Economy in Rwanda:
Rwanda is known for its remarkable economic transformation and political stability under President Paul Kagame. The country has implemented progressive policies to attract foreign investment, promote economic growth, and improve the business environment. Despite being landlocked and having limited natural resources, Rwanda has leveraged its strategic location and good governance to become a regional hub for trade, services, and technology.

Agriculture remains a crucial sector, employing a significant portion of the population. Key exports include coffee, tea, and horticultural products. Rwanda is also focusing on diversifying its economy through investments in manufacturing, mining, and information and communication technology (ICT).

Rwanda is a member of the East African Community (EAC), which enhances its role in regional trade. The country’s efforts to improve infrastructure, including the development of Kigali as a central business hub, bolster its economic prospects.

Facts and Figures:

• Official Name: Republic of Rwanda
• Capital City: Kigali
• Languages: Kinyarwanda, French, English
• Population: 13 Million (2022)

SWOT Analysis

Strengths:

• Political stability and progressive governance
• Strategic location in East Africa with access to regional markets
• Strong focus on ICT and innovation
• Membership in the EAC, enhancing regional trade opportunities

Weaknesses:

• Landlocked with limited natural resources
• High dependency on agriculture
• Small domestic market
• Limited access to finance for small and medium-sized enterprises (SMEs)

Opportunities:

• Investment in infrastructure development, including roads, energy, and ICT
• Expansion of the manufacturing sector
• Growth in tourism, leveraging Rwanda’s natural beauty and wildlife
• Development of the mining sector

Threats:

• Political and economic instability in the region
• Vulnerability to climate change affecting agriculture
• Corruption and bureaucratic inefficiencies
• Health challenges, including the prevalence of diseases like malaria and HIV/AIDS

Potential Industries in Rwanda

Healthcare Industry:
Rwanda’s healthcare sector is expanding, driven by increasing demand for services and products to treat chronic diseases like HIV/AIDS, malaria, and tuberculosis. There are opportunities for European companies to supply pharmaceutical products and medical technology. Local production of medical consumables and equipment is also becoming important.

Investment Opportunities:

• Supplying pharmaceutical products and medical technologies
• Establishing local manufacturing facilities for medical consumables
• Partnering with local healthcare providers to improve service delivery
• Investing in telemedicine and digital health solutions

Construction Industry:
Rwanda is focusing on improving its infrastructure, with significant investments planned for road construction, energy projects, and urban development. European companies can participate by supplying construction machinery, tools, building materials, and consulting services.

Investment Opportunities:

• Supplying construction machinery, tools, and building materials
• Participating in large-scale infrastructure projects
• Offering consultancy services for construction supervision and project management
• Engaging in private sector construction projects

Energy Industry:
Rwanda’s energy sector needs significant investment to meet the growing demand for electricity. Hydropower projects dominate the landscape, but there are also opportunities in solar and other renewable energy sources. European suppliers, project developers, and consultants find Rwanda’s energy market attractive.

Investment Opportunities:

• Developing hydropower and solar energy projects
• Supplying and installing off-grid solar solutions
• Providing technical consultancy for energy projects
• Investing in energy storage and distribution systems

Water and Environment:
Population growth and urbanization are driving the need for investments in water and wastewater management. European companies can offer technical components and consulting expertise to address these challenges. Stricter environmental regulations require industries to invest in wastewater treatment and waste management solutions.

Investment Opportunities:

• Developing and supplying water and wastewater treatment solutions
• Offering consulting services for environmental management
• Investing in waste management and recycling facilities
• Partnering with local governments on sustainable urban development projects

Agriculture:
Rwanda’s agriculture sector requires more investment to meet domestic and export demands. Key areas include coffee, tea, and horticultural products. There are opportunities to improve agricultural productivity and value addition through modern technologies and practices.

Investment Opportunities:

• Investing in modern agricultural technologies and practices
• Developing commercial farming operations for export crops
• Establishing processing facilities for agricultural products
• Partnering with local farmers to improve yield and sustainability

Market Access

Legal Framework, Founding, Investing

Legal System:
Rwanda’s legal system is influenced by civil law and customary law. The country has made significant reforms to improve the business environment, including modernizing its legal framework to attract foreign investment.

Legal Disputes:
Companies should consider arbitration in legal disputes. An arbitration award can be obtained locally under the Arbitration Act, based on the UNCITRAL Model Law. Alternatively, arbitration awards obtained abroad can be recognized and enforced in Rwanda under the New York Convention of 1958. Companies can also file claims in Rwandan courts, with the Commercial Court handling commercial disputes.

International Organizations
Rwanda is a member of:

• African Union (AU)
• African, Caribbean and Pacific Group of States (ACP countries)
• East African Community (EAC)
• Common Market for Eastern and Southern Africa (COMESA)
• United Nations (UN)
• Commonwealth of Nations
• World Trade Organization (WTO)
• Multilateral Investment Guarantee Agency (MIGA)
• World Intellectual Property Organization (WIPO)
• African Regional Intellectual Property Organization (ARIPO)

International Agreements and Bilateral Treaties
Rwanda is part of several international treaties, including:

• New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards
• African Continental Free Trade Area Agreement (AfCFTA)
• ICSID Convention on the Settlement of Investment Disputes

Bilateral agreements between Rwanda and Europe include:

• Double Taxation Agreement
• Investment Protection and Promotion Agreement

Setting up a Company in Rwanda:
Company formation is regulated by the Companies Act, 2009, and is done electronically via the Rwanda Development Board (RDB) platform. After formation, companies must be registered in the Companies Registry. The process takes around 6 hours to complete online.

Establishment Requirements for Selected Legal Forms:

• Private Company Limited by Shares: No minimum capital, max 100 shareholders, limited liability, electronic formation, registry registration required.
• Public Company Limited by Shares: Minimum capital of 1 million RWF, at least 7 founders, limited liability, electronic formation, registry registration required.
• Branch: No minimum capital, registration of parent company documents, appointment of local representatives, registry registration required.

Investing in Rwanda:
The Investment Code governs investments, with the Rwanda Development Board (RDB) serving as the responsible authority. RDB offers a one-stop center for handling bureaucratic steps. Foreign investment is allowed in most areas, but there are restrictions on land purchases and hiring foreign workers. Corporate tax is 30%, with branches of foreign companies taxed at 37.5%. VAT is 18%, and various withholding taxes apply.

Import Duties:
Rwanda, as part of the EAC, has a customs union with a common external tariff. Import duties are 25% for finished goods, 10% for intermediate products, and zero for raw materials and capital goods. Some sensitive goods have higher duties. The regular VAT rate is 18%, and excise duties apply to harmful and luxury goods. Customs clearance fee is 3.5%, with an additional 2% infrastructure fee.

Companies in Special Economic Zones (SEZs) receive customs and tax relief. The EU-Rwanda bilateral free trade agreement concluded in June 2023, pending ratification, will further facilitate trade.

Custom Declaration:
Customs declarations are made electronically via the Rwanda Electronic Single Window System. Only approved customs agents can access this system, and importers can apply for a license. Declarations must be submitted within 21 days of goods arriving in Rwanda. The SCT system in the EAC simplifies customs clearance, and companies can apply for AEO status for expedited processes.

Standards for Imported Goods:
Almost all goods must meet standards set by the Rwanda Standards Board (RSB), with verification through the PVoC program. SGS is the contact for exports from Europe. Non-compliant goods are not released by customs. Certain products, such as animals, plants, and used vehicles, are exempt from PVoC but are checked upon arrival.

Trade Barriers:
Import permits or licenses are required for some goods, including agricultural products, mineral oil products, pharmaceuticals, and chemicals. Import bans exist for counterfeit goods, harmful cosmetics, certain chemicals, plastic bags, used tires, and cars older than eight years.

Labor Market and Wages:
Regular employment is estimated at 12% of the population. Companies compete for a small pool of highly qualified workers, offering good retirement and medical benefits to attract and retain talent. The qualification of young professionals to meet the needs of the economy is a major challenge.

Development Projects and Tenders:
International donors, particularly the World Bank and African Development Bank, support many development projects in Rwanda. These projects often result in international tenders for consulting, delivery, and construction services.

Prepared by: Vincent Oluoch Odhiambo