Government targets to fetch $1.5 billion from foreign direct investments

Government targets to fetch $1.5 billion from foreign direct investments

The Government is projecting to attract foreign direct investments worth about $1.5 billion projects this year, according to Rwanda Development Board.

As of May, 49 investments had brought in about $500 million, while another 33 projects in the pipeline are expected to bring in about $1 billion.

According to RDB Chief Operating Officer Emmanuel Hategeka, the majority of the investments this year are in the mining and manufacturing sectors, tourism, construction and real estate, which is in line with areas the government has been trying to prioritize and promote.

If the achievement of the second Economic Development and Poverty Reduction Strategy is met, the projected investment will represent a $200 million increase from last year where the country received FDI worth about $1.3 billion up from $1.2 billion in 2015.

Reforms

To achieve the projected investments, RDB has announced 14 new business reforms in a bid to boost investments in the country and facilitate private sector growth.

The 14 reforms, that fall under seven indicators evaluated by the World Bank Doing Business Report, are expected to further improve the investment climate for both local and international investors.

The reforms are in the areas of; acquisition of construction permits, protecting minority investors, starting a business, paying taxes, enforcing contracts and trading across borders.

 

Under the ‘starting a business’ indicator, the requirement that all businesses ought to have an electronic billing machine was scrapped off following a ministerial order leaving the requirement to only businesses paying VAT.

“Under ‘starting a business,’ classification of who needs a billing machine before they start a business was made by the Ministry of Finance and Economic Planning, and Rwanda Revenue Authority. Previously everyone was required to have one which was considered costly for business. EBM are only linked to VAT,” she explained.

Another major reform is the reduction of costs and time to obtain a construction permit which had previously been said to be as expensive and time consuming.

In the last doing business report, Rwanda dropped from position 37 to 157 in the aspect due to what the report’s authors described as  time consuming processes.

To address this, authorities at City of Kigali have introduced an online system, Construction Building Permitting System, available on the platform www.BPMIS.gov.rw. This facilitates quicker and easier processing of applications.

The city also introduced a risk based assessment which will see low risk buildings benefiting from excessive permit requirements.

The City executive secretary, Didier Sagashya, said the new system reduces the number of days taken to acquire a construction permit to between five and seven days.

The costs to acquire a permit have come down following the revision of the fee. Previously, building owners were required to pay Rwf140 per square metre of the area built.

However, the fee has since reduced whereby a building with over 500 square  metres pays a flat fee of Rwf60,000, a building between 100m2 and 500m2 pays a flat fee  of Rwf40,000, while buildings of less than 100m2 pay Rwf20,000.

The reforms also include a new company law repealing the 2009 law to incorporate new trends of corporate regulation.

The new provisions enhance the rights of minority shareholders, for instance, shareholders owning 5 per cent shares in a company can call for a shareholders meeting and place items on the agenda.

The new reforms have also made it easier to trade across border by scrapping some documentation required and easing access to other documents.

With that, traders no longer have to go to the Rwanda Revenue Authority offices to get a certificate of origin and can acquire it at any exit point or border.

Other major reforms involve reduction of time taken to transfer commercial and industrial properties from 30 days to a day through an online land system as well as reduction of electricity tariffs for industries.

The Judiciary website will also give free access to judicial decisions further easing access to information for business people.

NAEB also revised the procedures involved in processing exports to one day.

Pending reforms

In the recent doing business ranking, Rwanda did not fair very well in the aspect of paying taxes as some businesses had cited the monthly declarations as time consuming  and preferred quarterly.

But RRA has since asked those who would like to declare quarterly to apply.

In a recent interview with this paper,  Rita Romalho, the head of the World Bank Doing Business Report, said they were considering adding an indicator on procurement regulations.

Since government is often the largest client, the  indicator is likely to  look at the process of providing services and goods to the Government and how tenders are processed and cleared.

Karim Tushabe, a legal consultant at the RDB’s doing business unit, said Rwanda had already began implementing e-Procurement procedures.

Read more at http://www.newtimes.co.rw/section/read/214635/