High tax rates, access and cost of land as well as high transport costs are the biggest bottlenecks affecting the success of business and investment in Rwanda.
This was revealed by the Private Sector Federation (PSF) through its newly released report, ‘Business and Investment Climate Survey (BICS).
“The aim of this report is to provide a detailed evidence based set of recommendations which both the government and the private sector can take forward to ensure that business becomes the driving force for development in Rwanda,” said Emmanuel Hategeka the PSF Chief Executive Officer (CEO).
The BICS report also cited access to finance, recruiting skilled and trained workforce, and shortage of electricity, water and poor telecommunication network as other major challenges hindering the business environment in the country.
Costly and lengthy ground transportation routes to ports in Mombassa and Dar-el salaam and lack of electronic cargo tracking system has fringed on business in foreign trade.
Rwanda has got 72,000 registered businesses according to the business census carried out last year and the tax rates affect mostly the service sector by 22 percent while the manufacturing sector suffers by 21 percent.
Rwanda’s electricity costs, $0.24 per kilowatt is the highest in the region and in the bid to solve this problem, the government has undertaken the project to produce at least 150 megawatts of cheap electricity.
This according to the revelations be enough to propel industrial growth and other investments in the country.
Electricity costs make up 12 percent of the average monthly costs and negatively affecting exports and manufacturing businesses to compete with manufactured imported products.
The report stipulates some recommendations if the situation is be improved which include the Rwanda Revenue Authority implementing continuous training of clearing agents and a 24 hour customs clearance.
According to the report RRA should also ensure uniform enforcement of tariffs and other charges such as withholding tax.
“It is the obligation of businesses to pay tax to the government in order to finance our budget which we now finance by fifty percent.” said Hategeka.