WB hails Rwanda’s business reforms, cautions on monopolies

Rwanda is one of the most open countries to foreign equity ownership as it does not have any legal ownership restrictions on some 33 sectors of the economy, World Bank said in a report.

Rwanda is one of the most open countries to foreign equity ownership as it does not have any legal ownership restrictions on some 33 sectors of the economy, World Bank said in a report.

The report dubbed “Investing Across Borders (IAB)” looks at indicators of Foreign Direct Investment (FDI) regulation in 87 countries to help countries develop more competitive business environments by identifying good practices in investment policy design and implementation.

“A foreign company requires no additional procedure other than obtaining a trade license if it wishes to engage in international trade, which takes only one day.

Applying for an investment approval is optional for foreign investors unless they wish to benefit from the various investment incentives provided by the law,” the report which was released in July 2010, reads in apart.

Foreign investors can open and maintain commercial foreign-currency bank accounts in Rwanda.

“Rwanda does not impose a minimum capital requirement on investors, nor does it impose any restrictions on the composition of the boards of directors of wholly foreign-owned companies.”

With only three procedures and four days, the report also found that the process of establishing a foreign-owned limited liability company in Rwanda (Kigali) is among the fastest of the countries surveyed by IAB globally.

It said: “Rwanda offers an efficient “one-stop shop,” the Rwanda Development Board, which centralizes start-up procedures and handles company registrations.”

The business registration process is now available online allowing electronic registration which takes less than an hour.

However, the report also underscores that there are a number of sectors that are characterized by monopoly with market structures dominated by public owned enterprises which makes it difficult for foreign investors to enter.

“The electricity and transportation sector groups, as well as the media industry, in particular, are dominated by monopolies,” the report says.

Commenting on the finding of this report, Frank Twagira, the Co-ordinator of the National “Doing Business” Task Force headquartered at RDB defended government about the “monopolistic or oligopolistic” market structures mentioned in the report.

“This should not be alarming and misinterpreted that these are sectors in which government does not encourage competition.  The reality is different,” Twagira told Business Times yesterday.

Twagira observed that government is increasingly giving way for private and foreign ownership through the ongoing process of privatisation of public owned enterprises.
He cited the privatisation of Rwandatel and the entrance of Contour Global Kivuwatt— a private firm that is developing an electricity generation facility at Lake Kivu—as a sign that government is divesting from business.

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