What you need to know about reforms in doing business

Facilitating the setting up and operation of Small and Medium Enterprises (SMEs), is a key building block for achieving sustainable development which will propel Rwanda into achieving the envisioned middle income status come the year 2020. Small and Medium Enterprises are considered the key development units for economies and are responsible for creating over 90 percent of jobs on the African continent according to the African Development Bank.

Business enablers that have, since the year 2005, been designed and implemented in Rwanda are responsible for milestones such as the easy business registration process where an entity is registered online in less than 6 hours and freely.

Starting a business

Mandatory Online registration of all companies in Kigali.

Resulting Impact:

Reduction of registration time from 1day to less than 6 hours. Businesses registered online are 58% of total registered business. 90% of total businesses have been registered online since reforms began in February 2014. 100% of companies in Kigali are registered online. o Automatic acquisition of certificate of registration through client’s email account reducing procedures from 2 to 1. Removal of costs for companies registered online from 15,000 Rwf to zero cost

Resulting Impact:

58% of businesses registered do not pay any registration fees. 100% of companies registered in Kigali do not pay any registration fees

Dealing with Construction permits

Procedures were reduced from 13 to 4. Below are the four new streamlined procedures.

1) Apply online for the building permit, environmental impact assessment and connection to utilities (water electricity and telephone) (20 days);

2) Receive a joint site inspection to process the above clearances (1 day);

3) Receive foundation inspection (building set out

and excavation also inspected at this point) (1day);

4) Receive final inspection and obtain occupancy permit and freehold title (online) (3 days)

Application of freehold title has been merged with application for occupancy permit for developers have successfully completed construction.

Resulting Impact:

Reduced time, from 104 days to less than 20 days Removal of costs for obtaining a freehold title from 743,200 frw to zero cost. The fee was as a result of the initial requirement to pay ten year lease fees in order to acquire a freehold title. Ease of information on development rights- Free access by public to the City Master Plan online

Getting electricity

Reduced electricity connectivity time by 50%. From 30 days to 15 days for projects owned by companies and maximum 2 days for projects owned by individuals.

Removal of study fees (9 USD for residential and 45 USD for Medium and large industry) and deposit fee of 23 USD.

Connectivity Within 1 km of grid –> free of charge

Connectivity Within 1km-5.3km –> Flat fee of Rwf 20 Million frw

Connectivity Beyond 5.3 km –> Rwf 20 Million for every km

Registering Property

24 districts have been connected to the Land Administration and Information System (LAIS) of Rwanda Natural Resources Authority in order to ease land title transfers. This will reduce the time and procedures. All districts in Kigali have been connected to LAIS. Land services have been decentralized from the District to the Sector level. This will shorten procedures and time. Land notary offices have been set up at the Sector level to facilitate and streamline services hence reducing time for property registration

Getting credit

The number of individuals and corporates listed in the private credit bureau increased from 1,119,918 in June 2013 to 1,346,147 in May 2014; thereby increasing the coverage from 17.2% to 20.6% in May 2014. Concerning the public credit registry, the number of individuals and corporates listed in the registry increased from 139,582 in June 2013 to 289,958 in May 2014 thereby increasing the coverage from 2.1% to 4.4%. Amendment of the tax procedure law article 51 removing tax debts priority in case of insolvency and harmonizing with the insolvency law where the secured creditor is given priority over tax. Insolvency law was amended to include a provision providing for grounds for relief from stay.

Protecting investors

Company law in its articles 7 and 8 imposes an obligation on directors to immediately disclose interests in a transaction to the board and shareholders. Company Law has been amended to provide for administrative sanctions including administrative fines to directors who fail to declare any conflict of interest. Investors, especially minority shareholders, have been given increased protection by granting them rights to request and obtain any document that may lead to discovery of information during trial.

Paying taxes

Rollout of a Mobile Declaration and mobile payment of taxes facility was done country wide for all small tax payers.

Resulting Impact:

Declaration has risen to 70% compliance for small tax payers. E-filing and e-payment of taxes has also been extended from large and medium to small tax payers.

Trading Across borders

A single customs territory in EAC was implemented in March 2014, starting with the northern corridor.

Resulting Impact;

1,451 declarations of consignments

o 140 companies benefited from the reforms.

o Reduction in time from 26 days to 6 days

o Reduction in importation cost from 4,990 US$ per container to 3,208 US$

Enforcing Contracts

Reduction in time from 230 days in DB 2014 Report to 73 days on average (14 days of filing/service and 59 days for trial and judgment)

Resolving Insolvency

71 cases of foreclosure were received. 13 have been concluded and 58 are on-going. 4 cases of insolvency were registered in the commercial courts from June 2013 to May 2014