The Government of Malawi (GOM) is eager to attract foreign direct investment and opportunities are plentiful for investors comfortable operating in frontier markets. Political risk in Malawi is manageable as the country has been largely free of political violence since gaining independence in 1964. Malawi has no significant tribal, religious, regional, ethnic, or racial tensions that could lead to violent confrontation. Malawi demonstrated its stability after the presidential election was rerun in 2020 when all political actors accepted the opposition win and power was transferred peacefully.
The GOM has several initiatives to help investors do business in the country. The Malawi Investment and Trade Center’s One Stop Center helps navigate relevant regulations and procedures, a process that can be challenging without local knowledge. The government also hosts Investment Forums to attract investors into the country, though with the COVID19 pandemic the forums have failed to take place. The Government of Malawi emphasizes private sector led development in the newly launched Malawi Vision 2063 development plan.
The agriculture and energy sectors are two areas of the Malawi economy that offer opportunity for investment. Agriculture accounts for 25% of GDP and 80% of Malawi’s exports, but the sector is prone to shocks such as Cyclone Idai and floods which hit the country in 2019, damaging infrastructure. Efforts to recover from the flooding damage have been slowed by the pandemic. Nonetheless, many opportunities exist for investment in agriculture, particularly in agribusiness and agro processing. The energy sector also provides opportunity for investment. In 2020, the U.S. International Development Finance Corporation (DFC) financed a multi-million dollar Solar Power Generation deal in Malawi, which has been approved by GOM and will roll out as planned. The solar power agreement followed the completion of MCC’s $350 million energy compact in 2018. Other opportunities in the energy sector, include mining, transport, and ICT.
Challenges for investment in Malawi are typical of developing countries. GOM has made efforts to combat corruption but it remains a major problem. Scarcity of skilled and semi-skilled labor is another serious impediment to businesses. Shortages are most acute in occupations such as economics, engineering, law, IT, and medicine/health. Infrastructure investment also lags and, as a land-locked country, port access depends on neighboring countries. Formal and informal trade boundaries may restrict both imports and exports, yet the economy is heavily reliant on imports. While power infrastructure has improved, power outages remain a significant impediment to investment.
In general, there are adequate legal instruments to protect investors, and foreign investors generally receive national treatment. All investors have access to Malawi’s legal system, which functions well and in an unbiased manner but is notoriously slow. There is an established mediation process to work with parties to overcome disputes and preempt court proceedings. All investors have the right to establish, acquire, and dispose of interests in business enterprises. Foreigners require a business residency permit to carry out any business activity in Malawi. All new land acquisitions are under leases, but foreigners may be limited to a 50-year renewable lease, compared to 99 years for Malawians.
The Government seeks to ensure the availability of foreign exchange for business transactions and remittances to attract investors and spur economic growth. There are no restrictions on remittance of foreign investment funds if the capital and loans initially came from foreign sources and were registered with the Reserve Bank of Malawi.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Malawi is open to foreign and domestic investment and grants national treatment to all investors. Foreign investors may invest in almost any sector of the economy and may access government investment incentives. There are no restrictions on ownership, size of investment, source of funds, investment sector, or whether the products are destined for export or for domestic markets. Furthermore, an investor can disinvest 100%, make international payments, and cannot be forced into local partnerships. However, the Malawi Stock Exchange limits an individual foreign investor to 10% of any company’s initial public offering (IPO) and the stake of all foreign investors in an IPO is limited to 49% of total shares of the company.
The GOM prioritizes investment retention and maintains an ongoing dialogue with investors through the Malawi Investment and Trade Center (MITC), Ministry of Trade, Ministry of Industry, Public Private Partnership Commission, and other government agencies. The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) represents all sectors of the economy and has been successful in lobbying the GOM on issues affecting the private sector. In recent years, the government has hosted Malawi Investment Forums to present a platform for marketing the country, fostering partnerships, and bringing in foreign direct investment.
Limits on Foreign Control and Right to Private Ownership and Establishment
The GOM does not impose restrictions on the ownership or location of investments. It permits FDI in all sectors of the economy except for those sectors or activities that may pose a danger to health, the environment or national security. Restrictions are not imposed on fund source, destination, or final product. There is, however, a requirement for companies registered in Malawi to appoint at least two Malawian residents as directors.
There are some limitations on foreign ownership of land. Under the Land Act of 2016, neither Malawians nor foreigners can acquire freehold land. Foreigners can secure lease-hold land for terms up to 50 years, after which the lease may be renewed. In addition, foreigners can only secure private land when no citizen has made an equal offer for the same land.
During the privatization of government assets, Malawian nationals are offered preferential treatment including discounted share prices and subsidized credit. A 2017 amendment to the Public Procurement and Disposal of Assets (PPDA) Bill includes an indigenization clause that calls for “the prioritization of all bids submitted to give preference to sixty percent indigenous black Malawians.” In 2020, GOM gazetted the Micro Small and Medium Enterprises (MSMEs) Participation Order, which empowers government ministries, departments and agencies (MDAs) to allocate procurements below certain thresholds to MSMEs. GOM is also in the process of gazetting Indigenous Black Malawian (IBM) Preference regulations, which orders MDAs to offer 60% of national competitive bidding procurements to IBM (PPDA Legal Instruments).
There is no government policy to screen foreign direct investment but minimum investment capital for foreign investors is $50,000. Such investors must register with MITC and RBM. Registration of borrowed invested funds allows investors to externalize profits to pay back loans contracted abroad and repatriate funds when disinvesting. MITC has revised the threshold for capital requirements but is waiting for gazetting to make the threshold official. The new thresholds will depend on the sector and will be revised upwards (MITC Malawi).
Other Investment Policy Reviews
WTO last performed a periodic Trade Policy Review of Malawi in April 2016. The full report can be accessed at WTO TPR . OECD and UNCTAD have not conducted reviews for Malawi.
In addition to MITC’s One Stop Center, businesses can register online at Registrar General, although the process may take longer and the website is sometimes inaccessible. To operate in Malawi, a business must register with the Registrar General, the Malawi Revenue Authority and often the Ministry or regulatory body overseeing their sector of activity. For example, construction companies need to register with the National Construction Industry Council. Businesses are also supposed to obtain business licenses from the city assembly, register the workplace with Ministry of Labor, and allow health officials to carry out an inspection of the company premises ( HYPERLINK “https://mitc.mw/invest/index.php” https://mitc.mw/invest/index.php ).
Domestic investors are not restricted to invest abroad except in the case of the Pension Act of 2010 and accompanying regulations which do not allow for the investment of pension funds or umbrella funds abroad.
3. Legal Regime
Transparency of the Regulatory System
The GOM continues to undertake various reforms to ensure that tax, labor, environment, health, and safety laws do not distort or impede investment. The legal, regulatory, and accounting systems are partially transparent and consistent with international norms. Almost all proposed laws, regulations, and policies (including investment laws) are subject to public consultation before submission to the Cabinet, the Parliament, or the Ministry of Justice. However, sometimes the public notice of such consultations comes late, with the effect that only insiders engage. Parliamentary procedures call for debate on drafts in relevant committees before presenting the bill to the floor for a vote. Rules allow fast-tracking bills as well.
Relevant government Ministries, Departments, and Agencies (MDAs) develop technical regulations and forward them to Ministry of Justice for review and gazetting. All regulations are set at the national level with input from relevant stakeholders. Regulations and enforcement actions are legally reviewable in the national court system. The Ministry of Justice provides oversight or enforcement mechanisms to ensure MDAs follow administrative processes for developing and implementing regulations. If they feel procedures were not followed, private individuals and entities can raise the issue with the appropriate MDA, parliament, or bring a case against the government in court or seek redress through the Office of the Ombudsman. There are no specific regulatory guidelines for reviewing regulations or conducting impact assessments, including scientific or data-driven assessments. What’s more, there are no specific criteria for determining which proposed regulations are subject to an impact assessment nor is there a specialized government body tasked with reviewing and monitoring regulatory impact assessments conducted by other individual agencies or government bodies
The GOM uses a mix of fiscal, financial, and regulatory instruments to administer policy, and thus management and responsibility spreads across multiple ministries and agencies. Taxation policy is the jurisdiction of the Treasury Department in the Ministry of Finance. The Malawi Revenue Authority is the main implementing agency for tax policy. The Reserve Bank of Malawi administers the exchange rate of the Malawi Kwacha, as well as liberal exchange controls to allow free flow of capital and earnings — repatriation of dividends, profits, and royalties. Immigration department administers the Employment of Expatriates Policy, Temporary Employment Permits (TEPs), and business residence permit. The Ministry of Lands, Housing and Urban Development is responsible for land policy administration. The Malawi Bureau of Standards is responsible for metrology, standardization, and quality assurance. The Malawi Communications Regulatory Authority administers the communications act.
Certain professional associations have sectoral rule-making power that amounts to regulatory power. These professional bodies include the National Construction Industry Council, Malawi Law Society, Malawi Accountants Board, Medical Council of Malawi, and the Employers Consultative Association of Malawi. Some of these associations require the use of local labor, local contractors, or other means to achieve localization or skills transfer to Malawians. The rule-making process is not always transparent to firms that are new to the Malawi market.
Interested parties can purchase copies of recent laws from the government printing office or access them at the National Library and in the High Court libraries. An increasing number of laws are also available online at https://malawilii.org/ . The GOM has no central repository for technical regulations. Relevant MDAs manage regulations and publish the regulations in the Malawi Government Gazette after which they form part of the schedules to relevant acts. MDAs websites do not usually post these laws and regulations but do provide them upon request.
The GOM also implemented reforms aimed at improvements in workplace registration and the implementation of the warehouse receipt systems act of 2018, the commodity exchange guidelines, and the cannabis bill of 2020. In 2020, GOM gazetted Export Processing Zone (EPZ) regulations which, among others, make provision for 20% allowance for local sales by an export enterprise under EPZ. GOM also gazetted Control of Goods Act (COGA) regulations which outline steps to take when issuing export and import restrictions ensuring that the process is fair, transparent, and predictable. Immigration rolled out an electronic permit system in 2019/20 and plans to roll out e-passport system in 2021. There are several reforms which the government seeks to implement through the MDAs. These reforms and regulations may improve the business environment. MDAs develop technical regulations and forward them to the Ministry of Justice for final review. The MDAs then present the regulations to Cabinet for final approval and gazetting. Thereafter, relevant government MDAs enforce regulations under their purview.
Transparency of public finances and debt obligations is mixed. Publicly available budget documents provide a full picture of Malawi’s proposed/estimated revenue, including natural resources revenues and off-budget donor support, and expenditures. However, the approved budget provides expenditure data at the level of ministry/budget vote, and not below, where the details necessary to gauge investment potential in given sectors should be visible. End of year financial statements detailing actual revenues and expenditures are presented alongside the budget proposal for the following financial year. The government also makes public general information about debt obligations in its financial statement and annual debt report. The documents are available at Ministry of Finance . The RBM also publishes public debt information in its quarterly economic reviews, published at RBM . In contrast to the visibility into government finances, contingent liabilities are generally unknown to the public, as the books of State-Owned Enterprises are usually not presented to the public in a transparent manner. The government shares additional debt information with the World Bank for debt sustainability analysis and with the IMF for evaluation of compliance with its Extended Credit Facility (ECF) and these analyses are made public through the IMF’s release of its ECF reviews.
International Regulatory Considerations
Malawi is a member of the COMESA Customs Union and the SADC Free Trade Area, governed by the SADC Protocol on Trade. The government develops all new regulations roughly in line with the regulatory policy provisions set out by COMESA and SADC, but national regulations rule if there is a conflict. As a member of both SADC and COMESA, Malawi is bound by their respective norms and standards. Malawi is also a member of Africa Continental Free Trade Area (AfCFTA). One can find details on the organizations’ respective websites:
Since 1995, there is no record of Malawi providing notification on draft technical regulations to the WTO Committee on Technical Barriers to Trade. The last time Malawi submitted a statement on implementation and administration of the WTO Agreement on Technical Barriers to Trade was in 2007. Malawi signed the WTO Trade Facilitation Agreement (TFA) on July 12, 2017. Malawi has made progress on implementing the TFA provisions through the launch of a trade information portal which one can access at https://www.malawitradeportal.gov.mw/ .
Legal System and Judicial Independence
Malawi’s legal system is based on English Common Law. The judiciary consists of local courts and a local appeals court in every district. The higher tiers consist of the Supreme Court of Appeal, the High Court, and the magistrates’ courts. Judges of the High Court are appointed by the President and posted to the five divisions of the high court: civil; commercial; criminal; family and probate; and revenue. The High Court has judicial authority over all civil and criminal cases. Magistrates’ courts are located throughout the country. The High Court hears appeals from the magistrates’ courts and the Supreme Court of Appeal in Blantyre hears appeals arising from the High Court. As of end 2020, there were 35 High Court judges and 11 Supreme Court judges. The Commercial Division of the High Court, presided over by a single judge, deals exclusively with disputes of a commercial or business nature while the Revenue Division deals with any revenue and tax related matter under written laws set out under the Malawi Revenue Authority Act. The Industrial Relations Court handles labor disputes and issues relating to employment. The Child Justice Court handles matters of justice affecting children but falls under the High Court. More information on the judicial system in Malawi can be found at Judiciary .
Laws and Regulations on Foreign Direct Investment
The legal system supports both local and foreign investment without bias. Key regulations that came out recently include The Trademarks Act of 2018, Control of Goods Act of 2018, The Corrupt Practice (Amendment) Act of 2019, The Reserve Bank Act of 2018, The Tobacco Industry Act of 2018, The Mines and Minerals Act of 2018 and the Cannabis Regulation Bill of 2020. The Malawi Investment and Trade Center (MITC) operates a One Stop Center and assists foreign investors to navigate relevant regulations and procedures. MITC and the Malawi Confederation of Chambers of Commerce and Industry ( MCCCI ) have relevant information.
Competition and Antitrust Laws
The GOM established the Competition and Fair-Trading Commission ( CFTC ) in 2005. The CFTC safeguards competition by regulating and monitoring monopolies, protecting consumer welfare, and by ensuring fair market conditions. Since 2013, the institution has overseen over 26 applications for merger and acquisition and dismantled five cartels. CFTC decisions may be appealed, first to the Board and subsequently to the Commercial (High) Court. COMESA Competition Commission is responsible for mergers and acquisitions across the COMESA block and the office is in Lilongwe. It promotes and encourages competition by preventing restrictive business practices and other restrictions that deter efficient operation of markets in COMESA.
Expropriation and Compensation
Section 44 of Malawi’s constitution permits expropriation of property only when done for public utility and with adequate notification and appropriate compensation. Even in such cases, there is always a right to appeal to a court of law. There are laws that protect both local and foreign investment. However, measures that carry expropriation effects are occasionally imposed, including export bans and implicit bans due to the government’s authority to require export licenses for any key commodities at any time for. These restrictions apply equally to foreign and domestic investors. There are no measures that deliberately deprive investors of substantial economic benefits from their investments.
Land acquisition is governed by the Land Acquisition Act of 2016. Accordingly, acquisition must be in the public interest and fair market value for the land must be paid. If the private landowner objects to the level of compensation, it may obtain an independent assessment of the land value. According to the Act, however, such cases may not be challenged in court; the Ministry of Lands, Housing, and Urban Development remains the final judge. In most cases, land is expropriated to give way to GOM development projects, such as construction of roads. Some landowners have refused to relocate due to disagreements; however, these cases are usually settled amicably and where necessary compensations are made. In such expropriations, claimants are well informed and fully engaged.
ICSID Convention and New York Convention
Malawi has not ratified the New York Convention but has ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention). As a member of the ICSID, Malawi accepts binding international arbitration of investment disputes between foreign investors and the GOM. The Investment Disputes (Enforcement of Awards) Act of 1966 makes provision for the enforcement in Malawi of awards of the Tribunal of the ICSID.
Investor-State Dispute Settlement
The government is not a signatory to a treaty or agreement recognizing binding international arbitration of investment disputes such as the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). Malawi does not have a Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with an investment chapter within the United States. Since 1996, there have been no known major investment disputes involving U.S. companies, although taxation disputes do occur. The court system in Malawi accepts and enforces foreign court judgments registered in accordance with established legal procedure. There are reciprocal agreements among Commonwealth countries to enforce judgments without this registration obligation. There is no such agreement between Malawi and the United States, but judgments involving the two countries can still be enforced if the judgment is registered appropriately in Malawi. There have been no known extrajudicial actions taken against foreign investors in the recent past.
International Commercial Arbitration and Foreign Courts
With respect to litigation, cases commenced in the High Court of Malawi or a subordinate court must, where the defendant indicates an intention to defend, first go to mediation. The Assistant Registrar of the High Court maintains a list of mediators and experts. A mediator chosen by agreement of the parties conducts the mandatory mediation. If the matter is not settled during mediation, the action will proceed in the court in which it was commenced. Malawi does not have an arbitration body. There is no statutory requirement for parties who have contractually agreed to arbitration to go through mediation. Parties will only be required to go through mediation before proceeding to arbitration if their agreement stipulates it. As in the case of Investor-State Dispute Settlements, the court system in Malawi accepts and enforces foreign court judgments that are registered locally. Statistics and information on investment disputes involving SOEs are not readily available. Court processes do not favor or discriminate SOE’s and there is adequate transparency in the domestic courts.
The commercial courts govern all bankruptcies under the provision of the consolidated Insolvency Act of 2016. The Act encourages alternatives to bankruptcy such as receivership and reorganization and gives secured creditors priority over other creditors. Monetary judgments are usually made in the investor’s currency. Cross-border provisions of the Insolvency Act are modeled after UN Commission on International Trade Law models. Malawi moved from 141/190 in 2019 to 134/190 in 2020 on WB Doing Business’s ease of “resolving insolvency”.
4. Industrial Policies
The GOM offers a wide range of tax and non-tax incentives which apply equally to domestic and foreign investors. These incentives apply to several sectors including manufacturing, agriculture, mining, and business more generally. Specific incentives tend to vary from year to year. A detailed list of investment incentives can be found on the MITC and Malawi Revenue Authority websites. The incentives offered to investors are applied consistently, but many companies complain about long delays in accessing the accrued benefits. Additionally, firms must negotiate their eligibility for these incentives with the responsible government entities. The GOM occasionally issues guarantee and joint financing on foreign direct investment projects especially on projects that are of national importance.
Foreign Trade Zones/Free Ports/Trade Facilitation
Legislation for the establishment of export processing zones (EPZs) came into force in 1995. Companies engaged exclusively in manufacture for export may apply for EPZ status. As of March 2021, 13 companies (down from 30 in 2000) were operating under the EPZ scheme. Almost all of these are foreign owned companies, though the law does not discriminate on ownership. To resuscitate the EPZs, the GOM in 2020 revised and gazetted the EPZ regulations to allow export processing firms to sell 20 percent of their product on the local market. The government is also in the process of establishing Special Economic Zones, which will have broader coverage than EPZs, allowing a mix of commercial activities including services.
Performance and Data Localization Requirements
Malawi employment and immigration laws and regulations require that local or foreign investors prioritize the hiring of nationals except in cases where skills are not locally available. The appointment of at least two Malawian residents as directors is also required. These laws and regulations are to a large extent enforced by the Immigration Department when issuing TEPs to foreign nationals. Expatriate employees who reside and work in Malawi must obtain a TEP. The government desires to make TEPs readily available, and mandates that processing times for TEP applications shall not exceed 40 working days. In practice, TEPs take significantly longer and face bureaucratic delays (anecdotal reports of several months to a year are common). The process to obtain employment permits can sometimes discourage investors
There are a few legal restrictions on foreign investment based on environmental, health, biosafety, and national security concerns. Affected sectors are firearms and ammunition; chemical and biological weapons; explosives; and manufacturing involving hazardous waste treatment/disposal or radioactive material. Since industrial licensing in Malawi applies to both domestic and foreign investment and is only restricted to a short list of products, it does not limit competition, protect domestic interests, or discriminate against foreign investors at any stage of investment. Additionally, retail operations in rural areas are limited to only Malawian citizens, although enforcement is weak.
Malawi does not place requirements on source of financing or geographic location nor does it set performance requirements for establishing, maintaining, or expanding an investment. While not discriminatory to foreign investors, investments in Malawi require multiple bureaucratic processes, which may include obtaining a business license, a tax registration number, and a land use permit. These procedures can be time consuming, particularly when it comes to land permits, and may constitute an impediment to investment. Investors may also face bureaucratic hurdles in obtaining TEP and business residency permits. Furthermore, there have not been reports of requirements for foreign IT providers to turn over source code or provide access to encryption, to prevent free transmission of customer or other business-related data outside the country’s territory, or to enforce local data storage within the country. Malawi Communications Regulatory Authority (MACRA) and the Ministry of Information are the government agencies responsible for IT issues. The Ministry of Information is in the process of developing a data protection bill (www.malawi.gov.mw/index.php/proud/thuwala/acts#) to be tabled in parliament.
5. Protection of Property Rights
Malawi has laws that govern the acquisition, disposition, recording, and protection of all property rights (land, buildings, etc.) as well as intellectual property rights (copyrights, patents, trademarks, etc.). Currently record keeping for registering land ownership is centralized and inefficient. Efforts are underway to computerize and decentralize recordkeeping. Malawi has a limited housing finance sector. As mortgage availability does not yet meet demand, most households still finance housing through savings or non-mortgage credit. Interest rates on mortgage may vary from a low of 18.1 percent depending on banks’ interest structure and Central Bank’s reference rate, with 10 percent down, the balance payable over 10-20 years. The lowest size of mortgage in Malawi is estimated at $21, 813 (Housing Finance Africa).
In 2016, Parliament passed a revised Land Act, which converted customary land tenure to leasehold title so that those currently using that land enjoy legal rights to it. The new law prohibits freehold title and lease terms can be for up to 99 years, but the law generally restricts foreigners to 50 years but renewable. The new Land Act prohibits granting of freehold to a person but allows those that are already holding such land titles to continue. The Office of Commissioner of Lands administers and manages land issues such as making grants, leases, and other dispositions. There is no reliable data on the proportion of land without clear titles, but it is likely much higher than 10%. The Millennium Challenge Corporation second compact for Malawi (potentially scheduled to start in 2022/23) may emphasize land reforms.
The Land Act of 2016 gives provision to repossess private land under freehold title if the land sits idle for more than two years since registration. However, GOM has not repossessed land from a developer in recent memory. In 2019 GOM warned all investors that it will begin repossessing all land that is not being developed as required by law. Malawi ranks 90 on “registering property” under the 2020 World Bank’s ranking of ease of doing business down from 83 in the 2019 report. Land has become a hot topic in recent times as some locals feel some foreigners are getting all prime land through bribery and corrupt tendencies by GOM officials.
Intellectual Property Rights
Malawi recognizes the importance of intellectual property protection and but lacks enforcement capacity. The Registrar General administers the Patent and Trademarks Act, which protects industrial intellectual property rights (IPR) in Malawi. The Registrar General maintains a public registry of patents and patent licenses. Patents must be registered. Trademarks are registered publicly following advertisement and a period of no objection. Enforcement of IPR is inadequate. However, general awareness of importance of protecting intellectual property in all forms has improved. The Copyright Society of Malawi (COSOMA) administers the Copyright Act of 2016, which protects copyrights and “neighboring” rights in Malawi.
The GOM approved the Copyright (Levy on Storage Devices) Regulations in February 2018. Following the approval, COSOMA and the Malawi Revenue Authority began enforcement of a 5% levy on media storage devices to ultimately compensate rights holders. Malawi also has a new Trademarks act of 2018 which is a repeal of the trademarks act of 1957 and came into force on October 1, 2018. Malawi launched the National Intellectual Property Policy in May 2019 which acknowledges challenges with intellectual property in the country and provides a framework to foster the generation, protection, and exploitation of intellectual property.
While enforcement officials routinely seize counterfeit goods, Malawi does not have a systematic approach to track and report on such seizures, so statistics are not available. Malawi is not listed in USTR’s Special 301 Report or the 2018 Notorious Market Report. For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at https://www.wipo.int/directory/en/details.jsp?country_code=MW.
6. Financial Sector
Capital Markets and Portfolio Investment
The Malawi government recognizes the importance of foreign portfolio investment and has made efforts to provide a platform for such investment through the establishment of a Malawi Stock Exchange (MSE). The MSE hosts 16 listed companies (of which two listed in 2020) with a total market capitalization of $2,320.28 million as of end January 2021 up from $2,062.89 million in February 2020. The demand and supply of shares for existing listed companies is limited. The stock exchange is licensed under the Financial Services Act 2010 and operates under the Securities Act 2010 and the Companies Act 2013. Other regulations include the Capital Market Development Act 1990, and Capital Market Development Regulations 1992 as amended in 2013.
Foreign investors can buy and sell shares at the stock market without any restrictions. Trading in shares can either be direct or through any one of four established brokers. There is a secondary market in government securities, and both local and foreign investors have equal access to purchase these securities. Malawi respects obligations under IMF article VIII and, therefore, refrains from imposing restrictions on making payments and transfers for current international transactions or from engaging in discriminatory currency arrangements or multiple currency practices without IMF approval. Liquidity for stock market participation is not a major problem with a variety of credit instruments on hand. Credit is generally allocated on market terms. The cost of credit is high but may fall in the medium term subject to continued moderate inflation, near stable exchange rate and policy rate downward adjustments. Foreign investors may utilize domestic credit but proceeds from investments made using local resources are not remittable.
Money and Banking System
According to the Institute of Bankers in Malawi, only 25 percent of the adult population in Malawi use banking services. Access to credit remains one of the biggest challenges for businesses and particularly SMEs, mostly due to the cost of credit. For instance, the base-lending rate in March 2021 was 11.9 percent, lowest in over a decade. The potential for using mobile banking technology to increase financial access in Malawi is emerging and official RBM Reports have provided evidence of increasing usage of electronic transactions.
Malawi has a generally sound banking sector, overseen and regulated by the central bank. In 2021, there were eight full-service commercial banks with over 150 branches across the country. The banking sector remained profitable and stable with adequate liquidity and capital positions throughout 2020. Prudential regulations have limited net foreign exchange exposure and non-performing loan rates continue to fall, though spreads continue to be high. The sector, however, is highly concentrated and heavily invested in domestic government debt, which is a possible systemic risk. The banking sector continues to perform though in 2019 some banks underwent rationalization processes where voluntary retirement and other initiatives reduced operational expenses. Total bank assets (eight banks) as of December 2020 were at MK2,242.2 billion roughly 46% of which fell under two largest banks: National Bank and Standard Bank.
The Reserve Bank of Malawi (RBM) is Malawi’s central bank, and it plays a critical role in ensuring efficiency, reliability, and integrity of the payment system in Malawi. It is also a supervisory authority over commercial banks and other financial institutions including insurance companies. There are no restrictions on foreign banks in Malawi. The Banking Act provides the regulations applicable to commercial banks and other financial institutions and provides a supervisory mandate to the Reserve Bank. As of December 2020, four of eight banks were foreign owned. The RBM maintains correspondent banking relationships with almost all central banks across the world and 14 major banks in Asia, Europe, Africa, and the United States. Major commercial banks in Malawi also maintain correspondent banking relationships with banks from Africa, Europe, Asia, and US. For local business, banks require that a foreigner possess a Temporary Employment Permit or business residency permit before opening a bank account.
Foreign Exchange and Remittances
Government policy seeks to ensure the availability of foreign exchange for business transactions and remittances to attract investors and spur economic growth. Commercial banks may operate as forex dealers. Investors have access to forex with no legal limitation, both to pay for imports and to transfer financial payments abroad. Specifically, there are no licensing requirements to import forex and full repatriation of profits, dividends, investment capital, and interest and principal payments for international loans is permitted once the loan and/or investment is registered with the RBM. Malawian investors seeking foreign financing must seek permission from the RBM before acquiring an international loan. RBM Website has several laws and regulations regarding foreign exchange transactions.
The Malawi Kwacha (K) is convertible into major world currencies such as the U.S. Dollar, British Pound, Euro, Japanese Yen, Chinese Yuan, and South African Rand, as well as key regional and trading partners’ currencies. Since May 7, 2012, the value of the local currency has floated freely against major world currencies though the RBM intervenes to avoid sharp depreciation or appreciation. Float aside, the MWK/USD rate remained remarkably stable since 2016 but has faced sustained depreciation since June 2020 losing over 5% by end December 2020. Foreign exchange is available throughout the year but RBM sets rules on the requirements to obtain forex from commercial banks and authorized dealers. Malawi’s official foreign exchange reserves, as of February 2021, are sufficient to cover 2.31 months of imports. Antidotally, since 2019 periodic forex scarcity has delayed some USD remittances.
Investment remittance policies in Malawi have not changed in the past year. There are no restrictions on remittance of foreign investment funds (including capital, profits, loan repayments, and lease repayments) if the capital and loans were obtained from foreign sources and registered with the RBM. The terms and conditions of international loans, management contracts, licensing and royalty arrangements, and similar transfers require initial RBM approval. The RBM grants approval according to prevailing international standards; subsequent remittances do not require further approval. All commercial banks are authorized by the RBM to approve remittances, and approvals are automatic if the applicant’s accounts have been audited and sufficient forex is available. There are no time limitations on remittances.
Sovereign Wealth Funds
Malawi does not have a Sovereign Wealth Fund or similar entity.
7. State-Owned Enterprises
Malawi has 67 state-owned enterprises (SOEs) scattered across many industries/sectors. A list of these SOEs is available on request from the Office of the President and Cabinet (OPC), but the GOM does not usually publish the list in the media or online except when releasing comprehensive list of board members of SOEs. The GOM has been known to bail out commercially-run SOEs when they have incurred heavy losses. Despite the significant role SOEs play in the Malawi economy, finances are opaque and overall statistics are not readily available.
Private and public enterprises generally compete on the same terms and conditions for access to markets, credit, and other business opportunities, although in practice personal relationships can influence decisions heavily. There are exceptions for some public works assignments where public enterprises tend to be given special preference by government. SOEs in the agriculture, education, and health sectors spend more on research and development than local private sector players and they are doing so for the public good rather than for profit. Because local firms tend to be capital-constrained and highly skilled labor is scarce, there is not a strong tradition of private sector-led research and development in Malawi.
Malawi’s SOEs are not required to adhere to the OECD Guidelines on Corporate Governance of SOEs. Corporate governance for most SOEs follows the terms of the relevant Malawi law that established the entity. All SOEs report to a line ministry and to the Department of Statutory Corporations in the OPC but also have a Chairperson and Board of Directors. The president through the OPC appoints board of directors who usually range from politicians, religious & traditional leaders, and professionals. Boards also have senior GOM officials as ex-officio/non-voting members. The participation of members of the government as ex-officio/non-voting members, and of politicians as directors, creates a perceived and/or real conflict of interest.
The government does not have any immediate plans for privatization, but in such cases all investors, irrespective of ethnic group or source of capital (foreign or local) may participate in privatization bids. However, the government may offer domestic investors a discount on shares. Privatization efforts currently focus on public-private partnerships and attracting strategic investors rather than outright privatization. These are handled by the Public Private Partnership Commission.
8. Responsible Business Conduct
There is a well-developed sense of Corporate Social Responsibility (CSR) or responsible business conduct (RBC) in Malawi and most corporate entities make a point to publicize such activities in the local media. There are no established laws or regulations governing RBC, nor does the Government (GOM) formally direct RBC to particular sectors. However, as part of its candidacy for the Extractives Industry Transparency Initiative, the GOM promotes RBC in the mining sector. There are laws governing protection of the environment and waste disposal for producers and consumers. GOM expects all enterprises to follow all laws of Malawi regarding employment and compensation. Malawi has several labor laws governing employment, work environment, industrial safety, age limits, hours of work, and minimum wages. However, the GOM through Environmental Affairs Department (EAD) and other MDAs lacks the resources to meaningfully enforce environmental, consumer, and labor laws and regulations. There is no history of provisions of environmental, social, or labor laws being waived to attract investment and there is no history of the government factoring responsible business conduct policies or practices into its procurement decisions. There have been no verified reports of high profile, controversial instances of private sector impact on human rights or resolutions in recent past. GOM lacks resources to meaningfully enforce human rights, labor rights, consumer protection, environment protections and other laws/regulations intended to protect individuals.
The GOM has enacted accounting standards applicable to the private sector that conform to international standards. Executive compensations are not defined. The law requires all MSE-listed companies to publish their annual audited accounts in local newspapers. Listed companies are also required to publicly declare their profits, dividends to be paid out, planned takeovers (or major portfolio investments), and all relevant information for shareholders to make informed decisions. They are also required to announce their annual shareholders meetings in newspapers.
Several civil society organizations monitor and advocate freely for corporate social responsibility and responsible business conduct in Malawi, including the Institute for Policy Interaction (IPI), the Catholic Commission for Justice and Peace (CCJP), the Centre for Environmental Policy and Advocacy, Institute for Sustainable Development, Malawi Economic Justice Network (MEJN), and Natural Resources Justice Network. On mining, Malawi does not adhere to OECD Guidelines for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas or any domestic measures requiring supply chain due diligence for companies that source minerals that may originate from conflict-affected areas. The Extractive Industries Transparency Initiative (EITI) Board approved Malawi as a candidate country in 2015. Following the conclusion of Malawi’s Validation in 2018, the EITI Board concluded that Malawi has made meaningful progress overall in implementing the EITI Standard. The Board also determined that Malawi has 18 months (until 27 August 2020) to carry out corrective actions regarding the findings of the initial assessment. Due to COVID19, Malawi requested extension of the assessment period to mid-2021 since the pandemic affected implementation of activities. Failure to achieve meaningful progress across several individual requirements in the second validation will result in suspension in accordance with the EITI Standard.
Public sector corruption, including bribery of public officials and conflicts of interest, are a major challenge for firms operating in Malawi. Giving or receiving a bribe, whether to or from a Malawian or foreign official, is a crime under Malawi’s penal code. However, enforcement is insufficient, slow, and selective. The Corrupt Practices Act establishes the independent Anti-Corruption Bureau (ACB) which works with other anti-corruption bureaus in the region but is consistently under-staffed and under-resourced. The Act widened the definition of corruption to include, among other things, offences for abuse of office and possession of unexplained wealth. The Act also provides for the investigation of other offences uncovered during investigating corruption and provides protection for whistleblowers.
Malawian law requires 48 categories of public officers, including all levels of officials from the president and members of parliament, down to specific categories of civil servants, including traffic police and immigration officers, to declare their assets and business interests. The paper declarations are accessible to the public upon request. The law does not extend to family members or to political parties. However, where evidence implicates family members or members of a political party in corruption, the ACB has the power to build a case against the accomplices and bring them to court. In addition, all public officials are required to disclose any conflict of interest and to recuse themselves from any deliberation or decision-making process in relation to the conflict. However, there is no clear definition of what constitutes conflict of interest and these laws are not regularly enforced.
The ACB encourages private sector companies and institutions to develop and implement corruption prevention policies as a way of mainstreaming anti-corruption initiatives into their operations. At times, the business sector joins forces to collectively engage in the fight against corruption, but no formal mechanism exists. Internal controls by companies exist but have failed to produce evidence in any high-profile cases.
Malawi is party to the United Nations Convention Against Corruption and the African Union Convention on Preventing and Combating Corruption. According to Malawian law, citizens have a right to form NGOs focused on anti-corruption or good governance and these NGOs are free to accept funding from any domestic or foreign sources. Malawi’s civil society and the media play an important and visible role in fighting corruption, investigating, and uncovering many cases of corruption. Specific firms with U.S. affiliations have noted irregularities in tender processes and mining licensing but have nonetheless continued to pursue business opportunities in Malawi. Although progress has been made, corruption continues to a major obstacle to doing business in Malawi.
National Integrity Platform
C/O African Institute of Corporate Citizenship (AICC)
Bwanje Street, Area 47, Private Bag 382, Lilongwe, Malawi
Telephone: +(265) 1 775 787 / 691
10. Political and Security Environment
Malawi continues to enjoy a stable and democratic government. Since the end of one-party rule in 1994, it has organized seven peaceful presidential and 6 parliamentary elections. International observers have characterized past elections, with the exception of 2019, as generally “peaceful, free, transparent, and credible.” In 2020, Malawians voted for a new government in a court sanctioned presidential re-run ousting the then ruling party. Although divisions exist, Malawi has no significant tribal, religious, regional, ethnic, or racial tensions that could lead widespread violence. Incidents of labor unrest occasionally occur, but these are usually non-violent and despite instances of political uncertainty there are no nascent insurrections or other politically motivated activities of major concern to investors. Democratic processes in Malawi are well established, and destabilizing unrest is unlikely.
11. Labor Policies and Practices
The majority of working-age individuals in Malawi live in rural areas and are involved in subsistence agricultural. Unskilled labor is plentiful. Skilled and semi-skilled labor is scarce. The informal economy covers about 89% of the labor force and the COVID19 pandemic has adversely affected the informal sector. Child labor remains a problem. A 2015 Child Labor Survey found 38% of children aged 5-17 are active in child labor. In November 2019, the U.S. Customs and Border Protection Agency issued a Withhold Release Order against tobacco from Malawi due to child and forced labor issues. As of March 2021, two companies were given waivers enabling them to export tobacco to the U.S. after proving their supply chain is free of child and forced labor. Discrimination against women remains pervasive. Despite the enactment of the Gender Equality Act in 2013, women continue to have lower literacy and education levels and less access to employment opportunities.
Occupational categories with skills shortages include accountants, economists, engineers, lawyers, IT, and medical/health personnel. The University of Malawi, a government-run university with five constituent colleges nation-wide, provides bachelor’s and master’s degrees in economics, engineering, medicine, education, agriculture, and administration. Other public universities are Mzuzu University, Malawi University of Science and Technology, and Lilongwe University of Agriculture and Natural Resources. The Government (GOM) expanded its network of vocational schools as the higher education system cannot enroll and produce enough qualified graduates. Chancellor College, part of the University of Malawi system, operates the country’s law school. There are also a few PhD programs that usually enroll very few candidates.
Malawi employment, immigration laws, and regulations require that any local or foreign investor prioritize the hiring of nationals except in cases where skills are not locally available. There are no restrictions on employers adjusting employment to respond to fluctuating market conditions so long as such adjustments comply with employment laws and regulations. There are also no social safety net programs for workers laid off for economic reasons nor are employers required to have employment insurance for their employees. In 2021, GOM with support from development partners launched a three-month special cash transfer program targeting the poor urban households who were economically hit by the COVID19 pandemic. There is no provision for labor laws to be waived to attract or retain investment in Malawi nor are there additional or different labor law provisions in Export Processing Zones for the purpose of promoting exports.
On collective bargaining, workers have the legal right to form and join trade unions. The law allows workers, except for military personnel and police, to form and join trade unions of their choice without previous authorization or excessive requirements. Unions must register with the Registrar of Trade Unions and Employers’ Organizations in the Ministry of Labor. There are about 24 unions affiliated with the Malawi Congress of Trade Unions with a membership of approximately 300,000 workers and the organizations are usually weak.
The Industrial Relations Court (IRC) has original jurisdiction over labor disputes and other issues relating to employment. An aggrieved party may appeal the decision of the IRC to the High Court of Malawi but only on matters of law or jurisdiction. Otherwise, on matters of fact, the decision of the IRC is final and binding. The Labor Relations Act (LRA) governs labor-relations management in Malawi’s formal sector. The Act allows strikes and lockouts for registered workers and employers after dispute settlement procedures in collective agreements and conciliation have failed. Employers, labor unions, and GOM lack sophistication regarding labor relations/disputes. Over the past few years there have not been any major strikes that posed any serious investment risk.
While GOM is a signatory to the ILO Convention protecting worker rights, enforcement is weak due to a serious labor inspector shortage and other resource constraints. The GOM is currently reviewing the Occupation Safety, Health and Welfare Act of 1997. The GOM also designated labor officers, police officers and immigration officers as trafficking in persons (TIP) enforcement officers following gazetting of the TIP Act of 2015. The government finalized the National Child Mainstreaming Guide, launched the National Action Plan on Child Labor (NAP II), and reviewed the National Child Policy. Four ILO instruments on forced labor, safety, and health in agriculture, which GOM ratified in November 2019, came into force on November 7, 2020, but the GOM has not updated domestic laws and regulations to fulfill the requirements of the ILO instruments. The ILO is finalizing a qualitative study on the tenancy system in Malawi, and an ILO financed quantitative study on tenancy prevalence is also underway with initial results expected mid-2021. In December 2020, GOM gazetted revised minimum wage regulations that increased wages by an average of 42.8 percent, with separate provisions for domestic workers and truck drivers.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source*
USG or international statistical source
USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Host Country Gross Domestic Product (GDP) ($M USD)
UNCTAD data available at https://stats.unctad.org/
* Source for Host Country Data: RBM Malawi. Note that Malawi Government rebased GDP in 2020 which resulted into upward adjustment of GDP figures (GDP Rebasing Malawi) .
Table 3: Sources and Destination of FDI
Data not available. Table 4: Sources of Portfolio Investment
Data not available.
14. Contact for More Information
Economic and Commercial Section
40/24 Kenyatta Drive, Lilongwe, Malawi
Rwanda has a history of strong economic growth, high rankings in the World Bank’s Ease of Doing Business Index, and a reputation for low corruption. Rwandan GDP grew 9.5 percent in 2019 before declining 3.4 percent in 2020 due to the global COVID-19 pandemic, the first recession since 1994. In late 2020 and early 2021, the Government of Rwanda (GOR) took significant policy reforms intended to return the economy to growth, improve Rwanda’s competitiveness in selected strategic growth sectors, increase foreign direct investment (FDI), and attract foreign companies to operate in the newly-created Kigali International Financial Centre. In February 2021, the GOR amended the Law on Investment Promotion and Facilitation (Investment Code), the Law on Anti-Money Laundering and Counter-Terrorism Financing, and the Company Act. The GOR passed a new law governing partnerships and a law governing mutual legal assistance in criminal matters. The Rwanda Financial Intelligence Centre (FIC) was also created to curb money laundering and terrorism finance. The country presents a number of foreign direct investment (FDI) opportunities in sectors including: manufacturing; infrastructure;energy distribution and transmission; off-grid energy; agriculture and agro-processing; affordable housing; tourism; services; and information and communications technology (ICT). The new Investment Code includes equal treatment for both foreigners and nationals in certain operations, free transfer of funds, and compensation against expropriation; the 2008 U.S.-Rwanda Bilateral Investment Treaty (BIT) reinforces this treatment.
According to the National Institute of Statistics for Rwanda (NISR), Rwanda attracted $462 million in FDI inflows in 2018, representing five percent of GDP. Rwanda had a total of $3.2 billion of FDI stock in 2018, the latest year data is available. In 2020, the Rwanda Development Board (RDB) reported registering $1.3 billion in new investment commitments (a 48 percent decline from 2019, and an 89 percent decline from 2018, due to COVID-19), mainly in manufacturing, construction, and real estate. FDI accounted for 51 percent of registered projects. With $324.7 million committed in seven projects, the United States topped origination countries with 13.2 percent of the total investment commitments to Rwanda.
Due to the economic impacts of COVID-19, Standard and Poor’s downgraded the Rwandan economic outlook from “Stable” to “Negative,” citing higher public debt and deteriorating exports, tourism revenues, and diaspora remittances. Moody’s changed Rwanda’s outlook from stable to negative due to potential lowering of returns on past GOR’s investments in transportation and tourism that would “raise credit risks associated with Rwanda’s relatively high debt burden, which had been rising before the coronavirus shock and is being exacerbated by it.”
Government debt has rapidly increased over the past few years to more than 70 percent of GDP in 2021, but most of these loans are on highly concessionary terms. The result is that the GOR holds cheaper debt than the average low-income country while maintaining a higher debt-carrying capacity. Development institutions such as the World Bank, African Development Bank, International Monetary Fund, and others have offered to lessen or suspend debt repayment terms for less developed countries such as Rwanda because of COVID-19. However, as of March 2021, Rwandan authorities had not requested debt service suspension from official bilateral creditors as envisaged under the Debt Service Suspension Initiative (DSSI) supported by the G-20 and the Paris Club. As of March 2021, Rwanda had neither incurred external payment arrears nor accumulated domestic arrears.
Many companies report that although it is easy to start a business in Rwanda, it can be difficult to operate a profitable or sustainable business due to a variety of hurdles and constraints. These include the country’s landlocked geography and resulting high freight transport costs, a small domestic market, limited access to affordable financing, and payment delays with government contracts. Government interventions designed to support overall economic growth can significantly impact investors, with some expressing frustration that they were not consulted prior to the abrupt implementation of government policies and regulations that affected their businesses.
While electricity and water supply have improved, businesses may continue to experience intermittent outages (especially during peak times) due to distribution challenges. The GOR is planning to meet more than 100 percent of the country’s power generation needs through various power projects in development. Some investors report difficulties in obtaining foreign exchange from time to time, which could be attributed to Rwanda running a persistent trade deficit.
Note: According to NISR, stock of U.S. FDI in the country stood at $182.67 million in 2018 (most recent data available)
1. Openness To, and Restrictions Upon, Foreign Investment
Over the past decade, the GOR has undertaken a series of policy reforms intended to improve the investment climate, wean Rwanda’s economy off foreign assistance, and increase FDI levels. Rwanda enjoyed strong economic growth until the start of the COVID-19 pandemic in March 2020, averaging over seven percent annual GPD growth over the prior decade. Rwanda also enjoys high rankings in the World Bank’s Doing Business report (38 out of 190 economies in 2020 worldwide, and second best in Africa) and a reputation for low corruption. In 2020, Rwanda experienced a 3.4 percent GDP contraction, marking its first recession since the 1994 genocide.
The RDB (https://rdb.rw) was established in 2006 to fast-track investment projects by integrating all government agencies responsible for the entire investor experience under one roof. This includes key agencies responsible for business registration, investment promotion, environmental compliance clearances, export promotion, and other necessary approvals. New investors can register online at the RDB’s website (https://rdb.rw/e-services) and receive a certificate in as few as six hours, and the agency’s “one-stop shop” helps investors secure required approvals, certificates, and work permits. RDB states its investment priorities are: 1) export; 2) manufacturing including -textiles and apparel, electronics, information communication and technology equipment, large scale agricultural operations excluding coffee and tea, pharmaceuticals, processing in wood, glass and ceramics, processing and value addition in mining, agricultural equipment and other related industries that fall in these categories; 3) energy generation, transmission and distribution; 4) information and communication technologies, business process outsourcing and financial services; 5) mining activities relating to mineral exploration; 6) transport, logistics and electric mobility; 7) construction or operations of specialized innovation parks or specialized industrial parks; 8) affordable housing; 9) tourism, which includes hotels, adventure tourism and agro-tourism; 10) horticulture and cultivation of other high-value plants; 11) creative arts in the subsector of the film industry; 12) skills development in areas where the country has limited skills and capacity.
In February 2021, Rwanda made significant changes to the Investment Code to address previous investor complaints and included new incentives to attract investments in strategic growth sectors. The GOR created the Rwanda Financial Intelligence Centre (FIC), passed a law on Anti-Money Laundering and Counter-Terrorism Financing, and passed a law on Mutual Legal Assistance in Criminal Matters to fully criminalize money laundering and terrorism financing and align the country with OECD rules. The GOR amended the Company Act and passed a law on partnerships to allow professional service providers to register as partners rather than limited liability companies.
In 2020, The World Bank Ease of Doing Business report indicated that Rwanda made doing business easier by exempting newly formed small and medium businesses from paying for a trading license during their first two years of operation. In addition, the GOR reduced the time needed to obtain water and sewage connections to facilitate construction permits. It also began requiring construction professionals to obtain liability insurance. The country also upgraded its power grid infrastructure and improved its regulations on weekly rest, working hours, severance pay, and reemployment priority rules.
Several investors have said a top concern affecting their operations in Rwanda is that tax incentives included in deals negotiated or signed by the RDB are not fully honored by the Rwanda Revenue Authority (RRA). Investors further cite the inconsistent application of tax incentives and import duties as a significant challenge to doing business in Rwanda. For example, a few investors have said that customs officials have attempted to charge them duties based on their perception of the value of an import regardless of the actual purchase price.
Under Rwandan law, foreign firms should receive equal treatment regarding taxes and equal access to licenses, approvals, and procurement. Foreign firms should receive value added tax (VAT) rebates within 15 days of receipt by the RRA, but firms complain that the process for reimbursement can take months and occasionally years. Refunds can be further held up pending the results of RRA audits. A few investors cited punitive retroactive fines following audits that were concluded after many years. RRA aggressively enforces tax requirements and imposes penalties for errors – deliberate or not – in tax payments. Investors cited lack of coordination among ministries, agencies, and local government (districts) leading to inconsistencies in implementation of promised incentives. Others pointed to a lack of clarity on who the regulator is on certain matters. The U.S. Treasury Department’s Office of Technical Assistance (OTA) provided tax consultants to RRA to review auditing practices in Rwanda. The OTA program concluded in 2020 and produced a standardized tax audit handbook for RRA’s auditors to use. RRA has also instituted improvements to its systems that will automate certain processes and make many more processes digitized. Per RRA, it is now able to handle VAT claims in real time due to these changes.
Rwanda has neither statutory limits on foreign ownership or control nor any official economic or industrial strategy that discriminates against foreign investors. Local and foreign investors have the right to own and establish business enterprises in all forms of remunerative activity.
Foreign nationals may hold shares in locally incorporated companies. The GOR has continued to privatize state holdings with the government, ruling party, and military continuing to play a dominant role in Rwanda’s private sector. Foreign investors can acquire real estate but with a general limit on land ownership according to the 2013 land law. While local investors can acquire land through leasehold agreements that extend to a maximum of 99 years, foreign investors can be restricted to leases of 49 to 99 years with the possibility of renewal. Freehold is granted only to Rwandan citizens for properties of at least five hectares but may also be granted to foreigners for properties in designated Special Economic Zones, on a reciprocal basis, or for land co-owned with Rwandan citizens (if Rwandan citizens own at least 51 percent). However, according to an October 2020 draft law, freehold tenure would continue for Rwandan citizens on lands of at least two hectares and freehold tenure for foreigners could be approved by a Presidential Order for exceptional circumstances of strategic national interests. Long-term leases (emphyteutic leases) in residential and commercial areas for both citizens and foreigners acquiring land through private means would be increased to 99 years compared to the current 20 and 30 years, respectively. As of April 2021, this draft law had not yet been finalized. The Investment Code includes equal treatment for foreigners and nationals regarding certain operations, free transfer of funds, and compensation against expropriation. In April 2018, Rwanda introduced new laws to curb capital flight. Management, loyalty, and technical fees a local subsidiary can remit to its related non-residential companies (parent company) are capped at two percent of turnover. Companies resolving to go beyond the cap are subject to a 30 percent corporate tax on turnover in addition to a 15 percent withholding tax and an 18 percent reserve charge.
RDB offers one of the fastest business registration processes in Africa. New investors can register online at RDB’s website (http://org.rdb.rw/busregonline) or register in person at RDB offices in Kigali. Once RDB generates a certificate of registration, company tax identification and employer social security contribution numbers are automatically created. The RDB “One Stop Center” assists firms in acquiring visas and work permits, connections to electricity and water, and support in conducting required environmental impact assessments.
RDB is prioritizing additional reforms to improve the investment climate. In October 2020, RDB launched electronic auctioning to reduce fraud by increasing transparency. The new system reduces the time needed to enforce judgments, reducing court fees and allowing payments electronically. RDB hopes to amend the land policy to merge issuance of freehold titles and occupancy permits; introduce online notarization of property transfers; implement small claims procedure to allow self-representation in court and reduce attorney costs; and establish a commercial division at the Court of Appeal to fast-track commercial dispute resolution.
Rwanda promotes gender equality and has pioneered several projects to promote women entrepreneurs, including the creation of the Chamber of Women Entrepreneurs within the Rwanda Private Sector Federation (PSF). Both men and women have equal access to investment facilitation and protections.
The Investment Code provides incentives for internationalization. A small and medium registered investor or emerging investor with an investment project involved in export is entitled to a 150 percent tax deduction of all qualifying expenditures relating to internationalization including: 1) overseas marketing and public relations activities including launch of in-store promotions, road shows, overseas business or trade conferences; 2) participation in overseas trade fairs not supported by another existing initiative; 3) overseas business development costs; 4) market entry and research costs such as costs of establishing a legal entity in a foreign market, salary costs of employees stationed in foreign market, and cost of analysis of market opportunities, supply chain and entry requirements. The Commissioner General of RRA approves qualifying expenditures in consultation with the CEO of RDB. Eligible registered investors receive pre-approval of qualifying expenditures through a joint review process administered by the RRA, RDB and the Ministry of Trade and Industry (MINICOM). An eligible registered investor may claim the tax deduction on a maximum of USD 100,000 of qualifying expenditures in each year. There are no restrictions in place limiting domestic firms seeking to invest abroad.
2. Bilateral Investment Agreements and Taxation Treaties
Rwanda is a member of the WTO, the East African Community (EAC), Economic Community of the Great Lakes, the Economic Community of Central African States, and the Common Market for Eastern and Southern Africa (COMESA). Rwanda ratified the African Continental Free Trade Area agreement in March 2018, and the agreement entered into force in 2019, but its implications for the region remain unclear.
The United States and Rwanda signed a Trade and Investment Framework Agreement (TIFA) in 2006 and a bilateral investment treaty (BIT) in 2008. Rwanda has active BITs with Germany (1969), the Belgium-Luxemburg Economic Union (1985), and the Republic of Korea (2013). Rwanda signed BITs with Mauritius (2001), South Africa (2000), Turkey (2016), Morocco (2016), the United Arab Emirates (2016), and Qatar (2018), but these treaties have yet to enter into force. Rwanda signed the Economic Partnership Agreement between the EAC and the European Union; this agreement has not yet entered into force.
Rwanda does not have a bilateral taxation treaty with the United States. Rwanda has double taxation agreements with Barbados, Mauritius, the Belgium-Luxembourg Economic Union, the Bailiwick of Jersey, Singapore, South Africa, Morocco, Turkey, United Arab Emirates, and Qatar.
After Rwanda implemented higher tariffs on imports of secondhand clothing and footwear in 2016, the U.S. government partially suspended African Growth and Opportunities Act (AGOA) benefits for apparel products from Rwanda, effective May 2018. Many other Rwandan exports to the United States are still eligible for trade preferences under the Generalized System of Preferences and AGOA. In 2020, Rwanda enjoyed a trade surplus of $24 million with the United States due in large part to AGOA-qualified exports of coffee, tea, and tree nuts.
3. Legal Regime
The GOR generally employs transparent policies and effective laws largely consistent with international norms. Rwanda is a member of the UN Conference on Trade and Development’s international network of transparent investment procedures. The Rwanda eRegulations system is an online database designed to bring transparency to investment procedures in Rwanda. Investors can find further information on administrative procedures at: https://businessprocedures.rdb.rw/.
The GOR publishes Rwandan laws and regulations in the Official Gazette and online at https://www.minijust.gov.rw/index.php?id=133. Government institutions generally have clear rules and procedures, but implementation can sometimes be uneven. Investors have cited breaches of contracts and incentive promises and the short time given to comply with changes in government policies as hurdles to complying with regulations. For example, in 2019 the Parliament passed a law banning single use plastic containers. Investors in the beverage and agro-processing sectors expressed concern that the law would have a serious impact on their operations, that alternative packaging was not available in some cases, and that the GOR did not consult effectively with stakeholders before submitting it. The law built on a ban on the manufacture and use of polyethylene bags introduced in 2008. Enforcement has not taken full effect as of April 2021.
There is no formal mechanism to publish draft laws for public comment, although civil society sometimes has the opportunity to review them. There is no informal regulatory process managed by nongovernmental organizations. Regulations are usually developed rapidly to achieve policy goals and sometimes lack a basis in scientific or data-driven assessments. Scientific studies and quantitative analysis (if any) conducted on the impact of regulations are not generally made publicly available for comment. Regulators do not publicize comments they receive. Public finances and debt obligations are generally made available to the public before budget enactment. Finances for State Owned Enterprises (SOEs) are not publicly available. Civil society organizations may request them with a legitimate reason, but these requests are not routinely granted.
There is no government effort to restrict foreign participation in industry standards-setting consortia or organizations. Legal, regulatory, and accounting systems are generally transparent and consistent with international norms but are not always enforced. The Rwanda Utility Regulation Agency (RURA), the Office of the Auditor General (OAG), the Anticorruption Division of the RRA, the Rwanda Standards Board (RSB), the National Tender Board, and the Rwanda Environment Management Authority also enforce regulations. Consumer protection associations exist but are largely ineffective. The business community has been able to lobby the government and provide feedback on some draft government policies through the PSF, a business association with strong ties to the government. In some cases, the PSF has welcomed foreign investors’ efforts to positively influence government policies. However, some investors have criticized the PSF for advocating for the government’s positions more so than conveying business concerns to the government.
The American Chamber of Commerce launched in November 2019, and a European Business Chamber of Commerce launched in March 2020. Both are coordinating policy advocacy efforts to improve the business environment for American, European, and other foreign firms in Rwanda. The Chinese also have a Chamber of Commerce registered in China that is active in Rwanda.
Rwanda is a member of the EAC Standards Technical Management Committee. Approved EAC measures are generally incorporated into the Rwandan regulatory system within six months and are published in the Official Gazette like other domestic laws and regulations. Rwanda is also a member of the Standards Technical Committee for the International Standardization Organization, the African Organization for Standardization, and the International Electrotechnical Commission. Rwanda is a member of the International Organization for Legal Metrology and the International Metrology Confederation. The Rwanda Standards Board represents Rwanda at the African Electrotechnical Commission. Rwanda has been a member of the WTO since May 22, 1996 and notifies the WTO Committee on Technical Barriers to Trade on draft technical regulations.
The Rwandan legal system was originally based on the Belgian civil law system. However, since the renovation of the legal framework in 2002, the introduction of a new constitution in 2003, and the country’s entrance to the Commonwealth in 2009, there is now a mixture of civil law and common law. Rwanda’s courts address commercial disputes and facilitate enforcement of property and contract rights. Rwanda’s judicial system suffers from a lack of resources and capacity but continues to improve. Investors occasionally state that the government takes a casual approach to contract sanctity and sometimes fails to enforce court judgments in a timely fashion. The government generally respects judicial independence, though domestic and international observers have noted that outcomes in high-profile politically sensitive cases appeared predetermined.
In August 2018, the GOR created a Court of Appeals to reduce backlogs and expedite the appeal process without going to the Supreme Court. The new Court of Appeals arbitrates cases handled by the High Court, Commercial High Court, and Military High Court. The Supreme Court continues to decide on cases of injustice filed from the Office of the Ombudsman and on constitutional interpretation. Based on Article 15 of Law nº 76/2013 of 11/09/2013, the Office of the Ombudsman has the authority to request that the Supreme Court reconsider and review judgments rendered at the last instance by ordinary, commercial, and military courts. More information on the review process can be found at https://ombudsman.gov.rw/en/?Court-Judgement-Review-Unit-1375. A tax court is yet to be established in Rwanda. In 2019, the RDB announced the government’s intent to create a commercial division at the Court of Appeal to fast-track resolution of commercial disputes.
National laws governing commercial establishments, investments, privatization and public investments, land, and environmental protection are the primary directives governing investments in Rwanda. Since 2011, the government has reformed tax payment processes and enacted additional laws on insolvency and arbitration. The Investment Code establishes policies on FDI, including dispute settlement (Article 13). The RDB publishes investment-related regulations and procedures at: http://businessprocedures.rdb.rw.
According to a WTO policy review report dated January 2019, Rwanda is not a party to any countertrade and offsetting arrangements or agreements limiting exports to Rwanda.
A new property tax law was passed in August 2018. The new law removes the provision that taxpayers must have freehold land titles to pay property taxes. Small and medium enterprises (SMEs) will receive a two-year tax trading license exemption upon establishment.
Market forces determine most prices in Rwanda, but in some cases, the GOR intervenes to fix prices for items considered sensitive. RURA, in consultation with relevant ministries, sets prices for petroleum products, water, electricity, and public transport. MINICOM and the Ministry of Agriculture have fixed farm gate prices (or the market value of a cultivated product minus the selling costs) for agricultural products like coffee, maize, and Irish potatoes from time to time. On international tenders, a 10 percent price preference is available for local bidders, including those from regional economic integration bodies in which Rwanda is a member.
Some U.S. companies have expressed frustration that while authorities require them to operate as a formal enterprise that meets all Rwandan regulatory requirements, some local competitors are allowed to operate informally without complying fully with all regulatory requirements. Other investors have claimed SOEs, ruling party-aligned, and politically connected business competitors receive preferential treatment in securing public incentives and contracts.
The Investment Code forbids the expropriation of investors’ property in the public interest unless the investor is fairly compensated. An expropriation law came into force in 2015, which included more explicit protections for property owners.
A 2017 study by Rwanda Civil Society Platform argues that the government conducts expropriations on short notice and does not provide sufficient time or support to help landowners fairly negotiate compensation. The report includes a survey that found only 27 percent of respondents received information about planned expropriation well in advance of action. While mechanisms exist to challenge the government’s offer, the report notes that landowners are required to pay all expenses for the second valuation, a prohibitive cost for rural farmers or the urban poor. Media have reported that wealthier landowners have the ability to challenge valuations and have received higher amounts. Political exiles and other embattled opposition figures have been involved in taxation lawsuits that resulted in their “abandoned properties” being sold at auction, allegedly at below market values.
The Investment Code states that “a dispute that arises between an investor and a State organ in connection with a registered investment should be amicably settled. If an amicable settlement cannot be reached, parties must refer the dispute to an agreed arbitration institution or to any other dispute settlement procedure provided for under an agreement between both parties. If no dispute settlement procedure is provided under a written agreement, both parties must refer the dispute to the competent court.”
Rwanda is signatory to the International Center for Settlement of Investment Disputes (ICSID) and the African Trade Insurance Agency (ATI). ICSID seeks to remove impediments to private investment posed by non-commercial risks, while ATI covers risk against restrictions on import and export activities, inconvertibility, expropriation, war, and civil disturbances.
Rwanda ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards in 2008.
Rwanda is a member of the East African Court of Justice for the settlement of disputes arising from or pertaining to the EAC. Rwanda has also acceded to the 1958 New York Arbitration Convention and the Multilateral Investment Guarantee Agency convention. Under the U.S.-Rwanda BIT, U.S. investors have the right to bring investment disputes before neutral, international arbitration panels. Disputes between U.S. investors and the GOR in recent years have been resolved through international arbitration, court judgments, or out of court settlements. Judgments by foreign courts and contract clauses that abide by foreign law are accepted and enforced by local courts, though these lack capacity and experience to adjudicate cases governed by non-Rwandan law. There have been a number of private investment disputes in Rwanda, though the government has yet to stand as complainant, respondent, or third party in a WTO dispute settlement. Rwanda has been a party to two cases at ICSID since Rwanda became a member in 1963; one of these cases is an ongoing case brought by an American investor against Rwanda. SOEs are also subject to domestic and international disputes. SOEs and ruling party-owned companies party to suits have both won and lost judgments in the past.
In 2012, the GOR launched the Kigali International Arbitration Center (KIAC). KIAC case handling rules are modeled on the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules. According to the KIAC’s 2020 activity report, KIAC had reviewed 160 cases by June 2020. Close to 40 percent of those cases were international with parties from more than 20 nationalities (Burundi, China, Ethiopia, Egypt, France, India, Italy, Kenya, Korea, Pakistan, South Africa, South Korea, Singapore, Rwanda, Spain, Switzerland, Turkey, Uganda, the United States, and Zambia). Arbitrators appointed were from Rwanda, Kenya, Malaysia, Nigeria, Canada, the United States, and Singapore. Of the 89 KIAC-approved international arbitrators, only four are of Rwandan nationality, suggesting that KIAC draws from a large pool of professionals in alternative dispute resolutions from all over the world. All 38 domestic arbitrators are Rwandan nationals.
Some businesses report being pressured to use the Rwanda-based KIAC for the seat of arbitration in contracts signed with the GOR. Some of these companies have indicated that they would prefer arbitration take place in a third country, noting that KIAC has a short track record and is domiciled in Rwanda. Moreover, some companies have reported difficulty in securing international financing due to the KIAC provision in their contracts.
Rwanda ranks 38 out of 190 economies for resolving insolvency in the World Bank’s 2020 Doing Business Report and is number two in Africa. It takes an average of two and a half years to conclude bankruptcy proceedings in Rwanda. Per the World Bank 2020 Doing Business Report, the recovery rate for creditors on insolvent firms was reported at 19.3 cents on the dollar, with judgments typically made in local currency.
In April 2018, the GOR instituted a new Insolvency and Bankruptcy Law. One major change is the introduction of an article on “pooling of assets” allowing creditors to pursue parent companies and other members of the group, in case a subsidiary is in liquidation. The new law can be accessed here: https://org.rdb.rw/wp-content/uploads/2020/06/Insolvency-Law-OGNoSpecialbisdu29April2018.pdf
The Investment Code offers a package of benefits and incentives for registered investors in priority and strategic growth sectors. Under certain conditions, these can include:
Preferentialcorporateincometaxrateofzeropercentfor1)an international company that has its headquarters or regional office in Rwanda; or 2) an entity registered in Rwanda by a philanthropic investor.
Preferentialcorporateincometaxrateofthreepercentfor1)an investor licensed to operate as a pure holding company; 2) a special purpose vehicle registered for investment purposes; 3) a Collective Investment Scheme; 4) a global trading or paper trading company (on foreign sourced trading income); or 5) an intellectual property company (on foreign sourced royalties).
Preferentialtaxincentivesforaphilanthropicinvestors: An entity established by a philanthropic investor is granted the following incentives: 1) grants and funds transferred to the entity for the purposes of financing its social impact activities are not deemed revenues and are therefore exempted from value added tax and corporate income tax charges; 2) goods and services procured locally by the entity are value added tax zero- rated; 3) an exemption of employment income tax is applied to foreign nationals recruited by the entity who ordinarily reside in Rwanda, provided that foreign employees do not exceed thirty percent of the professional staff of the entity. Foreign employees of the entity are entitled to a refund of social security contributions paid, upon their permanent departure from Rwanda.
Preferentialcorporateincometaxrateoffifteenpercentforregistered investors undertaking one of the following operations: 1) energy generation, transmission and distribution from peat, solar, geothermal, hydro, biomass, methane and wind (excluding investors having engineering procurement contracts executed on behalf of the Government of Rwanda); 2) mass transportation of passengers and goods; 3) manufacturing; 4) information and communication technology; 5) innovation research and development facilities; 6) fund management entities, collective investment schemes, wealth management services, financial advisory entities, family office services, fund administrators, financial technology entities, captive insurance schemes, private banks, mortgage finance institution, finance lease entities, asset backed securities, reinsurance companies, trust and corporate service providers; 7) construction of affordable houses; 8) electric mobility; 9) adventure tourism and agriculture tourism.
Preferentialcorporateincometaxrateforexportinvestments:1) twenty-five percent corporate income tax is applied to a registered investor with at least thirty percent of total turnover of goods and services coming from exports; 2) fifteen percent corporate income tax is applied to a registered investor with at least fifty percent of total turnover coming from export of goods and services.
Exemption from custom taxes and duties for products used in export processing zones: In addition to incentives for export investments, registered investors in products used in export processing zones are exempted from customs taxes and duties.
Incentives for internationalization: Small, medium or emerging involved in exports are entitled to a one hundred and fifty percent tax deduction of all qualifying expenditures relating to internationalization.
Corporateincometaxholidayofuptosevenyears:Investors (except those in private equity and venture capital) investing an equivalent of at least fifty million U.S. dollars and contributing at least thirty percent of the invested amount in form of equity in specific priority sectors are granted a maximum of a seven-year corporate income tax holiday.
Corporateincometaxholidayofuptofiveyearsfor1)specialized innovation and industrial park developers from the first year that the project makes a positive net income; and 2) licensed microfinance institutions from the date of their licensing.
Preferential withholding tax of zero percent is applicable to dividends, interest and royalties paid by investors benefiting from preferential corporate income tax of fifteen percent and three percent.
Preferential withholding tax of five percent is applicable to dividends and interest income paid to investors in companies listed on the Rwanda Stock Exchange.
Preferential withholding tax of ten percent is applicable to specialized innovation and industrial park developers on interest on foreign loans, dividends, royalties and service fees.
In addition, the Ministry of Finance and Economic Planning (MINECOFIN), upon recommendation by RDB’s Private Investment Committee, can issue a Ministerial Order offering more incentives for investments deemed of strategic importance.
In the past, poorly coordinated efforts between the RDB, RRA, MINICOM, and the Directorate of Immigration and Emigration led to inconsistent application of incentives, according to investors. Investors reported that tax incentives included in deals signed by the RDB were not honored by the RRA in a timely manner or sometimes were not honored at all. Additionally, investors continue to face challenges receiving payment for services rendered for GOR projects, VAT refund delays, and/or expatriation of profits. In 2016, the GOR instituted a law governing public-private partnership (PPPs) as a step toward courting investments in key development projects. The law provides a legal framework concerning establishment, implementation, and management of PPPs. Detailed guidelines for the law can be accessed here: http://rdb.rw/wp-content/uploads/2018/08/PPP-Guidelines.pdf
Rwanda has established the Kigali Special Economic Zone (KSEZ), which was set up through the merger of the former Kigali Free Trade Zone and the Kigali Industrial Park projects. SEZs in Rwanda are regulated by the SEZ Authority of Rwanda (SEZAR), based at the RDB. Land in KSEZ is acquired through the Prime Economic Zone Secretariat, a private developer, under the regulations of SEZAR. The price per square meter is $62, and the minimum size that can be acquired is one hectare (2.5 acres). Bonded warehouse facilities are now available both in and outside of Kigali for use by businesses importing duty-free materials. The GOR has established a number of benefits for investors operating in the SEZs, including tax and land ownership advantages. A company basing itself in the SEZ can also opt to be a part of the Economic Processing Zone. A number of criteria must be satisfied in order to qualify. These include requirements to maintain extensive records on equipment, materials and goods, suitable offices, and security provisions.
Holding an Export Processing Zone (EPZ) license allows a company to operate in the KSEZ and will exempt a company from VAT, import duties, and corporate tax. The company is then obliged to export a minimum of 80 percent of production. Even after considering savings due to these government incentives, a few investors reported that land in the SEZs was significantly more expensive than land outside the zones. The GOR has stated that there are no fiscal, immigration, or customs incentives beyond those provided in the Investment Code, though media has occasionally speculated that certain investors received additional incentives. The negative list of goods prohibited under the EAC Customs Management Act applies in SEZs. In November 2018, the GOR approved the Bugesera Special Economic Zone (BSEZ), located 45 minutes from Kigali. A new airport is under construction near the BSEZ as well. Procedural information and cost involved in operating in SEZs can be accessed here: https://businessprocedures.rdb.rw/procedure/238/189?l=en. The SEZ policy was revised in 2018. Under the new policy, foreigners and locals may only lease land (formerly, foreign investors were able to purchase land outright in SEZs). To read more on the new policy, please see: https://www.minicom.gov.rw/fileadmin/user_upload/Minicom/Publications/Policies/SEZ_Policy_-_January_2018_v2.pdf
Rwanda created the Export Growth Facility (EGF) in 2015 with an initial capital of RWF 500 million ($500,000) administered by the Development Bank of Rwanda (BRD). German KfW Development Bank injected $10 million in support of the fund. The pilot program targets SMEs with export sales below $1 million. Priority sectors include horticulture, agro-processing, and manufacturing. The facility has three windows: an investment catalyst fund, a matching grant fund for market entry costs, and an export guarantee facility. Investment catalyst funds support private sector investments in export-orientated production through a 6.5 percent subsidy on market interest rates (normally between 16-20 percent). The matching grant fund provides grants (50 percent of the need) for expenditure on specific market entry costs (export strategy elaboration, export promotion, compliance with standards, etc.). The export guarantee fund provides short-term guarantees to commercial banks financing exporters’ pre- and post-shipment operations. The export guarantee component is not yet operational. The facility supports both locally- and foreign-owned companies in Rwanda; at least one American company has already received a loan. Rwanda created the Business Development Fund (BDF) in 2011 to provide support to SMEs in credit guarantees, matching grants, asset leasing, and advisory services. BDF works with banks to provide guarantees between 50-75 percent of required collaterals. The maximum guarantee is RWF 500 million ($500,000) for agriculture projects and RWF 300 million ($300,000) for other sectors, for a maturity period of up to 10 years.
The GOR also manages the Rwanda Green Fund (FONERWA) to spur investment in green innovation. UK Aid and other donors have invested in the fund. FONERWA claims projects it supports have created more than 137,000 green jobs.
The GOR’s cabinet resolution of April 30, 2020, established the Economic Recovery Fund (ERF) to support businesses severely affected by COVID-19, and the National Bank of Rwanda (BNR) was designated to manage the initial $100 million in funds. This $100 million was structured in four financing windows: 1) the hotel financing window, 2) the working capital window for large corporations, 3) working capital window for small and medium enterprises (SMEs) and 4) working capital for micro-businesses. Lending under the first three windows is through banks, while the fourth one is through Microfinance Institutions (MFIs). According to the January 2021 International Monetary Fund (IMF) report, “the ERF comprises a debt restructuring window for hotels ($50 million), working capital financing windows for large corporates, SMEs, and microbusinesses ($47 million), and a guarantee scheme for up to 75 percent of ERF loans to SMEs ($3 million). ERF funds are lent to banks, MFIs, and Savings and Credit Cooperative Organizations (SACCOs), at zero or low interest, who in turn use it to provide loan restructuring for hotels or working-capital financing, at reduced rates, to firms deemed viable.” On March 31, 2021 the GOR announced the ERF would receive an additional $350 million to support the same activities as the original $100 million. The monies were not made immediately available, and sources of the funding have not been disclosed.
There is no legal obligation for nationals to own shares in foreign investments and no requirement that shares of foreign equity be reduced over time. However, the government strongly encourages local participation in foreign investments. There is no requirement for private companies to store their proprietary data in Rwanda. There is also no requirement for foreign IT providers to turn over source code and/or provide access to encryption technology. IT companies dealing with government data cannot store it outside Rwanda or transfer it without GOR approval. Rwandans’ private data must be stored in Rwanda. There is no formal requirement that a certain number of senior officials or board members be citizens of Rwanda unless as a pre-condition to benefits from increased investment incentives. For example, the Investment Code specifies that for an international company that moves its headquarters or regional office to Rwanda to be able to recruit any number of required managerial, professional, and technical foreign employees, at least 30 percent of professional staff must be Rwandan. A preferential corporate income tax rate of three percent is granted to collective investment schemes, special purpose vehicles and pure holding companies if at least 30 percent of their professional staff are Rwandans and at least two professional or qualified Rwandan residents are members of their board of directors.
While the government does not impose conditions on the transfer of technology, it does encourage foreign investors, without legal obligation, to transfer technology and expertise to local staff to help develop Rwanda’s human capital. There is no legal requirement that investors must purchase from local sources or export a certain percentage of their output, though the government offers tax incentives for the latter. Unless stipulated in a contract or memorandum of understanding characterizing the purchase of privatized enterprises, performance requirements are not imposed as a condition for establishing, maintaining, or expanding other investments. Such requirements are imposed chiefly as a condition to tax and investment incentives. The GOR is not involved in assessing the type and source of raw materials for performance, but the RSB determines quality standards for some product categories.
5. Protection of Property Rights
The law protects and facilitates acquisition and disposition of all property rights. Investors involved in commercial agriculture have leasehold titles and can secure property titles, if necessary. The Investment Code states that investors shall have the right to own private property, whether individually or collectively. According to the 2013 land law, foreign investors can acquire real estate, though there is a general limit on land ownership. Freehold is granted only to Rwandan citizens for at least five hectares (12.5 acres) and to foreigners for 1) properties located in designated Special Economic Zones, 2) on reciprocal basis or 3) on land co-owned with Rwandan citizens (if Rwandan citizens own at least 51 percent). However, according to the October 2020 draft law, freehold tenure will continue for Rwandan citizens on lands of at least two hectares (five acres) and, under a Presidential Order, freehold tenure for foreigners will be approved for exceptional circumstances (strategic national interest investments). The GOR will increase long-term leases (emphyteutic lease) in residential and commercial areas for both citizens and foreigners acquiring land through private means to 99 years compared to the current 20 and 30 years, respectively. While local investors can acquire land through leasehold agreements that extend to 99 years, the GOR has limited the lease period for foreigners to 49 years, in some cases. Such leases are theoretically renewable, but the law is new enough that foreigners generally have not yet attempted to renew a lease. Mortgages are a nascent but growing financial product in Rwanda, increasing from 770 properties in 2008 to 13,394 in 2017, according to the RDB. In 2020, RDB reported registering 16,624 mortgages in 2019.
The Investment Code guarantees protection of investors’ intellectual property (IP) rights, and legitimate rights related to technology transfer. The GOR approved IP legislation covering patents, trademarks, and copyrights in 2009. A registration service agency, which is part of the RDB, was established in 2008 and has improved IP right protection by making the registering of all commercial entities and facilitating businesses identification and branding possible.
The RDB and the Rwanda Standards Board (RSB) are the main regulatory bodies for Rwanda’s intellectual property rights law. The RDB registers intellectual property rights, providing a certificate and ownership title. Every registered IP title is published in the Official Gazette. The fees payable for substance examination and registration of IP apply equally for domestic and foreign applicants. From 2016, any power of attorney granted by a non-resident to a Rwandan-based industrial property agent must be notarized (previously, a signature would have been sufficient).
Registration of patents and trademarks is on a first time, first right basis so companies should consider applying for trademark and patent protection in a timely manner. It is the responsibility of the copyright holders to register, protect, and enforce their rights where relevant, including by retaining their own counsel and advisors. Through the RSB and the RRA, Rwanda has worked to increase protection of IP rights, but many goods that violate patents, especially pharmaceutical products, make it to market nonetheless. As many products available in Rwanda are re-exports from other EAC countries, it may be difficult to prevent counterfeit goods without regional cooperation. Also, investors reported difficulties in registering patents and having rules against infringement of their property rights enforced in a timely manner. The GOR is proposing a new IP law that will organize a patent and trade office for Rwanda.
As a COMESA member, Rwanda is automatically a member of the African Regional Intellectual Property Organization. Rwanda is also a member of the World Intellectual Property Organization (WIPO) and is working toward harmonizing its legislation with WTO trade-related aspects of IP. Rwanda has yet to ratify WIPO internet treaties, though the government has taken steps to implement and enforce the WTO TRIPS agreements. Rwanda is not listed in USTR’s 2019 Special 301 report or the 2019 Notorious Markets List. In July 2020, Rwanda acceded to the Marrakesh Treaty to facilitate access to published works for persons who are blind, visually impaired, or otherwise print disabled. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.
Rwanda conducts anti-counterfeit goods campaigns on a regular basis, but statistics on IP enforcement are not publicly available. A few companies have expressed concern over inappropriate use of their IP. While the government has offered rhetorical support, enforcement has been mixed. In some cases, infringement has stopped, but in other cases, companies have been frustrated with the slow pace of receiving judgment or in receiving compensation after successful legal cases.
6. Financial Sector
In February 2021, the GOR introduced new incentives to support the Rwanda Stock Exchange and the Capital Market Authority through the Investment Code. A preferential withholding tax of five percent is applicable to dividends and interest income paid to investors in companies listed on the Rwanda Stock Exchange. A preferential corporate income tax rate of three percent applies to collective investment schemes. A preferential corporate income tax rate of fifteen percent applies to fund management entities, wealth management services, financial advisory entities, financial technology entities, captive insurance schemes, mortgage finance institutions, fund administrators, finance lease entities, and asset backed securities.
In December 2017, the GOR established Rwanda Finance Limited (RFL), a state-owned enterprise charged with creating the Kigali International Financial Centre (KIFC). The goal is to create a conducive ecosystem to entice pan-African and international financial service providers and investment funds to Rwanda. KIFC is scheduled to be launched on the sidelines of Commonwealth Heads Of Governments Meeting (CHOGM) taking place in Kigali in June 2021. RFL has successfully pushed the GOR to change many Rwandan investment, banking, and commercial laws to in order to align with OECD/EU and AML/CFT requirements. In November 2019, BNR introduced a multiple bond issuance program. In the 2019-2020 financial year, seven bonds were reopened, eight new bonds were issued, and three multiple issuances were performed. Oversubscription reached 138% on average. BNR implemented reforms in recent years that are helping to create a secondary market for Rwandan treasury bonds.
In November 2019, BNR introduced a multiple bond issuance program. In the 2019-2020 financial year, seven bonds were reopened, eight new bonds were issued, and three multiple issuances were performed. Oversubscription reached 138% on average. BNR implemented reforms in recent years that are helping to create a secondary market for Rwandan treasury bonds.
In January 2021, the IMF completed its third review of Rwanda’s economic performance under a Policy Coordination Instrument, which can be found here: https://www.imf.org/en/Publications/CR/Issues/2021/01/04/Rwanda-Third-Review-Under-the-Policy-Coordination-Instrument-Press-Release-Staff-Report-and-49984
Many U.S. investors express concern that local access to affordable credit is a serious challenge in Rwanda. Interest rates are high for the region, banks offer predominantly short-term loans, collateral requirements can be higher than 100 percent of the value of the loan, and Rwandan commercial banks rarely issue significant loan values. The prime interest rate is 16-18 percent. Large international transfers are subject to authorization. Investors who seek to borrow more than $1 million must often engage in multi-party loan transactions, usually by leveraging support from larger regional banks. Credit terms generally reflect market rates, and foreign investors can negotiate credit facilities from local lending institutions if they have collateral and “bankable” projects. In some cases, preferred financing options may be available through specialized funds including the Export Growth Fund, BRD, or FONERWA.
The banking sector holds more than 67 percent of total financial sector assets in Rwanda. In total, Rwanda’s banks have assets of around $3.8 billion, which increased 18.5 percent between June 2018 and June 2020, according to BNR. Rwanda’s financial sector remains highly concentrated. The share of the three largest banks’ assets increased from 46.5 percent in December 2018 to 48.4 percent in December 2019. The largest, the partially state-owned Bank of Kigali (BoK), holds more than 30 percent of all assets. The total number of bank and micro-finance institution (MFI) accounts increased from 7.1 million to 7.7 million between 2018-2019.
Local banks often generate significant revenue from holding government debt and from charging a variety of fees to banking customers. The capital adequacy ratio decreased to 23.7 percent in June 2020 from 24.1 percent over the year but was still well above the prudential minimum of 15 percent, suggesting the Rwandan banking sector continues to be generally risk averse. Non-performing loans increased from 4.9 in December 2019 to 5.5 percent in June 2020 due to the COVID-19 pandemic’s disruption of economic activities.
The IMF gives BNR high marks for its effective monetary policy. BNR introduced a new monetary policy framework in 2019, which shifted toward an inflation-targeting monetary framework in place of a quantity-of-money framework. In April 2020, the BNR arranged a 50 billion RWF ($53.4 Million) liquidity fund for local banks facing challenges from COVID-19. The BNR allowed banks to restructure loans affected by the pandemic by authorizing an average of four months in loan holidays. Additionally, in March 2020, the BNR took a decision to suspend distribution of dividends from profits generated in 2019.
Foreign banks are permitted to establish operations in Rwanda, with several Kenyan-based banks in the country. Atlas Mara Limited acquired a majority equity stake in Banque Populaire du Rwanda (BPR) in 2016. BPR/Atlas Mara has the largest number of branch locations and is Rwanda’s second largest bank after BoK. Atlas Mara was, in turn, acquired by Kenyan based KCB bank. Moroccan-based Bank of Africa, a minority bank in Rwanda, actively discourages American account holders due to requirements imposed by the Foreign Account Tax Compliance Act (FACTA), which charges foreign banks for expenses incurred while auditing an American.
In November 2020, the GOR signed an MOU with the African Export-Import Bank (Afreximbank) to host the permanent headquarters of Afrexim Fund for Export Development in Africa (FEDA) in Kigali. FEDA will operate as an equity investment fund that provides seed capital to companies in Africa, emphasizing projects that promote intra-African trade, trade-related infrastructure, and value-added exports. According to RDB, the fund will have an initial commitment of $350 million from Afreximbank and is expected to grow to over $1 billion in the future.
Rwandans primarily rely on cash or mobile money to conduct transactions, though use of debit and credit cards is expanding. By December 2019, the number of debit cards in the country grew eight percent year over year to 945,000, and the number of mobile banking customers grew 22 percent to 1,266,000. Credit cards are becoming more common in major cities, especially at locations frequented by foreigners, but are not used in rural areas. In the financial year 2019-20, the number of retail point of sale (POS) using cards increased by 29 percent compared to 2018-19. ATM terminals decreased by 15 percent due to the adoption of other channels such as agency, internet, and mobile banking. Use of mobile money has grown by more than 500 percent since March 2020 due to changes brought about by COVID-19 and business closures.
In 1995, the government abandoned a dollar peg and established a floating exchange rate regime under which all lending and deposit interest rates were liberalized. On a daily basis, the BNR publishes an official exchange rate, which is typically within a two percent range of rates seen in the local market. Some investors report occasional difficulty in obtaining foreign exchange. Rwanda generally runs a large trade deficit, estimated at more than ten percent of GDP in 2019. In the 2019-2020 fiscal year, BNR reported that Rwanda’s trade deficit widened by 23.7 percent. Transacting locally in foreign currency is prohibited in Rwanda. Regulations set a ceiling on the amount of foreign currency that can leave the country per day. In addition, regulations specify limits for sending money outside the country; the BNR must approve any transaction that exceed these limits.
Most local loans are in local currency. In December 2018, BNR issued a new directive on lending in foreign currency which requires the borrower to have a turnover of at least RWF 50 million ($50,000) or equivalent in foreign currency and have a known income stream in foreign currency not below 150 percent of the total installment repayments. Moreover, the repayments must be in foreign currency. The collateral pledged by non-resident borrowers must be valued at 150 percent of the value of the loan. In addition, BNR requires banks to report regularly on loans granted in foreign currency.
Investors can remit payments from Rwanda only through authorized commercial banks. There is no limit on the inflow of funds, although local banks are required to notify BNR of all transfers over $10,000 to mitigate the risk 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 shortly after auction in Mombasa, Kenya. Repatriated export earnings deposited in commercial banks must match the exact declaration the exporter used crossing the border.
Rwandans working overseas can make remittances to their home country without impediment. It usually takes up to three days to transfer money using SWIFT financial services. The concentrated nature of the Rwandan banking sector limits choice, and some U.S. investors have expressed frustration with the high fees charged for exchanging Rwandan francs to dollars.
In 2012, the Rwandan government launched the Agaciro Development Fund (ADF), a sovereign wealth fund that includes investments from Rwandan citizens and the international diaspora. By September 30, 2019, the fund was worth 194.3 billion RWF in assets ($204 million). The ADF operates under the custodianship of the BNR and reports quarterly and annually to MINECOFIN. ADF is a member of the International Forum of Sovereign Wealth Funds and is committed to the Santiago Principles. ADF only operates in Rwanda. In addition to returns on investments, voluntary contributions from citizens and the private sector, and other donations, ADF receives RWF 5 billion ($5 million) every year from tax revenues and five percent of proceeds from every public asset that the GOR has privatized. The fund also receives five percent of royalties from minerals and other natural resources each year. The government has transferred a number of its shares in private enterprises to the management of ADF including those in the BoK, Broadband Systems Corporation (BSC), Gasabo 3D Ltd, Africa Olleh Services (AoS), Korea Telecom Rwanda Networks (KTRN), and the One and Only Nyungwe Lodge. ADF invests mainly in Rwanda. While the fund can invest in foreign non-fixed income investments, such as publicly listed equity, private equity, and joint ventures, the AGDF Corporate Trust Ltd (the fund’s investment arm) held no financial assets and liabilities in foreign currency, according to the 2018 annual report (the most recent report available).
7. State-Owned Enterprises
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 GOR has made efforts to privatize SOEs; reduce the government’s non-controlling shares in private enterprises; and attract FDI, especially in the ICT, tourism, banking, and agriculture sectors, but progress has been slow. Current SOEs include water and electricity utilities, as well as companies in construction, ICT, aviation, mining, insurance, agriculture, finance, and other sectors. Some investors complain about competition from state-owned and ruling party-aligned businesses. SOEs and utilities appear in the national budget, but the financial performance of most SOEs is only detailed in an annex that is not publicly available. The most recent state finances audit report of the OAG also covers SOEs and has sections criticizing the management of some of the organizations. SOEs are governed by boards with most members having other government positions.
State-owned non-financial corporations include Ngali Holdings, Horizon Group Ltd, Rwanda Energy Group, Water and Sanitation Corporation, RwandAir, National Post Office, Rwanda Printery Company Ltd, King Faisal Hospital, Muhabura Multichoice Ltd, Prime Holdings, Rwanda Grain and Cereals Corporation, Kinazi Cassava Plant, and the Rwanda Inter-Link Transport Company. State-owned financial corporations include the National Bank of Rwanda, Development Bank of Rwanda, Special Guarantee Fund, Rwanda National Investment Trust Ltd, Agaciro Development Fund, BDF and the Rwanda Social Security Board. The GOR has interests in the BoK, Ultimate Concepts Limited (UCL), New Horizon Limited, Rwanda Convention Bureau, BSC, CIMERWA, Gasabo 3D Ltd, AoS, Korea Telecom Rwanda Network, Dubai World, Nyungwe Lodge, and Akagera Management Company, among others.
Rwanda continues to carry out a privatization program that has attracted foreign investors in strategic areas ranging from telecommunications and banking to tea production and tourism. As of 2017 (the latest data available), 56 companies have been fully privatized, seven were liquidated, and 20 more were in the process of privatization. RDB’s Strategic Investment Department is responsible for implementing and monitoring the privatization program. Some observers have questioned the transparency of certain transactions, as a number of transactions were undertaken not through public offerings but through mutual agreements directly between the government and the private investor, some of whom have personal relationships with senior government officials.
8. Responsible Business Conduct
There is a growing awareness of corporate social responsibility (CSR) within Rwanda, and several foreign-owned companies operating locally implement CSR programs. Rwanda implements the OECD’s Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. Rwanda also implements the International Tin Supply Chain Initiative tracing scheme. In 2016, the Better Sourcing Program (currently RCS Global Group) began an alternative mineral tracing scheme in Rwanda. Rwanda also has guidelines on corporate governance by publicly listed companies. In recognition of the firm’s strong commitment to CSR, the U.S. Department of State awarded Sorwathe, a U.S.-owned tea producer in Kinihira, Rwanda, the Secretary of State’s 2012 Award for Corporate Excellence (ACE) for Small and Medium Enterprises. In 2015, the U.S. firm Gigawatt Global was also a finalist for the Secretary of State’s ACE award in the environmental sustainability category. In January 2021, Illinois-based Abbot laboratories was given the ACE award in recognition of its work to expand preventative health care in rural areas of Rwanda. Rwanda is not a member of the Extractive Industries Transparency Initiative.
Rwanda is ranked among the least corrupt countries in Africa, with Transparency International’s 2020 Corruption Perception Index putting the country among Africa’s four least corrupt nations and 49th in the world. The GOR maintains a high-profile anti-corruption effort, and senior leaders articulate a consistent message emphasizing that combating corruption is a key national goal. The government investigates corruption allegations and generally punishes those found guilty. High-ranking officials accused of corruption often resign during the investigation period, and the GOR has prosecuted many of them. Rwanda has ratified the UN Anticorruption Convention, is a signatory to the OECD Convention on Combating Bribery and is a signatory to the African Union Anticorruption Convention. U.S. firms have identified the perceived lack of government corruption in Rwanda as a key incentive for investing in the country. There are no local industry or non-profit groups offering services for vetting potential local investment partners, but the Ministry of Justice keeps judgments online, maintaining a source of information on companies and individuals in Rwanda at www.judiciary.gov.rw/home/ . The Rwanda National Public Prosecution Authority issues criminal records on demand to applicants at www.nppa.gov.rw .
Contact at government agency or agencies are responsible for combating corruption:
Rwanda is a stable country with relatively little violence. According to a 2017 report by the World Economic Forum, Rwanda is the ninth safest country in the world. Gallup’s Global Law and Order Index report of 2018 ranked Rwanda as the second safest place in Africa. Investors have cited the stable political and security environment as an important driver of investments. A strong police and military provide a security umbrella that minimizes potential criminal activity.
The U.S. Department of State recommends that U.S. citizens exercise caution when traveling near the Rwanda-Democratic Republic of Congo border, given the possibility of fighting and cross-border attacks involving armed rebel and militia groups. Relations between Burundi and Rwanda are tense, and there is a risk of cross-border incursions and armed clashes. Since 2018, there have been a few incidents of sporadic fighting in districts bordering Burundi and in Nyungwe National Park.
Grenade attacks aimed at the local populace occurred repeatedly between 2008 and 2014 in Rwanda. There have been several reported cross-border attacks in Western Rwanda on Rwandan police and military posts since 2016. Despite occasional violence along Rwanda’s borders with the DRC and Burundi, there have been no incidents involving politically motivated damage to investment projects or installations since the late 1990s. Relations with Uganda are also tense, but leaders continue to emphasize they are seeking a political solution. Rwanda has not allowed commercial traffic originating from Uganda to cross the Rwandan-Ugandan border since February 2019. Transit from/to Kenya through Uganda is allowed. Because of political tensions between Rwanda and Uganda, most of the commercial traffic to Rwanda goes through the Tanzanian border. In May 2020, the Rwanda-Tanzania border crossings were negatively impacted due to an influx of Tanzanian truck drivers infected with COVID-19.
General labor is available, but Rwanda suffers from a shortage of skilled labor, including accountants, lawyers, engineers, tradespeople, and technicians. Higher institutes of technology, private universities, and vocational institutes are improving and producing more highly trained graduates each year. The Rwanda Workforce Development Authority sponsors programs to support both short and long-term professional trainings targeting key industries in Rwanda. Carnegie Mellon University opened a campus in Kigali in 2012–its first in sub-Saharan Africa–and currently offers a Master of Science in Electrical and Computer Engineering and Master of Science in Information Technology. In 2013, Kepler established a nonprofit university program for students to work toward a U.S.-accredited degree through online learning and in-person seminars through a relationship with Southern New Hampshire University. Oklahoma Christian University offers an online Master of Business Administration program with on-site support in Kigali. The African Institute of Mathematics, University of Global Health Equity, and African Leadership University campuses in Rwanda offer college level and advanced degrees in many fields. Investors are strongly encouraged to hire Rwandan nationals whenever possible. According to the Investment Code, a registered investor who invests an equivalent of at least $250,000 may recruit three foreign employees. However, a number of foreign investors reported difficulties importing qualified staff in accordance with the Investment Code due to Rwandan immigration rules and practices. In some cases, these problems occurred even though investors had signed agreements with the government regarding the number of foreign employees.
Investors are strongly encouraged to hire Rwandan nationals whenever possible. According to the Investment Code, a registered investor who invests an equivalent of at least $250,000 may recruit three foreign employees. However, a number of foreign investors reported difficulties importing qualified staff in accordance with the Investment Code due to Rwandan immigration rules and practices. In some cases, these problems occurred even though investors had signed agreements with the government regarding the number of foreign employees.
Rwanda has ratified all the International Labor Organization’s eight core conventions. Policies to protect workers in special labor conditions exist, but enforcement remains inconsistent. The government encourages, but does not require, on-the-job training and technology transfer to local employees. The law restricts voluntary collective bargaining by requiring prior authorization or approval by authorities and requiring binding arbitration in cases of non-conciliation. The law provides some workers the right to conduct strikes, but due to numerous restrictions, workers rarely engage in strikes. In 2020, the government published additional specifications for labor representatives, regulations against strikes, and guidelines providing labor inspectors greater authority to access to workplaces and assess fines. The GOR has been known to take swift action against foreign companies with poor labor practices upon initial complaints from workers. The legal framework for employment rights for disabled persons is not as strong as in the United States, but the government and some employers are making efforts to offer reasonable accommodations. In 2000, the government revised the national labor code to eliminate gender discrimination, restrictions on the mobility of labor, and wage controls. There is no unemployment insurance or other social safety net programs for workers laid off for economic reasons. Private firms are responsible for their local employees’ income tax payments and Rwanda Social Security Board pension contributions. For full-time workers, these payments amount to more than 30 percent of take-home pay, which can be a disadvantage if competing firms are in the informal economy and not compliant with these requirements. Labor laws are not waived to attract or retain investment. There are no labor law provisions specific to SEZs or industrial parks. Collective bargaining is a relatively new concept in Rwanda and is not common. Few professional associations fix minimum salaries for their members and some investors have expressed concern that labor law enforcement is uneven or opaque. The official minimum wage has not changed since 1974 and is 100 Rwandan francs ($0.10) per day.
The legal framework for employment rights for disabled persons is not as strong as in the United States, but the government and some employers are making efforts to offer reasonable accommodations. In 2000, the government revised the national labor code to eliminate gender discrimination, restrictions on the mobility of labor, and wage controls. There is no unemployment insurance or other social safety net programs for workers laid off for economic reasons. Private firms are responsible for their local employees’ income tax payments and Rwanda Social Security Board pension contributions. For full-time workers, these payments amount to more than 30 percent of take-home pay, which can be a disadvantage if competing firms are in the informal economy and not compliant with these requirements. Labor laws are not waived to attract or retain investment. There are no labor law provisions specific to SEZs or industrial parks. Collective bargaining is a relatively new concept in Rwanda and is not common. Few professional associations fix minimum salaries for their members and some investors have expressed concern that labor law enforcement is uneven or opaque. The official minimum wage has not changed since 1974 and is 100 Rwandan francs ($0.10) per day.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical Source*
USG or International Statistical Source
USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Host Country Gross Domestic Product (GDP) ($M USD)
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/Top Top Five Destinations (US Dollars, Millions)
Inward Direct Investment
Outward Direct Investment
“0” reflects amounts rounded to +/- $500,000.
Inward Direct Investment according to IMF’s Coordinated Direct Investment Survey (http://data.imf.org/CDIS). Data on Rwandan outward FDI is not available.
Data on Rwanda equity security holdings by nationality is not available. According to a 2019 BNR report, portfolio investment remains the lowest component of foreign investment in Rwanda mainly due to the low level of financial market development. Portfolio investment stock amounted to $109.3 million in 2018, a 5 percent increase from 2017 levels. In 2018, Rwanda recorded foreign portfolio inflows of $5.9 million compared to $0.3 million in 2017.
Table 4: Sources of Portfolio Investment
Portfolio Investment Assets
Top Five Partners (Millions, current US Dollars)
Total Debt Securities
14. Contact for More Information
Jonathan Scott, Economic and Commercial Officer, United States Embassy
2657 Avenue de la Gendarmerie, P.O. Box 28 Kigali, Rwanda