United States Department of State

Policies Towards Foreign Direct Investment

For over a decade, the GOR has implemented a series of policy reforms intended to improve the investment climate, wean Rwanda’s economy off foreign assistance, and increase FDI levels. Rwanda enjoyed strong economic growth until the start of the COVID-19 pandemic in March 2020, averaging 7.1 percent annual GDP growth over the prior decade. Rwanda also enjoys a reputation for low corruption. In 2020, Rwanda experienced a 3.4 percent GDP contraction, marking its first recession since the 1994 genocide. Rwanda’s economy showed signs of recovery, as GDP grew 8.2 percent in 2022, and 7.6 percent in the first three quarters of 2023. By the end of 2023, GDP at current market prices was estimated at $15.8 billion, up from $13.3 billion in 2022. These improvements occurred despite a challenging global environment and the recent floods that destroyed agricultural produce and infrastructure in April-May 2023. GDP growth is expected to regain momentum in 2024–26, with a projected average growth of 7.2 percent.

The Rwanda Development Board (RDB) was established in 2006 to fast-track investment projects by integrating all government agencies responsible for the entire investor experience under one roof. This includes key agencies responsible for business registration, investment promotion, environmental compliance clearances, export promotion, and other necessary approvals. New investors can register online at the RDB website and receive a certificate in a few days, and the agency’s “One-Stop Shop” helps investors secure required approvals, certificates, and work permits. In February 2023, the GOR decided to move all remaining business and investment licensing to the RDB’s “expanded one-stop shop.”

In February 2021, Rwanda made significant changes to the Investment Code to address previous investor complaints and included new incentives to attract investments in strategic growth sectors, which include 1) export; 2) manufacturing including textiles and apparel, electronics, information communication and technology equipment, large scale agricultural operations excluding coffee and tea, pharmaceuticals, processing in wood, glass and ceramics, processing and value addition in mining, agricultural equipment and other related industries that fall in these categories; 3) energy generation, transmission and distribution; 4) information and communication technologies, business process outsourcing and financial services; 5) mining activities relating to mineral exploration; 6) transport, logistics and electric mobility; 7) construction or operations of specialized innovation parks or specialized industrial parks; 8) affordable housing; 9) tourism, which includes hotels, adventure tourism and agro-tourism; 10) horticulture and cultivation of other high-value plants; 11) creative arts in the subsector of the film industry; and 12) skills development in areas where the country has limited skills and capacity.

Since 2020, the GOR created the Rwanda Financial Intelligence Centre (FIC), passed an anti-money laundering and counter-terrorism financing law, and passed a law on mutual legal assistance in criminal matters to fully criminalize money laundering and terrorism financing and align the country with OECD rules. The GOR also amended the Company Act and passed a law on partnerships to allow professional service providers to register as partners rather than limited liability companies.

Rwanda’s October 2021 data privacy law (“The Law Relating to the Protection of Personal Data and Privacy”) is modeled on EU and U.S. data protection laws. The law is designed to increase consumer protections, especially as Rwanda seeks to become an information and communications (ICT) and innovation hub. According to some private sector firms, the regulatory burden introduced by the law poses a financial challenge for businesses. The law, which went into effect October 2023, provides individuals explicit rights over their data, such as the right to withdraw consent for data usage at any time. Companies are obligated to have stricter controls over data handling. These additional burdens increased compliance and operating costs for many businesses. Rwanda’s National Cyber Security Authority (NCSA) offered a two-year grace period from October 2021 to October 2023 to businesses prior to enforcement of non-compliance penalties.\

Several investors noted a top concern is tax policy implementation, which is vague and affects their operations in Rwanda. Investors also cited instances in which tax incentives and deals negotiated with RDB and line ministries were interpreted differently by the Rwanda Revenue Authority (RRA). Several investors reported their initial tax incentive packages were well-respected by all government agencies, including the RRA, but later attempts to expand the business or scale up faced significant obstacles when some of the investment incentives were changed or no longer honored. Officials at RRA recognized these gaps but stated investors were welcome to work with them to resolve tax disputes. RRA officials added the RRA’s supervisory ministry, the Ministry of Finance and Economic Planning (MINECOFIN), was often called upon to resolve line ministries’ divergent interpretations of tax policy.

Under Rwandan law, foreign firms should receive equal treatment regarding taxes and equal access to licenses, approvals, and procurement. Foreign firms should receive value added tax (VAT) rebates within 15 days of receipt by the RRA, but firms complained the process for reimbursement can take months and occasionally years. Refunds can be further delayed pending the results of RRA audits. A few investors cited punitive retroactive fines arising from indefinite audits which took years to complete. RRA aggressively enforces tax requirements and imposes penalties for errors – deliberate or not – in tax payments. Investors added lack of coordination among ministries, agencies, and local government authorities (for example, district-level officials) led to inconsistencies in implementation of promised incentives. Others pointed to a lack of clarity on who the regulating entity is on certain matters.

Limits on Foreign Control and Right to Private Ownership and Establishment

Rwanda has neither statutory limits on foreign ownership or control nor any official economic or industrial strategy that discriminates against foreign investors. Local and foreign investors have the right to own and establish business enterprises in all forms of remunerative activity.

Foreign nationals may hold shares in locally incorporated companies. The GOR has gradually continued to privatize state holdings, though the government (including the military) and ruling party continue to play a dominant role in Rwanda’s private sector. Under the 2021 land law, foreign investors can acquire real estate subject to a general limit on land ownership. Some foreign investors expressed fear implementation of the land law would pose new barriers to investment or place existing investments at risk due to the law’s requirements for foreign investors to acquire investment certificates.

The land law may prevent investors from developing already acquired land aligned with their initial plans. Several investors mentioned their properties were rezoned without prior consultation, causing significant losses and delays while they went through the rezoning process. Freehold is granted only to Rwandan citizens for properties of no more than two hectares but may also be granted to foreigners for properties in designated Special Economic Zones or through a Presidential Order for exceptional circumstances of strategic national interests. Long-term leases (emphyteutic leases) in residential and commercial areas are available to both citizens and foreigners acquiring land through private means. These leases typically last 99 years and are renewable. Foreign investors can also acquire land through concessional agreements to use government private land. Such agreements cannot exceed 99 years but can be renewed.

Other Investment Policy Reviews

In February 2019, The World Trade Organization (WTO) published a Trade Policy Review for the East African Community (EAC) covering Burundi, Kenya, Rwanda, Tanzania, and Uganda, along with an annex specific to Rwanda.