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How online registration made Rwanda a global reformer

By Kabona Esiara

A record 5,800 businesses registered in six months

Every seat at Rwanda Development Board’s (RDB) registrar general’s office is occupied with people registering and incorporating businesses.

Julius Ssekajja of Remera is one investor who registered his businesses between May 28, last year and October 2010. ‘It took me 24 hours to incorporate my business’ White Creations, a graphic and publishing company,’ Ssekajja says.  ‘I paid only Rwf 25,000 (US $43) to register the company.’

Ssekaja’s case illustrates how cheap and convenient it is to register a company in Rwanda.

Indians are amongst the most dominant foreign investors taking advantage of this process. They are in shops, factories and hotels; they offer professional services and some have bought tea plantations and are involved in sugar manufacturing.

‘We are 1200 Indians running 200 businesses,’ said Raj-Rajendran a.k.a Munyaneza, Chairman Indian Association in Rwanda, to reporters recently.

And according to Clare Akamanzi, chief operating officer of RDB, more Indian investors are expected to venture into Rwanda,

In Rwanda, you can either register your business online without going to a RDB office or you can visit an office and fill in the hard paper forms.  With the online registration, says Yves Sangano, RDB’s Registrar General, registering a company can take just one hour.

The move has helped formalise many businesses. Records from the registrar general’s office indicate that at least 5808 businesses have been registered since Rwanda launched the online registration on  May 19, 2010, compared to 5505 businesses registered in the last seven years.

‘We are receiving both individual businesses and companies. These are foreign and local,’ says Sangano.

Breaking down the type of the businesses they have registered, Sangano reveals that from January to May this year, at least 655 sole enterprises and 1,972 companies were registered.

Akamanzi adds that today there are different ways to register a business in Rwanda. ‘You can either come or register within RDB using the Basic Computerised System, or you can register a company wherever you are, as long as you have internet, whether you are at home or abroad,’ she says.

Explaining how it works, Akamanzi says the new system provides a single point registration where clients will have to interface with a single agency by filling a single consolidated dossier.

The online registration form is then confirmed by a registration certificate and a single identifier signed by the Registrar General of Companies.

The online system also connects to the Social Security Fund of Rwanda (SSFR), Rwanda Revenue Authority (RRA) with a single TIN number and National Institute of Statistics.

This further streamlines the existing business registration service by reducing the client interaction from two procedures to one.

Akamanzi assures that the online registration system is secure and guarantees cyber security to clients. She adds that the verification process is also ensured to avoid any possibilities of fraud or forgery.

It is such innovations that make Rwanda a global top reformer according to the World Bank’s Doing Business 2011 report.

The report published by the International Finance Corporation (IFC) and the World Bank, names Kazakhstan as the country that improved the most in its evaluation followed by Rwanda in the second position. Other countries in the top ten include Peru, Vietnam, Cape Verde , Tajikistan , Zambia , Hungary , Grenada , and Brunei Darussalam.

The report evaluates regulations that enhance business activities as well as those that hamper business.

Ranked at 58th overall in the world, Rwanda jumped 12 places from last year’s 67th position of the 183 countries surveyed in the report dubbed ‘Making a Difference for Entrepreneurs.’ It was ranked 158th in the 2009 Doing Business report.

‘The result is well deserved. What is more impressive than the rank, is that we are still leading in sub-Saharan Africa, but above all, we are the second top global reformer,’ said Frank Twagira, the Co-ordinator of the National ‘Doing Business’ Task Force at RDB, in an interview with the press.

‘This shows much deeper commitment to reform and consolidating the gains we have had over the last few years, so it should not come as a surprise that we are still ranked that high,’ Twagira observed.

Achieving the World Bank ranking as a top reformer for 2010, Twagira said, was the first step for the country in broadening reforms.

‘We have been positioning ourselves to go beyond Doing Business indicators. We are going to focus on a broader set of indicators that do not necessary have to fit in any form of publication.’

The new strategy for business reforms, Twagira said, will now shift focus to Small and Medium Enterprises (SMEs) and involve the private sector. ‘We are going to adopt an approach that is more centred on SMEs and overall on competitiveness €“ how Rwanda and the business can become more competitive in the globalised environment.’

In the East African region, Kenya comes second in ranking at 98, followed by Uganda at 122, Tanzania 128 and Burundi at 181 of the 183 countries surveyed.

According to the World Bank, Rwanda also made dealing with construction permits easier by passing new building regulations at the end of April 2010 and implementing new time limits for the issuance of various permits.

Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that loans of all sizes be reported to the central bank’s public credit registry.

The country also reduced the number of trade documents required and enhanced its joint border management procedures with Uganda and other neighbors, leading to an improvement in the trade logistics environment.

The rating of Rwanda’s trade across borders, however, was not impressive’the country was ranked 159 out of the 183 countries surveyed. In fact, many of Rwanda’s neighboring countries need to deal with non-tariff barriers to ease the flow of goods in the region.  According to the World Bank report, Tanzania performed slightly better in the 109 position, Kenya at 144 and Uganda at 148. Only Burundi fared worse than Rwanda at 179.

The private sector in Rwanda, through their umbrella organization, the Private Sector Federation, has always complained that despite commitments from the East African Community Heads of States, traders still waste a lot of time at weighbridges, police roadblocks and at customs.

Ras Banamungu, a trader at the Commercial Street in Kigali, is incensed with the police checks in Uganda. ‘Whether at night or during day these guys are ever stopping buses. This wastes a lot of our time,’ he said.

People at RDB say this ranking is expected as some of the difficulties of trading across borders are within Rwanda’s control but others are beyond it, explains John Gara, CEO of RDB.

‘If there are any non-tariff barriers arising in other countries, they will definitely affect somebody doing business here,’ he said.  ‘When lorry is stopped five times in Uganda and five times in Kenya, it will definitely affect the cost of doing business.’

The only hope, according to Gara, is for the East African sister states jointly tackle non-tariff barriers. ‘In the context of EAC community and corporation, we can certainly address those issues and make it much easier to trade across borders.’

For Rwanda, reforms are part of the continuous programme Rwanda started to make it easier for businesses to operate in Rwanda.

However, despite the poor ranking in the trading across the borders indicator, Twagira said Rwanda’s ranking is impressive.

‘The ranking is quite significant. We not only jumped 12 places in the most competitive segments of the Doing Business Index but have also managed to be the second fastest performing country this year.’

According to Twagira, ‘this shows Rwanda exhibiting consistence in reforming other than start stop reform process.’

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