The Private Sector through it umbrella organisation, the Private Sector Federation (PSF) has requested government to facilitate trade with a special focus on reducing the high transport costs.
According to the business community, the country’s road and air transport costs are the highest in the region due to the long distance from the nearest sea port which poses serious transport challenges by affecting the price of goods and services.
The demands are contained in a study carried out by the PSF in 2008 across 952 companies where over 80 percent of the respondents cited transport as a major challenge to doing business.
It is in this regard that the private sector requested for a review of the imposition of Value Added Tax (VAT) on international transport service.
According to the business community, this puts them at a disadvantage considering that foreign registered transporters have been relieved of VAT and can afford to charge less for transport, out competing locally registered transporters.
“Given this context, it is important for government to maintain supportive policy measures which should remain flexible and responsive to developments in the global and domestic economy,” Robert Bayigamba, the PSF Chairman told the third annual business roundtable hosted by President Paul Kagame on Friday.
PSF told the president that fuel costs in Rwanda are the highest in the region, given the tax component that favours heavy transporters of fuel from outside Rwanda.
“This is leading to declining sales of petroleum products in Rwanda,” Bayigamba observed.
The business community also called on government to put in place separate policy instruments that will promote Small and Medium Enterprise (SMEs) development to a level where they can innovate and compete in the regional and niche external markets.
“It is a well known fact that SMEs are the drivers of job creation and contribute in a significant way to economic growth,” the chairman argued, pointing out that 90 percent of enterprises in the country are micro and small enterprises.
The private sector also mentioned that it is “worst hit” with shortage of soft and hard skills that are critical for Rwanda’s economic development.
While a national skills development strategy and implementation plan is underway, the business community wants “quick win” measures to fix the gaps.
“A major question we ask ourselves Mr. President is how to build entrepreneurial skills and business culture among Rwandans at a tender age,” Bayigamba said.
Representatives of the private sector from selected clusters namely; tourism, mining, agribusiness and the financial sector also made presentations about challenges and opportunities within the respective sectors.
The cross- section of business leaders also raised concern about some government laws that have been enacted without their consultation notably the mortgage law.
However, the private sector commended government for establishing an enabling environment specifically citing Rwanda’s recognition as a top reformer in the World Bank 2010 Doing Business Report, Rwanda’s penetration into new markets in the Middle East, Asia and United States.
“This continues to help lower the perceived market risk hence attracting Foreign Direct Investment,”
The business community also hailed Rwanda’s admission into the Commonwealth family, restoration of diplomatic relations with France, Rwanda’s entrance into the East African Community Customs Union, the signing of the Common Market Protocol and opening up of embassies in Congo and current good relations with Sudan.
“All these provide platforms for business, trade and increased market opportunities,” Bayigamba said.
The President granted a request by the federation to have two meetings with the business community. He also pledged to expeditiously respond to issues raised during the meeting.
The third business round table was attended by approximately 220 business leaders around the country.