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Business Registration in Rwanda: How Digitization Improved Business Environment and Spurred Economic Growth

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Kigali, Rwanda Convention Centre

When it comes to doing business in Africa, the continent has grown and improved dramatically over the last decade or so, but the majority of nations are still dealing with inefficient tax collection and business registration, corruption, lack of infrastructure, and other issues. Yet Rwanda, together with partners like NRD Companies and others, has managed to transform itself into one of the leading economies in the developing world.

A country not long ago plagued by civil war and political instability, Rwanda is currently ranked second in the Sub-Saharan region and 38th globally in the World Bank’s Ease of Doing Business rankings. It is the only low-income country ranked among the first 100 countries.

But it took more than a decade of successful reforms to reach the stage the country is now at. Richard Kayibanda, who has been Registrar General at Rwanda Development Board (RDB) since 2018, talks about Rwanda’s transformation in more depth.

What were the most inefficient procedures that stalled business development in Rwanda a decade or two ago?

The most inefficient procedures were to do with business registration. Before implementing reforms in 2008, the legal system was outdated, with some legal aspects dating back to the 1960s. On top of that, all services were delivered manually, and many government institutions had overlapping responsibilities, which furthered unnecessary costs and overregulation. During this period, the country struggled to incentivize local entrepreneurs to start businesses or attract foreign investors.

What were the main challenges when registering a business prior to the reforms?

You needed an Article of Association (AoA) to register a business, which a lawyer could only do. The drafting of AoAs took approximately two days and cost at least US$300. Additionally, the documents required authentication by a public notary at the cost of US$150 and took at least one week to complete. So, in total, you are looking at more than two weeks and more than US$450 just to legally open your business. The cost of opening a business was largely prohibitive.

When did the first catalyst for change come about?

The first significant indicator of the changes coming came in 2007. The government established the Doing Business Steering Committee, bringing together representatives from different ministries and public agencies to lead the way towards implementing business-related reforms. Since then, Rwanda has introduced more than 50 legal and institutional reforms to improve the business environment. This has made the country the top reformer in the world in the last ten years.

What were the most important areas that the reforms aimed to improve?

The main goal was to introduce a digitized and automated version of the registry to incentivize business creation. An equally important objective was to make the process as timely and cost-efficient as possible. The new business registration system introduced free online registration for all companies. It presented the option to register a business without Articles of Association and removed the minimum capital requirements.

The online business registration, acting as a one-stop-shop for everything business registration-related, also made post-registration procedures like VAT registration online faster and enforcing contracts easier. In a few years, registering a business in Rwanda became free and fast: four procedures and five days compared to nine procedures and 16 days in 2008.

Did the changes require outside partnerships? If yes, who were your partners? Why did you choose them?

We have had many partners throughout our reforming journey. We partnered with NRD Companies to work on the technological part of the project. Since 2009, the company has helped Rwanda with the design, implementation, operation, and monitoring of the Rwandan commercial registration services. This included company registration, business information, registration of secured transactions and registration of intellectual property rights.

What made NRD stand out was that they recognized the importance of educating and informing society about such a significant change in their lives. NRD Companies prepared an awareness and outreach campaign, which allowed us to navigate the transition as smoothly as possible. They also offered continuous technological support after the project was implemented. We are still in contact with them and are invited to share our experience with other countries from time to time.

Seems like the reform framework and the digitization of business-related services has been successful. Rwanda is now the second-fastest growing economy in Africa, with 10.3% growth per year in the last 15 years. What advice would you give to other countries eyeing similar reforms?

The first thing I would say is that government support is essential. Resistance from stakeholders and beneficiaries is something you will most likely face in your journey, so having backing from the government helps ease the process. Also, reforms and infrastructure cost money. Additionally, sufficient ICT knowledge is paramount.

But at the end of the day, big changes are always accompanied by significant challenges, so try to be one step ahead of time and plan everything accordingly. I think soon we will see an increasing number of governments around the world introducing technological solutions to spur societal, political, and economic growth.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Uber to Halt Services in Parts of Belgium

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Uber

Uber will stop its ride-hailing service in most parts of Belgium tomorrow after a court ruling on Wednesday which extends an order given in 2015, banning its p2p (Peer to Peer) UberPop service to also cover professional drivers who provide its ride-hailing service.

Uber told TechCrunch that it is currently closely examining the details of the ruling, in order to arrive at a decision on whether or not to appeal the decision with the country’s Supreme Court.

This also follows a temporary decision to discontinue Uber’s service in Brussels, a decision which was referred to as “exceptional and unprecedented” by the tech giant. The company said that it was merely taking a step to complain about the lack of reform rules which forbid drivers from using smartphones.

After the ruling by the Brussels appeal court, private hire vehicle drivers have been obstructing a major tunnel in the capital of Belgium.

In a statement made concerning Friday’s impending shutdown, the chief of Uber in the country, Laurent Slitsagain criticized the government for not providing a reform which it has been soliciting for, stating that the decision was made depending on regulations which are now outdated as they were written before smartphones.

The company stated that the government has promised a reform but has failed to deliver said reforms for the last seven years.

According to Bloomberg, the shutdown will not be applicable to a small number of drivers who are licensed in the Flemish region of Belgium, and are therefore still permitted to use the application. Uber confirmed that the Appeal Court ruling only applies to drivers with Brussels licenses.

In another statement, Slits stated that the tech giant is hugely concerned about the 2,000 possessors of LVC licenses (rental car with driver licenses) who according to the country chief will lose their ability to generate earnings.

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Honeywell Flour Mills Refutes Ecobank Winding Up Proceeding Claims, Assures Investors of Total Transparency

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Honeywell Flour Mill Factory - Investors King

Following media reports that Honeywell Flour Mills Plc (HFMP) is a subject of an ongoing winding up proceedings instituted by Ecobank Nigeria Limited in a suit no: FHC/L/CP/1571/2015, Honeywell Flour Mill Plc has now refuted the publication, insisting there is no winding-up petition against the embattled company.

The company disclosed in a statement signed by Yewande Giwa, Company Secretary and obtained by Investors King.

It said “It is pertinent to set the record straight that there is no Winding-up Petition currently pending or live against HFMP in any Court in Nigeria. There is also no pending Court Order restraining trading in the shares of HFMP or inhibiting HFMP or its owners from dealing in its assets. HFMP assures its investors, regulators and stakeholders that in all of its engagements with FMN, it received independent legal advice and asserts that the transaction is not in breach of any subsisting Order of Court. The issue as to whether HFMP is indebted to Ecobank is still before the Courts and the final decision remains the exclusive preserve of the Courts. It is also important to state that the Court of Appeal judgement being referred to in the reports did not declare HFMP to be indebted to Ecobank.”

This was in response to a publication titled “Ecobank Warns against Acquisition of Honeywell Flour Mills, Alleges Company Facing Winding Up Proceedings” that claimed Ecobank Nigeria Limited had issued a 7-day ultimatum to Flour Mills to desist from completing the acquisition of 71.69 percent stake in Honeywell Flour Mills Plc on the ground that the company was hugely indebted to Ecobank.

However, Honeywell claimed “The assertions lack merit, were written in bad faith and are a deliberate attempt to undermine a transaction that will result in substantial benefit to the Nigerian economy and entrench the collaboration of two publicly quoted companies. As a responsible corporate citizen, we have entered the transaction with FMN having taken all legal issues into consideration.

“All stakeholders are hereby assured that management of Honeywell Flour Mills Plc will continue to act in the best interests of all concerned and work diligently to preserve value for all its shareholders.

“We expect that from the proposed combination, stakeholders will benefit from the more than 85-year combined track record of FMN and HFMP and their shared goal of making affordable and nutritious food available to Nigeria’s population. The country and its food security agenda will benefit from both companies’ focus on developing Nigeria’s industrial capability, its agricultural value chain and specifically backward integration of the food industry.”

This whole drama started immediately Honeywell Flour Mills and Flour Mills of Nigeria, in a joint statement, announced FMN has agreed to acquire a 71.69 percent stake valued at N80 billion in Honeywell Flour Mills Plc. A deal that will automatically make Honeywell Flour Mills Plc Flour Mills of Nigeria’s asset.

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Merger and Acquisition

Flour Mills of Nigeria Acquires First Bank of Nigeria Limited’s 5.06 Percent Stake in Honeywell Flour Mills

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Honeywell Flour Mill Factory - Investors King

Flour Mills of Nigeria Plc, Nigeria’s leading flour mill company, has acquired First Bank of Nigeria Limited’s 5.06 percent stake in Honeywell Flour Mills Plc.

The company disclosed in a statement signed by Umolu, Joseph A.O., Company Secretary/Director, Legal Services.

The acquisition was in addition to the 71.6 percent stake of Honeywell Flour Mills Plc (HFMP) FMN acquired on the same day. Therefore, Flour Mills of Nigeria Plc will now hold 76.75 percent equity interest in HFMP.

According to the company, the move will help build a resilient flour mills company that will ensure job continuity, deepen productivity and support national growth.

Commenting on the transaction, Omoboyede Olusanya, Group Managing Director of FMN, said “The proposed transaction is part of our global growth strategy, which is aligned with our vision to not only be an industry leader, but also a national champion for Nigeria in the Food and Agro-allied industries.”

“Given FMN’s parallel negotiations for both stakes culminating in the agreements being signed on the same date, the basis for arriving at key commercial terms including final equity price per share, will be the same. The price payable to FirstBank will be the same with Honeywell Group Limited.”F

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