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2012 Investment Climate Statement - Rwanda


2012 Investment Climate Statement
Bureau of Economic and Business Affairs
June 2012
Report
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Openness To, and Restrictions Upon, Foreign Investment


The Government of Rwanda recognizes the private sector is an essential engine of development and welcomes Foreign Direct Investment (FDI). Since 2008 the government has undertaken a series of pro-investment policy reforms to ensure Rwanda remains competitive in attracting foreign investment. As a result, the World Bank recognized Rwanda as the world’s top business climate reformer in 2009 and the second most improved in 2010. Rwanda now ranks third in sub-Saharan Africa, behind only Mauritius and South Africa. Despite Rwanda’s strong improvement in international business climate rankings, U.S. FDI has not increased correspondingly.

The Rwanda Development Board (RDB) was established in 2008 to fast track development projects and to facilitate new investment. RDB consolidates several government agencies previously involved in promoting investment including the Rwanda Investment and Export Promotion Agency (RIEPA), the Rwanda Commercial Registration Service Agency (RCRSA), the Human Resource and Institutional Capacity Development Agency (HIDA), the Rwanda Information and Technology Agency (RITA) and the Rwanda Office of Tourism and National Parks (ORTPN).

The establishment of RDB builds on the investment law of 2006 which assists investors in obtaining necessary licenses, visas, work permits, and tax incentives and which remains in full force. The law provides permanent residence and access to land for investors who deposit USD 500,000 in a commercial bank in Rwanda for a period not less than six months. This law also fixes the minimum initial capital investment requirement for foreign investors at USD 250,000 to qualify for tax and other investment incentives. Despite RDB’s role in facilitating FDI, international investors have remarked that they have faced difficulty in obtaining or renewing visas and that tax incentives and import duties have been applied inconsistently.

RDB provides investors with a “one-stop” investment services center. Through the one-stop center RDB assists potential investors in securing all required approvals, certificates, work permits, tax incentives and land registrations. Foreign investors who pass through RDB have not reported any discrimination. By law, foreign firms are treated equally with regard to taxes, access to licenses, approvals, and procurement.

No statutory limits on foreign ownership or control exist, and there is no official economic or industrial strategy that has discriminatory effects on foreign investors.

Rwanda is still developing its legal infrastructure. Specialized commercial courts began operations in 2008 and, with the help of foreign commercial judges, have largely cleared a substantial backlog of cases. Despite this, the Heritage Foundation’s 2011 Economic Freedom Index raises concerns regarding a lack of independence and capacity in the judicial system as well as corruption in legal processes. Investors have commented that the sanctity of contracts is not always upheld and court judgments are not always enforced in a timely fashion. For U.S. investors, the neutral arbitration clause of the U.S.-Rwanda Bilateral Investment Treaty, which came into force on January 1, 2012, may assuage these concerns.

In 2008, the government implemented business reform legislation, which included new bankruptcy regulations and arbitration laws. In 2009 it approved a new Intellectual Property law. A company law also adopted in 2009 strengthened investor protections by requiring greater corporate disclosure, increasing the liability of directors and improving shareholders’ access to information. In 2011, the Government of Rwanda reformed tax payment processes and enacted additional laws on insolvency and arbitration. These laws were designed to facilitate international business and to further improve the investment climate.

There is no mandatory screening of foreign investment. However, RDB does evaluate business plans of investors seeking tax incentives in order to record incoming foreign investment and to better allocate investment incentives to qualified foreign investors.

The government encourages foreign investment through outreach and tax incentives. The only difference in treatment between foreign and domestic companies is the initial capital requirement for official registration – USD 250,000 for foreign investors; USD 100,000 for domestic investors. There are no reports of foreign investors declining to invest due to these differing treatments. Foreign investors can start a new business irrespective of the initial capital requirement.

Foreign investors can acquire real estate, but there is a general limit on land ownership. Although land is owned by the state, both foreign and local investors can acquire land through lease-hold agreements that extend to a maximum of 99 years.

The government established the Privatization Secretariat and the Rwanda Public Procurement Agency to ensure transparency in government tenders and divestment of state-owned enterprises. Rwanda’s ranking in Transparency International’s “Corruption Perception Index” has improved significantly, falling from 102 in 2008 to 49 in 2011. The index rated Rwanda as the “least corrupt” country in East Africa. Despite the strong improvement in these rankings, the most recent Auditor General report to Rwanda’s Parliament highlighted that over USD2.6 million of tenders were awarded in breach of Rwandan procurement law in 2010. Some of the entities applying inappropriate procurement methods were the Ministry of Infrastructure, the Prime Minister’s Office and the Office of the Ombudsman.

There are no laws requiring private firms to adopt articles of incorporation or association which limit or prohibit foreign investment, participation, or control.

The World Bank, Transparency International, the Heritage Foundation and MCC have all reported improved business climate indicators over the last three years.

Measure

Year

Index/Ranking

TI Corruption Index

2011

5/49

Heritage Economic Freedom

2011

62.7/75

World Bank Doing Business

2012 (published in 2011)

45

MCC Gov’t Effectiveness

2012 (published in 2011)

0.81/97%

MCC Rule of Law

2012 (published in 2011)

0.62/92%

MCC Control of Corruption

2012 (published in 2011)

1.27/100%

MCC Fiscal Policy

2012 (published in 2011)

0.6/88%

MCC Trade Policy

2012 (published in 2011)

78.0/82%

MCC Regulatory Quality

2012 (published in 2011)

0.56/92%

MCC Business Start Up

2012 (published in 2011)

0.994/100%

MCC Land Rights Access

2012 (published in 2011)

0.823/93%

MCC Natural Resource Mgmt

2012 (published in 2011)

70.04/73%

Conversion and Transfer Policies

There is no difficulty obtaining foreign exchange, or transferring funds associated with an investment into a freely usable currency and at a legal market clearing rate. In 1995, the government established a market-determined exchange rate system under which all lending and deposit interest rates were liberalized. The central bank holds daily foreign exchange sales freely accessed by commercial banks.

Investors can remit payments only through authorized commercial banks. There is no limit on the inflow of funds, but the central bank requires justification for all transfers over USD 20,000 to facilitate the oversight of potential money laundering. Additionally, there are some restrictions on the outflow of export earnings. Companies generally must repatriate export earnings within three months after the goods cross the border. Tea exporters must deposit sales proceeds soon after auction in Mombasa. Repatriated export earnings deposited in commercial banks must match the exact declaration the exporter used crossing the border. Rwandans working overseas can freely make remittances to their home country.

It usually takes two to three days to transfer money using SWIFT financial services. Other financial services companies such as Western Union and Money Gram are also available to investors seeking to transfer funds.

Since January 2007, the Rwandan Franc (RwF) has been convertible for essentially all business transactions. Rwanda has a liberal monetary system and complies with International Monetary Fund (IMF) Article VIII and all Organization for Economic Cooperation and Development (OECD) convertibility requirements.

Expropriation and Compensation

The government reserves the right to expropriate property “in the public interest” and “for qualified private investment” under the expropriation law of 2007. The government and land owner negotiate compensation directly depending on the importance of the investment and the size of the expropriated property. RDB may facilitate expropriation in cases where the expropriation is potentially controversial. Valuation of expropriated property is often opaque and controversial. In the past several years, a number of property owners have protested expropriation of their property by the city of Kigali and claimed the compensation offered was below market value and not in accordance with the expropriation law. Currently, implementation of the Kigali City Master Plan is creating additional threatened expropriations, with property owners being compelled to construct multi-story commercial developments or face potential eviction from their property.

Rwanda’s 2007 Law Relating to Expropriation in the Public Interest requires compensation to be paid to property owners prior to relocation or expropriation. In practice, however, this procedure has not always been followed. For detailed information on the expropriation law, visit www.amatageko.net and see official gazette law No 18/2007 of 19 April 2007.

There are no laws that require local ownership, but the Organic Land Law allows the Government to expropriate land that is “underutilized.”

Dispute Settlement

Currently there are no known outstanding disputes between U.S.-registered businesses operating in Rwanda and the Government of Rwanda. All known disputes between U.S. businesses and the Government of Rwanda in recent years have been resolved to the satisfaction of the U.S. business either through court judgment or an out of court settlement.

On January 1, 2012 the U.S.-Rwanda Bilateral Investment Treaty came into force. Under the auspices of this international treaty, U.S. investors have the right to bring investment disputes before neutral, international arbitration panels.

The government established an arbitration center in 1998 as an alternative dispute resolution mechanism, but it has not lived up to expectations according to businesses that have utilized it. Rwanda is a member of the International Center for the Settlement of Investment Disputes (ICSID) and African Trade Insurance Agency (ATI), which are supported by the World Bank and Lloyds of London. ATI covers risk against restrictions on import and export activities, inconvertibility, expropriation, war, and civil disturbances. Rwanda is also a member of the East African Court of Justice for the settlement of disputes arising from or pertaining to the East African Community (EAC).

In 2008, Rwanda opened specialized commercial courts to address commercial disputes and facilitate enforcement of property and contract rights. To clear a backlog of commercial cases, Rwanda hired experienced foreign judges who presided over Rwandan commercial trials. Their role was positively received and non-controversial. The law governing commercial establishments, the investment law, the law on privatization and public investment, the land law and the law on protection and conservation of the environment currently are the main laws governing investments in Rwanda.

Judgments of foreign courts and contract clauses choosing foreign governing law are accepted and enforced by local courts. Local courts lack experience adjudicating cases with non-Rwandan governing law. There have been a number of private investment disputes in Rwanda, but the government has never been involved as a complainant or respondent in a World Trade Organization (WTO) dispute settlement.

Rwanda signed and ratified the Multilateral Investment Guarantee Agency (MIGA) convention on October 27, 1989. MIGA issues guarantees against non-commercial risks to enterprises that invest in member countries.

Performance Requirements/Incentives

Unless stipulated in a memorandum of understanding that characterizes the purchase of privatized enterprises, performance requirements are not imposed as a condition for establishing, maintaining, or expanding other investments. They are mostly imposed as a condition to access tax and investment incentives. Investors who demonstrate capacity to add value and invest in priority sectors enjoy more tax and investment incentives including Value Added Tax (VAT) exemptions on all imported raw materials, 100 percent write-off on research and development costs, five to seven percent reduction in corporate income tax if the company exports products and services valued from USD three to five million, duty exemption on equipment, and a favorable accelerated rate of depreciation of 50 percent in the first year. The government offers grants and special access to credit to investors developing rural areas. There are no import quotas for investors.

Although there are no legal obligations regarding these matters, the government encourages foreign investors to transfer technology and expertise to local staff, in order to help develop Rwanda’s human capital. RDB has been increasingly successful developing investment incentives and publicizing investment opportunities. Registered investors obtain certificates that bring benefits, including exemption from value-added tax and duties when importing machinery, equipment, and raw materials. However, some investors have complained that coordination between RDB and Rwanda Revenue Authority is limited. Registered investors have noted that taxes were assessed by Rwanda Revenue Authority despite RDB’s assurances that their investments qualified for tax-exempt or tax-incentivized status. This was particularly the case with regards to importing machinery and equipment.

There is no legal requirement that investors in general must purchase from local sources or export a certain percentage of their output. However, to benefit from incentives in a planned export zone, investors will be required to export a certain percentage of the finished product.

The government gives preferential tax incentives to investors who create significant export-oriented growth. The government determines eligibility for such incentives upon request based on several factors: exports must total at least 80 percent of production (or exports total at least 10 percent if manufacturing under bond); capital investment is at least USD 100,000 (local investors and Common Market for East and Southern Africa --COMESA-- member states) or USD 250,000 (non-COMESA investors).

There is no legal obligation that nationals own shares in foreign investments or that shares of foreign equity be reduced over time. However, the government strongly encourages local participation in foreign investments. The government does not impose conditions on transferring technology.

The government is not involved in assessing the type and source of raw materials for performance, but the National Bureau of Standards determines quality standards. The government does not require investors to disclose proprietary information to government authorities.

U.S. and other foreign firms participate in government-financed and/or subsidized research and development programs.

There is no visa requirement for U.S. national tourists for the first 90 days of their stay in Rwanda.

Foreigners applying for work permits and/or residency visas must apply within 15 days of their arrival in country. The government generally processes visa applications for foreign nationals in a timely manner. However, the application process for work permits and extended stay visas has recently become more onerous, with immigration authorities requesting extra documentation on applicants’ qualifications and taking multiple months to reach a decision in many cases. Applicants may facilitate the process by ensuring that they travel with original police clearances, preferably stamped or notarized. Educational documents should be on original letterhead. Applicants should also obtain a certified copy of their diplomas, should they not be traveling with the original.

Investors should be aware that East African Community (EAC) applicants are given hiring preference and the Immigration Office may hesitate to authorize work permits for non-EAC skilled labor.

Right to Private Ownership and Establishment

Local and foreign investors have the right to own and establish business enterprises in all forms of remunerative activity. The Rwandan constitution stipulates that every person has the right to private property, whether personal or in association with others. The government cannot violate the right to private ownership except in the public interest and only then after following procedures that are determined by law and subject to fair compensation.

The law also allows private entities to acquire and to dispose of interests in business enterprises. Foreign nationals may hold shares in locally incorporated companies. The government has divested and continues to divest in public enterprises. However, private holding companies closely affiliated with the government or the ruling party continue to play a large role in the private sector.

Protection of Property Rights

The law protects and facilitates acquisition and disposition of all property rights. Investors involved in commercial agriculture have lease-hold titles and are able to secure property titles, if needed. The land law passed in 2005 stipulates modalities of property registration and a land titling campaign that began as a pilot project in 2008 is now underway nationwide.

The Government maintains measures that may violate the WTO’s TRIMs (Trade Related Investment Measures) by allowing parallel imports of goods from countries where patents and original trademarks are not registered and recognized. However, as a least developed country, Rwanda has until 2013 to abide by specific WTO TRIMs.

Rwanda adheres to key international agreements on intellectual property rights and their protection, but as a least developed country, Rwanda has until 2013 to abide by specific Trade Related Intellectual Property (TRIP) arrangements. As a member of COMESA, Rwanda is automatically a member of African Regional Intellectual Property Organization (ARIPO). It is also a member of World Intellectual Property Organization (WIPO) and is currently working towards harmonizing its legislation with WTO trade-related aspects of intellectual property. The Ministry of Commerce (MINICOM), the Rwandan Revenue Authority (RRA), and the Rwandan Bureau of Standards (RBS) work together to address issues involving counterfeit products on the Rwandan market. Through the RBS and the RRA, Rwanda has earned accolades for its protection of intellectual property rights, but many goods that violate patents, especially pharmaceutical products, make it to market nonetheless.

Rwanda has not yet ratified WIPO internet treaties, but the Government has taken steps to implement and enforce the WTO TRIPS agreements. Intellectual property legislation covering patents, trademarks and copyrights was approved in October 2009. A Registration Service Agency, which is part of the RDB, was established in 2008 and will further improve intellectual property rights by registering all commercial entities and facilitating business identification and branding.


Transparency of the Regulatory System

The government generally uses transparent policies and effective laws to foster clear rules consistent with international norms. Institutions such as the Rwanda Revenue Authority (RRA), the Ombudsman’s office, Rwanda Bureau of Standards (R BS), the National Public Prosecutions Authority (NPPA), the Rwanda Utilities Regulatory Agency, the Public Procurement Agency, and the Privatization Secretariat all have clear rules and procedures. However, some investors claim that the RRA unfairly targets foreign investors for audits.

There is no formalized mechanism to publish draft laws for public comment, although civil society sometimes has the opportunity to review proposed laws. There is no government effort to restrict foreign participation in industry standards-setting consortia or organizations.

Some investors complain that the strict enforcement of tax, labor, and environmental laws impede investment. The government updated the labor code in 2009 to simplify recruitment of labor and facilitate the hiring, firing and retention of competent staff.

Rwanda established an Ombudsman’s office in 2003 that monitors transparency and regulatory compliance in all governmental sectors. The Rwanda Utility Regulation Agency, the Auditor General’s Office, the Anticorruption Division of the RRA, the RBS, and the National Tender Board also enforce regulations. In 2009 and 2010, the press reported instances of alleged malfeasance involving private citizens and Rwandan officials. This led to investigations and arrests of high ranking officials as well as a number of resignations. In 2011, the only major reported instance of alleged malfeasance involving a senior Rwandan official led to the arrest and resignation of the editor of the newspaper that carried the story.

There is no informal regulatory process managed by nongovernmental organizations. Existing legal, regulatory and accounting systems are generally transparent and consistent with international norms but are not always enforced.

A key component of the government’s regulatory system is the Office of the Auditor General, established in 1999 to audit government adherence to fiscal controls. The Auditor reports regularly to the Parliament and those reports have led to wide-ranging criminal investigations of alleged misconduct.

Consumer protection associations exist, but are largely ineffective. The business community has been able to lobby the government and to provide feedback on government policy and execution through the Private Sector Federation, a business association partially funded by the government.

Efficient Capital Markets and Portfolio Investment

Access to affordable credit is a serious challenge in Rwanda, as interest rates are relatively high and loans are usually short-term. Savings rates have been low. However, credit terms generally reflect market rates and foreign investors are able to negotiate credit facilities from local lending institutions if they have collateral and “bankable” projects.

The private sector has limited access to credit instruments. Most Rwandan banks are conservative, risk-averse and trade in a limited range of commercial products. Following privatization, commercial banks introduced a variety of credit instruments with more products becoming available as the local banking industry matures. Credit cards are not used extensively, except in major hotels and a few restaurants. Debit cards have been introduced on a limited basis. In December 2011, Visa International opened an office in Rwanda and announced a partnership with the central bank through which the company intends to significantly expand electronic payment services throughout Rwanda.

An over-the-counter (OTC) market was established in 2008 with the assistance of the US Department of Treasury, but volume is limited and confined to sale of government treasury bills and a few corporate bonds and shares. In December 2010, Rwanda’s largest foreign investor, Heineken, launched the country’s first Independent Private Offering (IPO) for 30 percent of the shares in its Rwandan subsidiary Bralirwa. According to the Minister of Finance, the shares were oversubscribed. Bralirwa listed its shares on the Kigali OTC market in January 2011, the first Rwandan company to do so. Subsequently, Bank of Kigali became the second listed Rwanda firm with its shares officially trading on the Rwanda Stock Exchange from September 1, 2011.

The central bank capital requirement for commercial and investment banks is currently USD 8.3 million. As of 2011, all banks were compliant with the minimum capital requirement. The required minimum capital adequacy ratio of 15 percent is well above the Basel minimum requirement of eight percent.

With only a small OTC market, corporations generally trade shares among themselves or with private investors. No hostile takeovers have occurred involving foreign investors, and both the central bank and the government have been very active in seeking foreign investors for the banking sector.

The IMF gives the central bank high marks for its effective management of the regulatory system. In June 2010, Rwanda became the seventh country in the world to adopt the IMF’s Policy Support Instrument, a program designed for countries that have achieved macroeconomic stability and no longer need financial support from the IMF. As of December 2011, Rwanda was completing its third review under the IMF’s Policy Support Instrument.

Competition from State-Owned Enterprises (SOEs)

Rwandan law allows private enterprises to compete with public enterprises under the same terms and conditions with respect to access to markets, credit, and other business operations. Since 2006, the government has made an intensive effort to privatize SOEs, to reduce the government’s non-controlling shareholdings in private enterprises, and to attract foreign direct investment, especially to the telecommunications, tourism, banking, and agriculture sectors. Foreign investors now own controlling interests in some of Rwanda’s largest firms. Rwandan investors and investor groups have acquired many privatized SOEs. A number of these investor groups are backed by government shareholders, including the Rwandan Social Security Board and other government savings schemes. Others are led by individuals with close ties to the government and/or ruling party. SOEs include water and electricity utilities and companies in construction, mining, finance, tea and other agricultural investments. The government continues to own minority shares in telecommunications, insurance, hotels and other sectors.

Some private sector firms assert that SOEs and private enterprises in which the government owns shares, or that have close ties to the government officials, receive preferential treatment with regard to access to credit and tax compliance enforcement.

SOEs generally have boards of directors that function independently. However, ministers and their representatives sit on SOE boards and exercise considerable influence. Most SOEs are required to publish audited annual reports, but some are not readily available.

Corporate Social Responsibility

There is a growing awareness of corporate social responsibility but only a few companies (primarily those that have international ownership) have actually implemented sustainable programs.

Political Violence

Rwanda is a stable country with little violence. A strong police and military provide a security umbrella that minimizes potential criminal activity and political disturbances. On several occasions since 2008, unknown assailants detonated grenades in Kigali and in rural areas of the country. The most recent detonation occurred on January 3, 2012. There have been no incidents involving politically motivated damage to investment projects or installations since the late 1990’s.

Presidential elections in 2010 were peaceful and orderly. President Kagame won 93 percent of the popular vote and returned for his second, and final, seven-year term in office. Although the eastern region of Democratic Republic of the Congo (DRC) bordering Rwanda remains unstable, rebel groups operating in the DRC have not conducted significant insurgent activity in Rwanda since 2001. In 2009, Rwanda reestablished diplomatic ties with the DRC and the two countries are now cooperating to establish peace in the eastern DRC and to improve regional economic ties. Rwanda acts in concert with its neighbors to fight crime and terrorism. It also actively cooperates in efforts to identify and freeze the assets of known terrorist individuals or organizations.

Corruption

The government maintains a high-profile anti-corruption effort and senior leaders articulate a consistent message that combating corruption is a key national goal. There are relatively frequent public reports of investigations into allegations of misconduct by officials using their office for personal gain. The government regularly investigates such incidents and generally prosecutes and punishes those found guilty. Enforcement is the same for both foreign and local investors. High-ranking officials accused of corrupt activities often resign during the investigation period and many have been prosecuted. Senior government officials take pride in Rwanda’s reputation for being tough on corruption, and numerous governmental institutions play an active role in investigating public officials accused of corruption.

Rwanda has signed and ratified the UN Anticorruption Convention. It is a signatory of the OECD Convention on Combating Bribery. It is also a signatory of the African Union Anticorruption Convention. Giving and accepting a bribe is a criminal act under law, and penalties depend on circumstances surrounding the specific case. U.S. firms have identified the relative lack of corruption in Rwanda as a key incentive to investing in the country.

Some businesses report occurrences of petty corruption in the customs clearing process, but there are limited reports of corruption in transfers, dispute settlement, regulatory system, taxation or investment performance requirements.

A local company cannot deduct a bribe to a foreign official from taxes. A bribe by a local company to a foreign official is a crime in Rwanda.

Institutions including the Ombudsman’s office, the Anti-Corruption Unit of the RRA, and the Auditor General’s Office identify corruption cases. The police and the NPPA prosecute cases. Since 2009, the Ombudsman’s office has criminal investigative powers that allow it to pursue corruption cases.

There is a local chapter of Transparency International in Rwanda. Transparency International reported in its 2011 report that Rwanda has improved its ranking in the Corruption Perception index from 2.7 in 2007 to 5.0 in 2011.

Bilateral Investment Agreements

Rwanda is eligible for trade preferences under the African Growth and Opportunity Act (AGOA), which the United States enacted to extend duty-free and quota-free access to the U.S. market for nearly all textile and handicraft goods produced in eligible beneficiary countries. The U.S. and Rwanda signed a Trade and Investment Framework Agreement (TIFA) in 2006 and a Bilateral Investment Treaty in 2008. The Bilateral Investment Treaty officially came into force on January 1, 2011.

OPIC and Other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) has provided a single investment guarantee in Rwanda to Sorwathe, an American-owned tea factory. Given Rwanda’s political, economic and currency stability, OPIC officials have expressed interest in expanding OPIC involvement in Rwanda and are currently evaluating future projects.

The Export-Import Bank (EXIM) continues its program to insure short-term export credit transactions involving various payment terms, including open accounts that cover exports to the U.S. of consumer goods, services, commodities, and certain capital goods. Rwanda is a member of the Multilateral Investment Guarantee Agency (MIGA) and the African Trade Insurance Agency (ATI).

Labor

General labor is available, but there is a shortage of skilled labor, including accountants, lawyers, and technicians. Higher institutes of technology, many private universities, and vocational institutes are improving and producing more and more graduates each year. Carnegie Mellon University opened a campus in Kigali – its first in sub-Saharan Africa – and plans to offer masters-level courses in information and communication technologies starting in 2012. In 2009, the government raised compulsory basic education from six to nine years and made English mandatory, instead of French, as the language of instruction from elementary school grade four onwards. Starting in the 2012 school year, the government intends to extend compulsory basic education from nine to twelve years.

Rwanda attempts to adhere to International Labor Organization (ILO) conventions protecting worker rights. Policies to protect workers in special labor conditions exist, but enforcement remains inconsistent. The government encourages but does not require on-the-job training of and technology transfer to local employees.

The government revised the national labor code in 2000 to eliminate gender discrimination, restrictions on the mobility of labor, and wage controls. In 2009, parliament passed a new labor code, which sets the minimum work age for formal employment at 18 and strengthened prohibitions on the use of child labor and hazardous or forced work. Companies find skill deficits in many sectors when hiring, but these deficits will continue to shrink as literacy rates increase and more qualified people graduate from Rwandan institutions of higher learning. The general population’s literacy rate continues to improve.

Foreign Trade Zones/Free Ports

Rwanda is a member of several sub-regional economic organizations, such as the East African Community (EAC), which put in place a customs union in 2009. That union facilitates the movement of goods produced in the region and permits an EAC citizen with certain skills to work in any member country. Rwanda is also a member of the Economic Community of the Great Lakes (CEPGL) together with the DRC and Burundi, and of COMESA, which includes Rwanda, Burundi, Comoros, DRC, Djibouti, Egypt, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Seychelles, Sudan, Swaziland, Uganda and Zimbabwe. COMESA countries have a free trade agreement that permits goods originating in member countries and that comply with certain rules of origin to enter other member markets duty free. Value addition on imported raw materials must be three percent to qualify for duty free entry. Rwanda has established a free trade zone outside Kigali, with excellent current and planned future communications infrastructure. Bonded warehouse facilities are now available to businesses importing duty free materials

Foreign Direct Investment Statistics

Foreign direct investment in Rwanda surged from 2006 to 2009, but fell significantly in 2010. According to the World Bank’s World Investment Report 2010, Foreign Direct Investment (FDI) flows into Rwanda increased from USD 16 million in 2006 to USD 119 million in 2009, before dropping to USD 42 million in 2010. 2010 FDI flows equated to 0.75% of 2010 gross domestic product.



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