THE RWANDA INVESTMENT CLIMATE PROJECT One of the critical challenges facing Rwanda is how to stimulate the Private Sector and encourage investment. Not only does Rwanda have to overcome its dark past to attract investors, but it also needs an improvement of its legal and regulatory framework, which is still not ideal for potential investors. It also desperately needs to improve its ranking in the cost of doing business index.
With this in mind, the Government of Rwanda, in partnership with the Investment Climate Facility for Africa (ICF) has set up the Rwanda Investment Climate Project (RICP). The goal of the Project is to reduce the cost and risk of doing business in Rwanda, which, in turn, will create an investment-friendly environment.
It is the first comprehensive attempt to identify the constraints on the private sector and put in place the necessary reforms to neutralize them. The Project will be managed by a Project Management Unit (PMU), which will oversee its development. Advertisements are currently running in the local and International media to recruit qualified personnel to run the PMU.
The RICP will tackle three key areas in need of reform: business registration, commercial legislation and land registration. Each of these components contain fundamental flaws that hinder the growth of the private sector in Rwanda, but it is the objective of the Project to ensure that these flaws will be a thing of the past.
With regard to Business Registration, there are deficiencies in the provision of modernized methods for business formalization, the registration of securities and intellectual property and effective provision of the necessary information to current and potential investors.
The centerpiece of these reforms will be the creation of the Rwanda Commercial Registration Services Agency (RCRSA), which will contain a Company’s registry, a registry for non-incorporated Companies, a register for non-land securities and a register for patents, trademarks and industrial designs. The registry will also contain all the relevant application forms and will serve as a valuable information database for existing and potential businesses. It will also enable the Government to have a comprehensive overview of the Business structure and make informed decisions based on the comprehensive and accurate statistics the Registry will provide. The benefits to potential-and-current investors will be enormous and it will bring some much needed clarity to registering and financing Businesses in the country.
The settling of commercial disputes is also an important aspect of the Project. Rwanda lacks a Commercial Court to deal with commercial cases and it is the aim of the Project to set up specialized, modern Commercial Courts. The difficulty of enforcing Commercial contracts has proved to be a major hindrance to private sector growth (according to the Cost of Doing Business Index, the average time of enforcing contracts is 310 days) so, with this in mind, the RICP has thrown its weight behind the creation of these Courts. They will take on the growing number of commercial cases that are currently being dealt with by specialized tribunals. It is envisaged that the Courts will be fully-equipped and staffed with trained personnel within the next few months. More than twenty Rwandan judges have been selected to take a Masters degree in South Africa and they will oversee cases brought before the Court in the near future while others are being trained. Overall, by strengthening the means and methods of dispute resolution, investor confidence will be increased and there will be clear evidence that the law will take its course whenever a commercial dispute arises. Investors need to be confident that contracts can be enforced quickly and efficiently and that the judiciary system can handle a wide range of commercial disputes.
Land registration and administration systems also require an urgent overhaul to make them relevant to today’s modern world. In the past it has been virtually impossible to use land assets as collateral to obtain loans from financial institutions as legal titles were usually granted only after the owner had fully developed the land. In addition, registering land was a costly and prolonged process that provided little incentive for other interested buyers to do the same.
Such a situation is archaic and has absolutely no relevance to today’s world. Forthcoming legislation will grant titles to landowners at the outset of land development activity and boost economic activity by formalizing the use of land as collateral. It will remove other procedural impediments to land titling and will provide for the transformation of existing land rights into new forms of legal land rights. The legislation also establishes the Office of the Registrar of Authentic Land Deeds (which will be under the structure of the National Land Center) to ensure the smooth implementation of the new Law.
The legislation will also put in place streamlined registration processes and will create an alternative dispute resolution mechanism suitable for resolving land disputes. Land is, of course, a very critical issue, and its management could make or break the economy. However with the forthcoming modern and efficient land registration system and other incentives to boost the ownership of land, Rwanda will be setting itself on the path of becoming the most business-friendly country in the region.
This three-pronged approach will help to establish Rwanda as an attractive prospect for investors and RICP will provide the funds, vision and technical expertise to ensure that this will become a reality.
The overall result of the project’s work will be to reduce the cost and risk of doing business in the country and bring clarity and relevance to laws governing businesses and land ownership. The project also shows the Government’s determination to create a dynamic and innovative economy and its desire to open up the country to the world. Rwanda’s future prospects as a successful and business-friendly economy could very well hinge on its success.
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