Foreign Investment Advisory Service

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In Rwanda, Entrepreneurs Are in Business in Two Steps and 24 Hours
November 11, 2009
Country: Rwanda

Richard Mugisha is a busy man. Clients come to his renowned law chambers from government offices, small businesses, large corporations, and international organizations. Lately, however, Mugisha’s professional load has lightened a bit, and he likes it that way. Since May 2009, when the Rwanda Business Registration Services announced new streamlined processes, Mugisha’s clerks fulfill two simple procedures instead of eight and no longer wait 14 days for an answer.

To register a business in the Rwandan capital of Kigali, an entrepreneur completes one application form that satisfies both the tax and social security authorities and then pays a flat fee of about $50—all in the same room. If all documentation is in order, the certificate of incorporation is issued 24 hours later. Business start-up has been streamlined in other ways, as well. The 2009 company law introduced standard articles of incorporation and eliminated the requirement to notarize and publish the names of the new company in the official gazette.

The government’s efforts in reforming the investment climate in Rwanda were rewarded with the country being placed among the top 10 global reformers in Doing Business 2010, and its national investment promotion intermediary placed among the top 25 worldwide in improved facilitation of interested investors in Global Investment Promotion Benchmarking 2009.

With continued technical support from the Investment Climate Advisory Services of the World Bank Group, Rwanda’s legislature rose to the challenge, enacting four critical business laws, including (i) a new company law that sets out increased protections for minority shareholders (including rules for disclosure, company audits, and reports) and establishes the principle of director liability in the event of abuse of company assets; (ii) a secured-transactions law that improves access to finance, particularly for small- and medium-sized firms as it allows for the use of movable property, including forecasted crop harvests, as collateral; (iii) a new labor law that aims to improve employment relations by increasing the flexibility of labor contracts and addressing maternity leave and child labor; and (iv) an insolvency law that helps failing companies resolve their liabilities.

Alongside the legislation, Rwanda’s officials have pushed through a raft of administrative improvements, introducing a flat fee for transferring land titles and publication of a client charter that tells users when their applications for services and licenses such as construction permits will be processed. On trade logistics, the Rwanda Revenue Authority has extended working hours for border-clearance staff to encourage and speed trade. Additionally, Rwanda and Uganda have begun piloting an electronic exchange of transit cargo information.

In the case with Richard Mugisha, the talk these days is about the quality of doing business as well as the quantity.

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