order to support national development goals.

The required Petroleum Policy, therefore, seeks to establish an efficient procurement, transportation, distribution and end-user system in an environmentally sound manner.

Conclusion

The development of Trade and Industry regime in Rwanda is making necessary long term policy initiatives to enable government of Rwanda to achieve the country’s roadmap into the future.

Ends

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