New reforms set up to boost doing business

KIGALI - As part of the government’s wider efforts to promote Rwanda as a leading business and investment destination, Rwanda Development Board (RDB) has released an update on the Business reform agenda.
RDB CEO John Gara.
RDB CEO John Gara.

KIGALI - As part of the government’s wider efforts to promote Rwanda as a leading business and investment destination, Rwanda Development Board (RDB) has released an update on the Business reform agenda.

The business reforms are aimed improving the country’s investment climate in order to drive the growth of the private sector and generate wealth.

Further reforms have been implemented in the areas of Doing Business including easing the process to start a business, acquiring construction licences, registering property, access to credit, cross border trade and paying taxes.

According to the CEO of RDB, John Gara, the new reforms are aimed at making Rwanda a more suitable choice of destination for investors. Rwanda was named the Best Reformer worldwide by the 2010 Doing Business World Bank Report.

“We do not carry out all these reforms as an end in themselves but as a foundation for a deeper and more comprehensive agenda that will make it much easier for the business community to operate here.” Gara noted.

Apart from reducing the procedures involved in starting a business to a single procedure, completed in one day, online business registration is set to be operational by the end of this month.

The simplified business registration as well as the online services will encourage more businesses to formalize thus reducing the informal sector and contributing to economic growth and wealth creation.

According to RDB, Prime Minister’s decree enforcing time limits for the delivery of construction permits and instituting sanctions for failure to deliver is in the pipeline, while a one stop centre for construction licenses was adopted by Cabinet and has been launched by Kigali City Council.

The aim is to reduce inefficiencies in the system and minimise the administrative burden/costs of compliance of acquiring construction licenses while encouraging investment in the construction sector that is a key source of growth to the economy.

In the area of registering property, the National Land Centre has abolished the requirement to formulate a separate sale contract at their office in addition to the one concluded between the parties.

The centre now requires the latter contract in order to streamline the processes. This has cut back on the time to formalize title deeds.

In other reforms, experts have been contracted to set up the country’s first private credit bureau that will be operational by early May 2010 and will serve as a critical risk analysis tool that banks can utilize in their loan transactions.

This is being done concurrently with improvements to the public credit reference bureau managed by the Central Bank.

According to RDB, credit information will help banks to lend to businesses that are compliant based on their good track record in financing their loans. This reform will be key in addressing access to finance constraints that Rwanda faces.

RDB is also finalizing the online collateral registry for movable property. The reform is to encourage the use of moveable property in loan acquisition.

Rwanda and Uganda have launched a one stop border post at Gatuna in addition to one at Nemba on the Rwanda and Burundi border to ease cross border trade. An additional one is planned at Rusumo on the Rwanda and Tanzania border.

24 hour operations at Gatuna border post have commenced easing movement of goods and persons across border points and reducing the time taken to do so.

A semi-automated single window at Customs has been put in place (already done at SDV) and to be implemented at Gikondo, Airport, Gatsata and Kabuye oil depots by end May 2010. A fully automated system including outer stations and all border posts is slated for May 2011.

Efforts are also underway to establish an electronic single window which will improve the movement of cargo across borders while boosting trade within the region.

RRA has established a calculator for PAYE while one for VAT is set for later in April 2010 while tax advisory services have been established at the district level.

The reforms in the payment of taxes will lead to a better understanding of tax requirements and reduce compliance costs to businesses.

In the legal framework, Cabinet has approved draft laws as part of the legal reforms to ease doing business in the various sectors while giving the private sector confidence to go about their business backed by law.

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