Diva magazine issue 5 by The Diva Magazine

THE DIVA

July - Sep 2012

THE DIVA

MINEAC

28 HOPE MAGAZINE

ISSUE N0 22 - JUNE 2012 HOPE MAGAZINE 29

ISSUE N0 22 - JUNE 2012

“We cannot ask investors to go and find pow¬er connections by themselves. Some investors are new in the country and do not know where to find EWSA,” the official adds. Because electricity connection is applied for concurrently with the construction permit, it takes approximately 30 working days for the investor to be handed complete documentation. implemented to enhance the Centre’s role in easing the permit obtaining process. The new reforms to affect the process of obtaining construction permits were at two levels, the city and district levels with each level having specific roles to play for different groups of applicants. Reforms at the city level included merging the functions of various desks into one, Establishment of Management Information Systems (MIS), costs for Deed plan and Construction Permit will be reduced by 30% and Introduction of Risk-based approaches to bullet proof against shoddy construction. The Kigali Construction One Stop Centre handles specifically commercial units involving heavy construction investments such as commercial multi- households residential houses (living or office apartments), Social structures such as schools, hospitals and churches and industrial construction--factories, industries, warehouses, and other workshops. At district level, operations have been streamlined by introducing a central registry with Ghant Charts to receive and process applications for small and mid size projects on the basis of first come first served. www.hope-mag.com

The new reforms, including the newest of applying for permits on-line, will, without a doubt, be captured in the 2013 report giving Rwanda strong hopes to improve from last year’s ranking.

Getting Electricity Rwanda remains the easiest EAC country to get connected to the national electricity grid. Easy connection to electricity is vital in attracting major investments and Rwanda is the 50th best country in the world in as far as easing access to electricity by investors is concerned. Investors seeking to set up business in Rwanda today do not have to chase for power connection on their own. Instead, officials of the Kigali City Construction One-Stop Center will do it for them. All that the investor has to do is to indicate on his or her application form for a construction permit that they want to have electricity connected to their site. “The rest of the work will be done by us. It is the one-stop center that takes up the issue with the Electricity, Water and Sanitation Authority (EWSA),” says a senior official of the center. In order to ensure that the process flows smoothly, EWSA has designated an officer as its focal point at the Kigali City Construction

One-Stop Center to coordinate all activities related to electricity connections for investors. “We cannot ask investors to go and find power connections by themselves. Some investors are new in the country and do not know where to find EWSA,” the official adds. Because electricity connection is applied for concurrently with the construction permit, it takes approximately 30 working days for the investor to be handed complete documentation. Costs of accessing electricity have been reduced from 30% to 20% to the client who requests EWSA to purchase equipments on their behalf and from 30% to 15% to the clients who purchase the equipments themselves. The government has continued to address the issue intermittence of power supply. With funding from World Bank’s International Development Association (IDA) a new 21 MW Jabana heavy fuel oil power plant has been built. Under the same funding, the power transmission infra¬structure around Kigali City has been overhauled and a new main substation added to improve the city sub-transmission system. The project code-named “Urgent Electricity Rehabilitation Project (UERP),” the government has managed to improve power sup¬ply and eliminate load shedding from about 50 percent at peak hours in 2004 to zero per¬cent presently. Other interventions have been in rolling out access to more areas under the Electricity Access Roll-out Program (EARP) by the government and the World Bank. According to officials of EWSA, this project is one of the strategic objectives of the Economic Development and Poverty Reduction Strategy that aims at expanding electricity access to investors all over the country. This, in way, brings in the loop medium investors who intend to open the countryside to the processing facilities. Besides, investors in banking and telecommunication sectors who are rolling out services to remote areas outside Kigali City are able to find the necessary infra¬structure such as power. The program has a five-year strategic target to increase the electrification rate in the country from the current 9% to 16% by connecting more than 300,000 new consumers – both domestic and industrial.

Registering Property Flexibility with which a business entity or an individual can acquire, register and transfer ownership of all types of property is important for growth of business and the economy in general. To ensure this swiftness, one of the reforms has been to remove the Tax clearance certificate

which was formerly a requirement for property transfer. Land administration information system (LAIS) was implemented. This is a set of systems or processes of determining, recording and disseminating information about the ownership of land in order to make all land tenure rules operational. This reform has enabled daily land transactions to be made in a very cost effective manner in terms of time, procedures and in a more transparent and effective way. Since land is a constant commodity that can only get scarce as the population grows, the Organic Law of 2005 that put land under the ownership of public entities such as the state, cities and districts from who business and individuals can lease for up to 99 years makes it easier for investors to apply for and get land without much of a hassle as the Government can even help some to identify

reward ‘good’ borrowers, the Rwanda Development Board together with BNR and Credit Reference Bureau Africa Ltd has created an intervention mechanism that allows for easy access to credit by both individuals and enterprises. Paul Pavlidis is the CEO of Credit Reference Bureau Africa Ltd. “We do not manufacture data, but we man¬age it. This information is updated from the subscribers’ databases on a monthly basis to make it relevant. On request from the subscribers, who are currently the banks and mi-cro-finance institutions and with the consent of the prospective borrower, this data spells out the borrowing history and can be provided online in less than two minutes,” Pavlidis explains. Currently, all commercial banks and 30 micro-finance institutions are subscribers with the CRBAfrica. Given the geographical dispersal of MFIs in

antee fund. Désiré Rumanyika, CEO of the Business Development Fund says the agriculture guarantee fund targets projects related to the entire agricultural value chain while the SME fund is for all other sectors, and the only condition is that the business should be productive and adding value. For instance for agricultural projects, BDF can provide a guarantee of up to Rwf 500 million, while for other SMEs the maximum amount is Rwf 150 million. A 50% fee has also been put in place setting a provision in movable assets like trading stock (inventory of stock of harvested cereals, cash crops, Animals and livestock in groups including cows, goats, rabbits, pigs, horses, sheep and poultry, Vehicles and Motor vehicles (tracks, cars, motorcycles) aircraft and ships, Plant and machinery. This means, with moveable assets, an investor, especially youthful entrepreneurs who make up majority of the population, can easily access funds.

Protecting Investors

space for projects. With these reforms, it takes a minimum of 60 days to register property in Rwanda, a remarkable achievement considering that it took 371 days in 2007.

Getting Credit According to the National Bank of Rwanda, ten years ago non-performing loans (NPLs) made up 40% of all credit given out, an indication that Rwanda’s financial sector was characterized by very high credit risk. To¬day, NPLs have dropped to 12%, even though the ideal level for a thriving financial sector is 5%. In order to give banks more confidence, and

both rural and urban cen-ters, the culture of borrowing and loan servicing is steadily getting entrenched, permeating to all parts of the country. This is a strong impetus in the Doing Business environment, as it ensures a sustainable growth of SMEs and a steady or even a growing purchasing power. The Business Development Fund (BDF) has been created by the Rwandan Development Bank (BRD) to help SMEs access to funding for setting up or expanding a business. Under this reform, BDF’s mission is to provide guarantees so that people with good business plans can access loans from commercial banks. BDF has two funds: the agriculture guarantee fund and the SME guar-

Rwanda is fast becoming a hub for foreign investments. Last year, total investments amounted to over US$600 million. However, when investors come, efforts must be put in place to retain them and this involves many measures. Because the World Bank looks at how investors (shareholders) are protected in a company, deliberate measures have been put in place to actually reform laws relating to organizations. On a general outlook, investors’ money is also protected by a strict regulatory role played by the Capital Markets Authority which has become well established since its launch. There are two local companies listed on the stock market of Rwanda and two others cross listed on the Kenya and Rwanda stock Market. The role of RCMA is to ensure investors don’t lose money by buying shares in phony companies. “That’s why even after four years we only have two locally listed companies. About fifteen are on the list to go public in the next three years but we demand strict qualifications and procedures to fulfill before being allowed on the market,” said Charles Furaha, the Legal & corporate manager at the Rwanda capital markets authority. Other reforms such as the establishment of the Kigali international arbitration centre will also play multi-role including protecting investors. For instance, most international investors are not comfortable with www.hope-mag.com

ISSUE N0 22 - JUNE 2012 HOPE MAGAZINE 29

ISSUE N0 22 - JUNE 2012

investors to go and find pow¬er conneclves. Some investors are new in the country w where to find EWSA,” the official adds. Bey connection is applied for concurrently with permit, it takes approximately 30 working stor to be handed complete documentation.

ce the Centre’s role taining process. ect the process of permits were at district levels with fic roles to play for icants. l included merging us desks into one, agement Informasts for Deed plan it will be reduced ion of Risk-based oof against shoddy

n One Stop Cencommercial units uction investments multi- households ng or office aparts such as schools, es and industrial industries, wareshops. ations have been cing a central regts to receive and or small and mid is of first come first

The new reforms, including the newest of applying for permits on-line, will, without a doubt, be captured in the 2013 report giving Rwanda strong hopes to improve from last year’s ranking.

Registering Property

According to the National Bank of Rwanda, ten years ago non-performing loans (NPLs) made up 40% of all credit given out, an indication that Rwanda’s financial sector was characterized by very high credit risk. To¬day, NPLs have dropped to 12%, even though the ideal level for a thriving financial sector is 5%. In order to give banks more confidence, and

Flexibility with which a business entity or an individual can acquire, register and transfer ownership of all types of property is important for growth of business and the economy in general. To ensure this swiftness, one of the reforms has been to remove the Tax clearance certificate

Protecting Investors

space for projects. With these reforms, it takes a minimum of 60 days to register property in Rwanda, a remarkable achievement considering that it took 371 days in 2007.

Getting Credit

THE DIVA

July - Sep 2012