Officials from Rwanda Development Board (RDB) were, on Friday, put to task to explain issues related to investment policy, particularly for local investors, and how the agency is working to attract more investments into the country.
The officials were appearing before the parliamentary Public Accounts Committee (PAC) to answer queries raised in the Auditor-General’s 2014/15 report.
PAC vice chairperson Theoneste Karenzi asked the team to explain what incentive policy was in place to boost local investors as it had been done for foreign ones.
“Some of the foreign investors are given red carpet treatment yet in actual sense they are investing less than our local investors. We have heard of cases of local investors who say that they are not treated as equals. I think this should be done fairly. What is the policy on incentives toward local investors and how are they facilitated?” he asked.
In response, RDB chief operating officer Emmanuel Hategeka said the law does not offer special incentives to foreign investors but that the incentives are the same depending on the size of the investment.
“Incentives to both local and international investors are equal when it comes to the law. I am happy to tell you that the number of locals investing is close to that of foreign investors.
“When it comes to incentives, they are given based on investment laws. There is a seven-year tax holiday given to anyone who invests $50 million and above. Recently, we gave that to a Rwandan who is investing that much,” he said.
Dealing with fraud
MP Cecile Murumunawabo tasked the officials to explain how RDB is dealing with fraudsters who hide behind investing but instead swindle banks and locals and flee the country.
“There are so-called foreign investors who come here and even borrow money from our banks and eventually take off without doing anything. What strategy is there to follow up on such fraudsters?” she asked.
Former RDB chief executive Francis Gatare explained that though there had been such issues – he cited some real estate development investors – there were new measures that had been put in place to reverse the trend.
Gatare is now the chief executive of Rwanda Mines, Petroleum and Gas Board, and had appeared before PAC as the person who headed RDB during the period covered by the audit.
“It’s indeed true that there were issues, especially in real estate investment, where investors acquired bank loans and some even received down payment from potential home buyers but did not deliver.
“It wasn’t only foreigners, even locals did that. When we found out, we undertook two strategies; to compensate those who had paid, some were refunded and others were given their houses. In some cases, the banks took over the projects,” he said.
He explained that there were now regulations in place to protect locals and banks from such fraud.
“There are regulations set by the Ministry of Infrastructure and Rwanda Housing Authority stating that no one interested in a real estate project is allowed to use money collected from locals,” Gatare said.
“Should there be a case where people are interested in paying for homes earlier, an account will be opened and the money will be used as collateral to indicate to banks that there is demand but that money cannot be withdrawn. Should the project fail, those who failed would be refunded to those who paid. This does not change how banks do their business of studying projects before investing in them.”
The hearings will end on October 10 and a report of the findings will be delivered to the Plenary by October 23.