iGuide Rwanda

Business registration

Investment certificate

Environmental Impact Assessment (EIA)

If your project is in industry, road construction, housing, tourism, water and sanitation, energy, railways and airports, fisheries, mining, agriculture or forestry, you are required to carry out an EIA prior to receiving a certificate of clearance from the RDB.

Population

The Rwandan population is estimated at 10.5 million, with the highest density in Africa (440 inhab/km2). Life expectancy at birth is 51 years. It is overwhelmingly rural but the urban population, currently at 18 percent is increasing at an estimated rate of 4.2 percent per year.

Skills

Wages

There is no legal minimum wage in Rwanda. However typical private sector salaries faced by investors are indicated in the table.

Social security contributions

As an employer, you are required to contribute quarterly to the Rwanda Social Security Board for their employees' social security. The contribution rates are set below.

The pension is a defined benefit scheme, based on years of service (2 % a year for a minimum of 15 years) and average of the last three years of salary. It is portable between employers.

The medical insurance provides beneficiaries with 85 % coverage of all medical costs incurred within Rwanda.

The occupational safety insurance covers beneficiaries for all medical costs incurred within Rwanda, and where authorized abroad, related to work-related injuries.

Employment and contracts

Employment in Rwanda is covered by the Labour Law 2009. Contracts for a period of six months or more must be written while those of a shorter period may be oral. Article 34 of the law provides for contract termination in case of changing economic conditions and skill requirements of an employer. Termination indemnities and other penalties are only payable to employees with continuous service of at least 12 months.

Employment contracts can be of three types; fixed term, open ended or for a defined work. Fixed term or work-defined contracts are automatically terminated at the end of the defined period or work. Open-ended contracts may also be ended at any time by either party for legitimate reasons and with prior notice. While renewal of fixed term contracts is allowed based on mutual consent, such renewal does not lead to the fixed term contract becoming indefinite.

Termination indemnities

Termination indemnities

Years worked	Indemnity
Less than 5	One month
5-10	Two months
10-15	Three months
15-20	Four months
20-25	Five months
Over 25	Six months

Expatriate employees

The provisions of the Labour Law 2009 also apply to the employment of foreign workers. They require both work and residence permits, which can be issued by the RDB.

Work permits are usually issued to key personnel or for expatriates coming to work in an occupation for which there is a shortage of locally available labour. The permits need to be renewed on an annual basis. However, if you invest more than US$ 100,000 you are automatically allowed to hire up to three expatriate employees, with your residence and work permit fees those of up to three expatriate employees waived for the first year. In case there is a need for more than three expatriate employees, you will need to apply to the agency and will be subject to the regular conditions for work permits stated above.

Fees for work permits fall into two categories. Workers who earn more than RWF 500,000 are classified as Category A and pay RWF 50,000 per year. Those earning under RWF 500,000 are Category B and pay RWF 10,000. Workers from EAC countries do not have to pay a fee.

Electricity

Water

Water is provided at the following rates.

Telecommunications

Rwanda has a liberalized telecommunication sector. Its infrastructure benefits from a 2,300 km fibre optic backbone, which runs through the country, connecting to the Seacom submarine cable. Operators lease capacity from it. 

Telephone

Rwanda benefits from fixed and mobile telephone provision. Fixed lines are provided by Rwandatel and MTN. Mobile telephony is provided by three operators. The largest is MTN, followed by Tigo and Airtel. All have invested in 3G technology and MTN and Tigo provide money transfer applications.

Internet

Seventy-five percent of the population has internet access with a network that combines the fibre optic backbone with microwave transmitters on telephone towers. The same network connects schools, universities, government departments and 65 RDB telecentres providing business development services to small enterprises.

Fixed line broadband is provided by Rwandatel and MTN.

Transport infrastructure

Road network

Rail

There is no railway system in Rwanda. Expressions of interest are being sought in the construction of a railway line between Kigali and Isaka in Tanzania (estimated cost of US$ 3.7 billion), and the rehabilitation of the line from Isaka to the port at Dar es Salaam (estimated cost of US$ 1 billion). This would be as a PPP

Air

Rwanda's main international gateway is at Kigali, which enjoys direct flights to Addis Ababa, Amsterdam, Brazzaville, Brussels, Bujumbura, Dar es Salaam, Dubai, Entebbe, Istanbul, Johannesburg, Libreville, Mombasa and Nairobi. Kigali is also the base for national airline Rwandair. The main foreign airlines flying to Kigali are Brussels Airlines, Ethiopian Airlines, Kenya Airways, KLM, Qatar Airways and Turkish Airlines.

The number of passengers, both foreign and domestic, using Kigali airport was around 450,000 in 2011. With only a small terminal building, plans are in place to build a larger airport 30 km from the city at Nyamata. Kigali airport does enjoy cold storage facilities.

Domestic airports and airfields include Butare, Cyangugu, Gisenyi (on the border with DRC), Nemba and Ruhengeri.

Maritime

There is some internal lake transport, although only that on Lake Kivu is of significant economic value, as it connects Rwanda to the DRC market. Studies are being made on the navigability of the Kagera River (and its tributaries) which passes through nearly all the provinces of the country and serves as a border with Tanzania and Uganda.

Transport costs

The cost of transporting a 40 foot container from Mombasa to Kigali is below.

Other costs

For indicative purposes, a basket of goods and services that investors may face in Rwanda are included below.

Land in Rwanda

The Land Law, 2005 governs the use and management of land in Rwanda; it stipulates that all land belongs to the Government (the State, the cities and districts). Both domestic and foreign investors in Rwanda enjoy the same rights with respect to investment in land.

Categories of land

Acquiring land

Land costs

Land disputes

Land dispute matters are heard by competent courts after certain steps to resolve the dispute have been taken by the parties. According to Article 57 of the 2008 Ministerial Order relating to requirements and procedures for a land lease, the following steps must be followed:

• you must first refer the matter to the authority that took the decision and the latter must provide its response within 15 days from the date of receipt of request;
  
• if you are not satisfied or no reply was given within the time specified, you can refer the matter to the next higher authority with responsibility for land. This must be done within 15 days from the date of notification of the decisions of the lower authority; and
  
• if you are not satisfied by the decision of the higher authority, you may refer the matter to the competent court of law.  
  

Construction permits

Obtaining a construction permit takes 30 days and can be done at the Kigali One Stop Centre. At the end of the process, you will receive documents that include deed plans, location contract, building permit, occupational permit and access to utilities such as water, electricity and telephone. 

The RDB can provide you assistance through its in-house EWSA staff to help connect to water and electricity. The EWSA client charter limits waiting times for connections for water and electricity to two days upon application and payment.

Free economic zones

Corporate tax

VAT

VAT is payable at 18 percent. Exports of goods and services are zero-rated and, barring need for further verification, refunds take place within 30 days of a claim being made. Agricultural products, pesticides and fertilizers used in agriculture, health services and supplies, education services and the supply of education materials to learning institutions, bus transport services and water supplies to rural areas are exempt from VAT.

Excise taxes

Soft drinks and alcoholic beverages as well as cigarettes and telephone communications are subject to excise duties specified in the table.

Custom duties

Withholding taxes

A number of withholding taxes are payable. These are specified in the table.

Personal income tax

Income is taxed progressively at 0, 20 and 30 percent. As an employer, you will need to withhold this amount from your employees under pay as you earn (PAYE). If you are self-employed, you must declare and pay your own PAYE on a monthly basis.

Benefits in kind are also taxed. Taxes on these must be declared and settled on an annual basis. The following are not taxed:

• contributions to the state social security fund;
  
• pension payments under the state social security system; and
  
• employer’s contribution to a qualified pension fund not exceeding, when combined with that of the employee, 10% of the employee’s income from employment or RWF 1,200,000 p.a. whichever is lower.

Double taxation agreements

Double taxation agreements to which Rwanda is signatory

Partner	Type of agreement
Belgium	Income and capital
EAC	Income
Mauritius	Income
South Africa	Income

Investment protection

The Government of Rwanda has put in place a number of legal and treaty measures to provide protection for your investment.

Protection from expropriation

Revocation of investment certificate

The Investment Law provides that if you fraudulently represent of provide false or incorrect material, your investment certificate may be revoked by RDB giving a written notice requiring you to show cause within 10 days from the date of the notice why the certificate should not be revoked. If within that period a satisfactory explanation is not provided, the Board may withdraw the certificate. You may, however, continue to operate your business in Rwanda while the legal process takes its due course or even after the certificate is revoked but then without the associated incentives.

In practice RDB has never revoked certificates. It normally relies on counselling to achieve the desired corrective action.

Exchanging and remitting funds

The National Bank of Rwanda governs matters relating to the management of foreign exchange. Financial transfers to service debt payments, dividends, royalties and profits are unrestricted. However, they are subject to a 15 percent withholding tax. There are some restrictions on the transfer of earnings by expatriate employees, subject to meeting fiscal obligations. There are also reporting and repatriation requirements for exporters with transactions exceeding US$ 10,000. Both residents and non-residents may open foreign currency accounts with domestic banks. Only authorized dealers are allowed to engage in the foreign exchange business, except where the National Bank of Rwanda permits a specific person or class of persons to do so, subject to the conditions it may impose.

Dispute settlement

International investment agreements

Rwanda has investment agreements with the countries listed below;

Belgium and Luxembourg

Germany

Mauritius

South Africa

Switzerland

United States

Intellectual property

Intellectual property in Rwanda is governed by the Protection of Intellectual Property Law, 2009. The law regulates industrial property, and copyright and related rights.

You may register industrial property at the RDB. Protection for inventions is provided through patents that are issued for 20 years with no possibility for renewal. Trademarks may be issued for periods of 10 years and can be indefinitely renewed at the end of each term. Both patents and trademarks may be transferred or assigned. Copyrights and related rights are also available under the law; for natural persons such rights are guaranteed for life and up to 50 years after. Effective technical protective measures are protected against circumvention. Furthermore utility model certificates as well as protection rights for designs for layouts and industrial designs are provided, though on a more short term basis.

Procedures for registering industrial and intellectual property are provided below.

International commitments

Rwanda is signatory to the following international intellectual property treaties.

Enforcement of intellectual property rights

Enforcement of intellectual property falls in the jurisdiction of the commercial courts in Rwanda whose procedures include conservatory and provisional measures as well as injunctive relief. Criminal procedures are available for acts of infringement and include penalties involving imprisonment for up to five years and/or fines of up to 500 million RWF. Special Border Measures have been put in place by the law and the circulation of imported goods may be suspended if they are believed to infringe protected rights.

Competition law

Rwanda's Competition and Consumer Protection Law 2011 is enforced by the autonomous Rwanda Competition and Consumer Protection Commission. Competition and consumer protection disputes currently fall under the jurisdiction of the commercial courts.

Rwanda must also conform to regional competition policy requirements under both EAC and COMESA. This is overseen by the COMESA Competition Commission, which enjoys international legal personality, and the EAC Competition Regulations, which once applied will apply to cross-border economic activity.

Production and trade

The focus of the Government has been on reforming the economy and promoting economic growth. The Government is also pursuing an ambitious programme for human resource development to rebuild the human capital lost or emigrated in 1994. This has led to some important socio-political achievements, including the restoration of peace, security, stability and personal safety; a zero-tolerance policy towards corruption; judicial and administrative reforms; regional integration; increased investment in education; and substantial progress towards national reconciliation.

Economic composition

The main contributor to growth has been services (government expenditure on education, health and public administration). The industrial sector picked up after 2008 downturn and reflects important government capital expenditure and greater investment in construction. Agriculture while occupying 79.5 percent of the labour force and growing at an annual rate of 5.17 percent over the previous five years, has been declining in proportion to the economy, marking Rwanda's gradual economic diversification to services.

Market access

As an investor in Rwanda you benefit not only from Rwanda's internal market but from the country's membership of two sub-regional economic groupings, the EAC single market and the COMESA common market, and from preferential access to a number of developed country markets, described below.

The national market

As a market, Rwanda has a population of 10.5 million and a GDP per capita of US$ 644.

Preferential access to regional and international markets

Rwanda enjoys access to the following markets and trade agreements.

Energy

Investment opportunities in the energy sector

• Power generation from Methane gas in Lake Kivu (available concession for 150MW)
  
• Power generation from geothermal (potential for 740MW)
  
• Micro Hydro power plants (more than 100 sites available for private investment)
  
• Peat to power generation (potential for 1200MW)
  
• Solar
  
• Peat to power
  

Incentives for potential investors in the power sector

Depending on the significance of the project, the Government is open to providing support in infrastructure, roads and transmission access.

Tourism

Opportunities for investment also exist in the following areas:

• Develop meetings, conferences, and convention infrastructure and facilities. 
  
• Four and five star hotels in Kigali, Musanze, Huye, Nyagatare and Rubavu.
  
• Karisimbi cable car project: the Government is offering a concession to build a cable car for tourists to Mt. Karisimbi in the Volcanoes National park.
  
• Tourism and hospitality training schools.
  
• Construction of a cultural village in Kigali
  
• Creation of theme parks and aquariums
  
• Establishment and promotion of zoos, zoological and botanical gardens
  
• Development of exhibition centers in and around Kigali City
  

Manufacturing

With Rwanda's duty-free access both across the EAC Common Market, Comesa and preferential access to the EU and US (see above), the country presents opportunity for export manufacturing.  This is currently dominated by agro-processing, particularly in tea and coffee, and to a smaller degree in horticulture and floriculture.

While Rwanda’s internal market remains small, it runs a substantial trade deficit. There are therefore opportunities for small investors in import substitution, for example in consumer goods, the largest category of imports. Current manufacturing takes place in beer, soft drinks, cigarettes, sugar, wheelbarrows, soap, cement, mattresses, plastic pipe, roofing materials, textiles, and bottled water. Being a landlocked country with high transport costs, also means that there is a certain natural protection for investors in the country. 

The Government is making available industrial land through the Kigali Free Economic Zone (see Land tab).

ICTs

The Government has invested heavily in developing ICT infrastructure to enable service delivery. This has included:

• 2,500km optic fibre network throughout the country and with 9 regional links to neighboring countries;
  
• Fibre optic connection to the SEACOM and EASSy undersea cables:
  
• a state-of-the-art Tier 3 internet data centre;
  
• a deployed wireless broadband covering over 80% of Kigali, to be extended to all major towns; and
  
• an innovation centre and incubator for start-ups.
  

As a result, the ICT sector in Rwanda has been growing steadily over the last twelve years with ICT literacy levels also rising in the same period. University curriculums have been revised to contain both practical and theoretical aspects of ICTs.

Agriculture

Commercial agriculture in Rwanda is characterized by three main sectors in descending order: coffee, tea and horticulture and floriculture. Agriculture contributes 33.6% to the national GDP. Export crops (tea and coffee) projected by the National Agriculture and Export Development Board to grow at 22% between 2012 and 2014.

Coffee

Coffee is central to Rwanda’s economy. It is the second largest export item by value. Coffee is cultivated by around 400,000 smallholders on 52,000 hectares. Most coffee is sold as green beans through farmers' cooperatives to exporters who in turn sell to commodity traders. Coffee is 95 percent Arabica and is mainly exported to the United States and Germany, where it is blended with other beans. The little coffee that is roasted in Rwanda tends to be sold locally, though coffee that has been exported unblended under the Rwanda appellation has been recognized as a high quality product, winning cupping contests internationally, and buyers are willing to pay a premium.

There are opportunities for investment in quality improvement and value addition through:

• the construction of coffee washing stations which are crucial for the end product targeting the up-market niche segments (requiring an average investment of US$ 150,000 for a washing station with a capacity of 200 tonnes);
  
• the construction of roasting facilities on a large scale;
  
• the setting up of modern coffee-processing and packaging plants; and
  
• the operating of large-scale coffee plantations.
  

Real estate and construction

The construction sector grew by 24% in the year 2011 compared to 9% in 2010, and contributed 8% to GDP. Dominant in the sector was the construction of hotels and commercial buildings. 

The City of Kigali's conceptual master plan envisages that all areas in the city can be re-developed in the next seven years. According to this plan, there are over 35,590 ha of land for potential growth in the city.

Opportunities in the real estate and construction sector exist in:

• residential housing for low- and middle-income customers;
  
• building apartments and shopping malls in Kigali City;
  
• brick and tile making factories;
  
• office blocks in Kigali City;
  
• estate development for high income customers;
  
• development of entertainment centres;
  
• manufacturing of construction finishing materials;
  
• training and certification of key services.
  

Financial services

There are currently 9 commercial banks in Rwanda as well as a number of microfinance institutions and rural savings and credit cooperatives. The sector is overseen by the National Bank of Rwanda.

Growth potential remains strong with 42% of the population in the formal financial system. The return on equity in the sector as of June 2012, according to the Rwanda Development Board, was 10.9%. There is also a stock exchange, overseen by the Capital Markets Authority (CMA).

All banks are subject to a five percent minimum reserve requirement. Banks wishing to install in Rwanda must apply for a license to the National Bank of Rwanda by presenting a business model showing that there is a gap in the market and demonstrating a minimum share capital of US$ 8.13 million.

In order to improve access to credit, a private credit reference agency bas been set up, of which all banks and other financial institutions must be members. Other companies such as utilities can be voluntary participants. 

Why invest in Rwanda?

Key data

Official name	Republic of Rwanda
Surface area	26,338 km2
Capital city	Kigali
Population	10.5 million (est 2012)
Administrative regions	Four Provinces and Kigali City
Local currency	Rwandan Franc (RWF))
Exchange rate	1 USD = 638 RWF
Official language(s)	Kinyarwanda, French, English
Other national language(s)	Kiswahili
GDP per capita	644 USD

Map of Rwanda