RWANDA 2010 INVESTMENT CLIMATE STATEMENT

UNCLAS KIGALI 000041

SENSITIVE
SIPDIS

DEPARTMENT PASS TO EB/IFD/OIA, DEPT OF TREASURY, DEPT OF
COMMERCE, USTR

E.O. 12958: N/A
TAGS: ECON EINV EFIN OPIC KTDB USTR RW
SUBJECT: RWANDA 2010 INVESTMENT CLIMATE STATEMENT

REF: STATE 124006

OPENNESS TO FOREIGN INVESTMENT
--------------


1. (U) The Government of Rwanda recognizes the private sector
is an essential engine of development and welcomes foreign
investment in policy and in practice. As a result of reforms
implemented in 2008 and 2009, the World Bank recognized
Rwanda as the world,s top reformer in adopting business
regulation reforms and raised the country,s ranking in the
World Bank &Ease of Doing Business8 indicators from 143 in
the world to 67, the largest single year increase by any
country since the World Bank first published the rankings in

2003. Rwanda now ranks fifth from the top among African
nations.


2. (U) The Rwanda Development Board (RDB) was established in
2008 to fast track development projects and to facilitate new
investment. RDB consolidates several government agencies
previously involved in promoting investment including the
Rwanda Investment and Export Promotion Agency (RIEPA),the
Rwanda Commercial Registration Service Agency (RCRSA),the
Human Resource and Institutional Capacity Development Agency
(HIDA),the Rwanda Information and Technology Agency (RITA)
and the Rwanda Office of Tourism and National Parks (ORTPN).



3. (U) The establishment of RDB builds on the investment law
of March 2006 which assists investors in obtaining necessary
licenses, visas, work permits, and tax incentives and which
remains in full force. The law provides permanent residence
and access to land for investors who deposit $500,000 in a
commercial bank in Rwanda for a period not less than six
months. This law also fixes the minimum initial capital
investment requirement for foreign investors at USD 250,000
to qualify for tax and other investment incentives. No
statutory limits on foreign ownership or control exist, and
there is no official economic or industrial strategy that has
discriminatory effects on foreign investors.


4. (U) Rwanda is still developing its legal investment
infrastructure, and the commercial judicial system continues
to lack capacity. Specialized commercial courts began
operations in May 2008 and, with the help of foreign
commercial judges, have largely cleared a substantial backlog
of cases, but it remains difficult to enforce contracts.


5. (U) In 2008, a business law reform commission drafted new
commercial legislation to facilitate investment and improve
the business climate. The government approved and published
in May 2009 new bankruptcy regulations and arbitration
legislation. It has also approved a new Intellectual
Property law, which is awaiting publication. Legislators
have drafted updated contract legislation that is pending
parliamentary review.


6. (U) While there is no mandatory screening of foreign
investment, the RDB does evaluate business plans of investors
seeking tax incentives to record incoming foreign investment
and to better allocate investment incentives to qualified
foreign investors.


7. (U) The government encourages foreign investment through
outreach and tax incentives. The only difference in
treatment between foreign and domestic companies is the
initial capital requirement for official registration
(registration is not mandatory) ) USD 250,000 for foreign
investors; USD 100,000 for domestic investors. There are no
reports of foreign investors declining to invest due to these
differing treatments. Foreign investors can start a new
business irrespective of the initial capital requirement.
Qbusiness irrespective of the initial capital requirement.


8. (U) Foreign investors can acquire real estate, but there
is a general limit on land ownership. Although land is owned
by the state, both foreign and local investors can acquire
land through lease-hold agreements that extend from 50 to 99
years.


9. (U) The government established the Privatization
Secretariat and the Rwanda Public Procurement Agency to
ensure transparency in government tenders and divestment of
state-owned enterprises. A November 17, 2009 report by
Transparency International lowered Rwanda,s &Corruption
Perception Index8 ranking from 102 in 2008 to 89, placing
Rwanda among the top ten performers in Africa and the &least
corrupt8 in East Africa.


10. (U) RDB provides investors with a &one stop8 investment
services center. Additionally, RDB organizes investment
conferences, both in Rwanda and abroad, to attract foreign
investment. RDB directors and local businesses regularly
join Rwandan President Paul Kagame in overseas tours to
attract foreign investors. In September 2009, President
Kagame was the keynote speaker at the annual Corporate
Council for Africa meeting held in Washington, DC.


11. (U) RDB assists potential investors in securing all
required approvals, certificates, land for their projects,
work permits, and tax incentives. Foreign investors who pass
through RDB have not reported any discrimination. Legally,
foreign firms are treated equally with regard to taxes,
access to licenses, approvals, and procurement. However,
during the year some foreign investors asserted they were
subjected to more scrutiny on tax enforcement matters than
domestic firms.


12. (U) There are no laws requiring private firms to adopt
articles of incorporation or association which limit or
prohibit foreign investment, participation, or control.


13. (U) The World Bank, Transparency International, the
Heritage Foundation and MCC have reported improved business
climate indicators over the last two years.

Index/Ranking (Date of Report) 2009 2010

TI Corruption Index 3.0/102 3.3/89
World Bank Doing Business (rank) 143 67
Heritage Economic Freedom 54.2/124 59.1/93

Index/Percent

MCC Government Effectiveness .45/88 .59/94
MCC Rule of Law .21/63 .39/76
MCC Control of Corruption .68/97 .80/98
MCC Fiscal Policy -0.4/59 -0.5/59
MCC Trade Policy 61.2/28 67.4/47
MCC Regulatory Quality 0.08/56 0.14/61
MCC Business Start Up 0.866/39 0.988/98
MCC Land Rights Access 0.648/64 0.814/89
MCC Natural Resource Mgmt 58.03/31 57.37/46


CONVERSION AND TRANSFER POLICIES
--------------


14. (U) There is no difficulty obtaining foreign exchange, or
transferring funds associated with an investment into a
freely usable currency and at a legal market clearing rate.
In 1995, the government established a market-determined
exchange rate system under which all lending and deposit
interest rates were liberalized. The central bank holds
daily foreign exchange sales freely accessed by commercial
banks.


15. (U) Investors can remit payments only through authorized
commercial banks. There is no limit on the inflow of funds,
but the central bank requires justification for all transfers
over USD 20,000 to facilitate the oversight of potential
money laundering. Additionally, there are some restrictions
on the outflow of export earnings. Companies generally must
repatriate export earnings within three months after the
goods cross the border. Tea exporters must deposit sales
proceeds soon after auction in Mombasa. Repatriated export
earnings deposited in commercial banks must match the exact
declaration the exporter used crossing the border. The
central bank requires individuals and businesses to justify
transfers of more than USD 20,000 per year from Rwandan
commercial banks. Rwandans working overseas can freely make
remittances to their home country.


16. (U) It usually takes two to three days to transfer money
using SWIFT financial services. Other financial services
Qusing SWIFT financial services. Other financial services
companies such as Western Union and Money Gram are also
available to investors seeking to transfer funds. Since
January 2007, the Rwandan Franc (RwF) has been convertible
for essentially all business transactions. Rwanda has a
liberal monetary system and complies with IMF Article VIII
and all Organization for Economic Cooperation and Development
(OECD) convertibility requirements. The Rwandan Franc
exchange rate is closely tied to the USD.
EXPROPRIATION AND COMPENSATION
--------------

17. (U) The government reserves the right to expropriate
property &in the public interest8 and &for qualified
private investment8 under the expropriation law of April

2007. Buyers and sellers negotiate compensation directly
depending on the importance of the investment and the size of
the expropriated property. RDB may facilitate expropriation
in cases where the expropriation is potentially
controversial. Valuation of expropriated property is often
opaque and controversial. Legislation governing valuation of
expropriated properties is still pending. In 2008, a number
of property owners vocally protested expropriation of their
property by the city of Kigali and claimed the compensation
offered was below market value and not in accordance with the
expropriation law. In 2009, expropriation of property in
Kigali was suspended temporarily.


18. (U) Expropriation actions have been more common in the
capital because Kigali is undergoing major development.
Authorities have not expropriated any industrial plants;
expropriation has been limited to residential areas and small
farms. For detailed information on the expropriation law,
visit www.primature.gov and official gazette law No 18/2007
of 19 April 2007. There are no laws that require localgJ_*n~Qa is a member of
the International
Center for the Settlement of Investment Disputes (ICSID) and
African Trade Insurance Agency (ATI),which are supported by
the World Bank and Lloyds of London. ATI covers risk against
restrictions on import and export activities,
inconvertibility, expropriation, war, and civil disturbances.



20. (U) In 2008, Rwanda opened specialized commercial courts
to address commercial disputes and facilitate enforcement of
property and contract rights. To clear a backlog of
commercial cases, Rwanda hired experienced foreign judges who
presided over Rwandan commercial trials. Their role was
positively received and non-controversial. The law governing
commercial establishments, the investment law, the law on
privatization and public investment, the land law and the law
on protection and conservation of the environment currently
are the main laws governing investments in Rwanda.


21. (U) Judgments of foreign courts and contract clauses
choosing foreign governing law are accepted and enforced by
local courts. However, some government entities and
officials have opposed strongly foreign choice of law clauses
and international arbitration. Local courts lack experience
adjudicating cases with non-Rwandan governing law. There has
been a growing number of private investment disputes in
Rwanda, but the government has never been involved as a
complainant or respondent in a World Trade Organization
dispute settlement.


22. (U) Rwanda signed and ratified the Multilateral
Investment Guarantee Agency (MIGA) convention on October 27,

1989. MIGA issues guarantees against non-commercial risks to
enterprises that invest in member countries.

PERFORMANCE REQUIREMENTS AND INCENTIVES
--------------


23. (U) Unless stipulated in a memorandum of understanding
Q23. (U) Unless stipulated in a memorandum of understanding
that characterizes the purchase of privatized enterprises,
performance requirements are not imposed as a condition for
establishing, maintaining, or expanding other investments.
They are mostly imposed as a condition to access tax and
investment incentives. Investors who demonstrate capacity to
add value and invest in priority sectors enjoy more tax and
investment incentives which include VAT exemptions on all
imported raw materials, 100 percent write-off on research and
development costs, 5 to 7 percent reduction in corporate
income tax if the company exports products and services
valued from USD 3 to 5 million, duty exemption on equipment,
and a favorable accelerated rate of depreciation of 50
percent in the first year.


24. (U) Although there are no legal obligations regarding
these matters, the government encourages foreign investors to


transfer technology and expertise to local staff, in order to
help develop Rwanda,s human capital. Immigration
authorities generally grant work permits to foreign
expatriates as long as they are key personnel and fall into
categories of skilled labor where Rwandans are not available.



25. (U) RDB has been increasingly successful developing
investment incentives and publicizing investment
opportunities. Registered investors obtain certificates that
bring benefits, including exemption from value-added tax and
duties when importing machinery, equipment, and raw
materials. RDB also assists with the issuance of expatriate
work permits, securing all the required government permits,
and assisting with land acquisition if required. The
government offers grants and special access to credit to
investors promoting rural areas. There are no import quotas
for investors.


26. (U) There is no legal requirement that investors in
general must purchase from local sources or export a certain
percentage of their output. However, to benefit from
incentives in a planned export zone, investors will be
required to export a certain percentage of the finished
product. The government regulates access to export-related
foreign exchange.


27. (U) The Government gives preferential tax incentives to
investors who create significant export-oriented growth. The
government determines eligibility for such incentives upon
request based on several factors: exports must total at least
80 percent of production (or exports total at least 10
percent if manufacturing under bond); capital investment is
at least USD 100,000 (local investors and COMESA members) or
USD 250,000 (non COMESA investors).


28. (U) There is no legal obligation that nationals own
shares in foreign investments or that shares of foreign
equity be reduced over time, however, the government strongly
encourages local participation in foreign investments. The
government does not impose conditions on transferring
technology.


29. (U) The government is not involved in assessing the type
and source of raw materials for performance, but the National
Bureau of Standards determines quality standards. The
government does not require investors to disclose proprietary
information to government authorities.


30. (U) U.S. and other foreign firms participate in
government-financed and/or subsidized research and
development programs.


31. (U) There are no onerous residence visa or work permit
requirements that inhibit foreign investors, mobility.
There is no visa requirement for U.S. nationals for the first
90 days of their stay in Rwanda. The government generally
processes visa applications for other foreign nationals in a
timely manner. As a result of the July 1, 2009 entry into
force of the East African Community (EAC) customs union,
other East Africans who qualify y as skilled workers do not
need permits to work in Rwanda. Unskilled workers do require
visas. The RDB facilitates visas and work permits for
potential investors.


RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT
--------------


32. (U) Local and foreign investors have the right to own and
establish business enterprises in all forms of remunerative
activity. The Rwandan constitution stipulates that every
person has the right to private ownership, whether personal
or in association with others. The government cannot violate
the right to private ownership except in the public interest,
Qthe right to private ownership except in the public interest,
and with procedures that are determined by law, and subject
to fair compensation.


33. (U) The law also allows private entities to acquire and
to dispose of interests in business enterprises. Foreign
nationals may hold shares in locally incorporated companies.
The government has divested and continues to divest in public
enterprises that would compete with the private sector.
However, holding companies closely affiliated with the
government continue to dominate the private sector.

PROTECTION OF PROPERTY RIGHTS

--------------


34. (U) The law protects and facilitates acquisition and
disposition of all property rights. Investors involved in
commercial agriculture have lease-hold titles and are able to
secure property titles, if needed. The land law passed July
14, 2005 stipulates modalities of property registration and a
land titling campaign that began as a pilot project in 2008
is now underway nationwide.


35. (U) The Government maintains measures that may violate
the WTO,s TRIMs (Trade Related Investment Measures) by
allowing parallel imports of goods from countries where
patents and original trade marks are not registered and
recognized. However, as a least developed country, Rwanda
has until 2013 to abide by specific WTO TRIMs.


37. (U) Rwanda adheres to key international agreements on
intellectual property rights and their protection, but as a
least developed country, Rwanda has until 2013 to abide by
specific Trade Related Intellectual Property (TRIP)
arrangements. As a member of Common Market for East and
Southern Africa (COMESA),Rwanda is automatically a member of
African Regional Intellectual Property Organization (ARIPO).
It is also a member of World Intellectual Property
Organization (WIPO) and is currently working towards
harmonizing its legislation with WTO trade-related aspects of
intellectual property. The Ministry of Commerce (MINICOM),
the Rwandan Revenue Authority (RRA),and the Rwandan Bureau
of Standards (RBS) work together to address issues involving
counterfeit products on the Rwandan market. Through the RBS
and the RRA, Rwanda has earned accolades for its protection
of intellectual property rights, but many goods that violate
patents, especially pharmaceutical drugs, make it to market
nonetheless.


38. (U) Rwanda has not yet ratified WIPO internet treaties,
but the Government has taken steps to implement and enforce
the WTO TRIPS agreements. Intellectual property legislation
covering patents, trademarks and copyrights have been drafted
and are pending parliamentary review. A Registration Service
Agency, which is part of the Rwanda Development Board (RDB),
was established in 2008 and will further improve intellectual
property rights by registering all commercial entities and
facilitating business identification and branding.

TRANSPARENCY OF THE REGULATORY SYSTEM
--------------


39. (U) The government generally uses transparent policies
and effective laws to foster clear rules consistent with
international norms. Institutions such as the Rwanda Revenue
Authority (RRA),the Ombudsman,s office, the Bureau of
Standards, the National Public Prosecutions Authority (NPPA),
the Rwanda Utilities Regulatory Agency, the Public
Procurement Agency, and the Privatization Secretariat all
have clear rules and procedures. However, some investors
claim that the RRA unfairly targets foreign investors for
audits.


40. (U) There is no formalized mechanism to publish draft
laws for public comment, although civil society has the
opportunity to review proposed laws. There is no government
effort to restrict foreign participation in industry
standards-setting consortia or organizations.


41. (U) Some investors complain that the strict enforcement
of tax, labor, and environmental laws impede investment. The
government updated the labor code in 2009 to simplify
recruitment of labor and facilitate the hiring, firing and
retention of competent staff.
Qretention of competent staff.


42. (U) Rwanda established an Ombudsman,s office in 2004
that monitors transparency and compliance to regulation in
all governmental sectors. In 2009, the government expanded
the Ombudsman,s authority to include criminal investigation
powers to prosecute corruption. The Rwanda Utility
Regulation Agency, the Auditor General,s Office, the
Anticorruption Division in the Rwanda Revenue Authority, the
National Bureau of Standards, and the National Tender Board
also enforce regulations. In 2009, the press frequently
reported instances of alleged malfeasance involving private
citizens and Rwandan officials. This led to investigations
and arrests of high ranking officials as well as a number of
resignations.


43. (U) There is no informal regulatory process managed by
nongovernmental organizations. Existing legal, regulatory
and accounting systems are generally transparent and
consistent with international norms but are not always
enforced.


44. (U) A key component of the government,s regulatory
system is the Office of the Auditor General, established in
1999 to audit government adherence to fiscal controls. The
Auditor reports regularly to the Parliament and those reports
have led to wide-ranging criminal investigations of alleged
misconduct.


45. (U) Consumer protection associations exist, but are
largely ineffective. The business community has been able to
lobby the Government and to provide feedback on government
policy and execution through the Private Sector Federation, a
business association partially funded by the government.

EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT
-------------- --------------


46. (U) Access to affordable credit is a serious challenge in
Rwanda, as interest rates are relatively high and loans are
usually short-term. Savings rates have been low. However,
credit terms generally reflect market rates and foreign
investors are able to negotiate credit facilities from local
lending institutions if they have collateral and &bankable8
projects.


47. (U) The private sector has limited access to credit
instruments. Most Rwandan banks are conservative,
risk-averse and trade in a limited range of commercial
products. Following privatization, commercial banks
introduced a variety of credit instruments with more products
becoming available as the local banking industry matures.
Credit cards are not in use except in major hotels and a few
restaurants, but debit cards have been introduced on a
limited basis.

48. (U) The Central Bank encourages and facilitates
investments through the sale of treasury bills and bonds. An
over-the-counter (OTC) market was established in 2008 with
the assistance of the US Department of Treasury, but volume
is limited and confined to sale of government treasury bills
and a few corporate bonds and shares.


49. (U) The percentage of non-performing loans in the
commercial market remains high at 29 percent in 2008. In
2009, the commercial banking sector made a concerted effort
to &clean up8 its loan portfolios, which further restricted
capital availability. In 2006, the central bank increased the
capital requirement for commercial and investment banks to
USD 9.2 million.


50. (U) With only a small OTC market, corporations generally
trade shares among themselves or with private investors. No
hostile takeovers have occurred involving foreign investors,
and both the central bank and the government have been very
active in seeking foreign investors for the banking sector.
The IMF gives the central bank high marks for its effective
management of the regulatory system.

COMPETITION FROM STATE OWNED ENTERPRISES
--------------


51. (U) Rwandan law allows private enterprises to compete
with public enterprises under the same terms and conditions
with respect to access to markets, credit, and other business
operations. Since 2006, the government has made an intensive
effort to privatize SOEs, to reduce the government,s
non-controlling shareholdings in private enterprises, and to
attract foreign direct investment, especially to the
telecommunications, tourism, banking, and agriculture
sectors. Foreign investors now own controlling interests in
Qsectors. Foreign investors now own controlling interests in
most of Rwanda,s biggest taxpayers. Many smaller SOEs, when
privatized, have been acquired by Rwandan investors and
investor groups including some that have themselves
government shareholders and others led by individuals with
close ties to the government. SOEs include water and
electricity utilities and companies in construction, mining,
finance, tea and other agricultural investments. The
government continues to own minority shares in
telecommunications, brewing, insurance, hotels and other
sectors.


52. (U) Some private sector firms assert that SOEs and
private enterprises in which the government owns shares, or
that have close ties to the government officials, sometimes
receive preferential treatment with regard to access to
credit and, as noted earlier, in tax compliance enforcement.


53. (U) SOEs generally have boards of directors that function
independently. However, Ministers and their representatives
sit on SOE boards and exercise considerable influence. Most
SOEs are required to publish audited annual reports, but some
are not readily available.
CORPORATE SOCIAL RESPONSIBILITY
--------------


54. (U) There is a growing awareness of corporate social
responsibility but only a few companies (primarily those that
have international ownership) have actually implemented
sustainable programs.

POLITICAL VIOLENCE
--------------


55. (U) Rwanda is a stable country with little violence. A
strong police and military provide a security umbrella that
minimizes potential criminal activity and political
disturbances. On several occasions during 2008 and 2009
unknown assailants detonated grenades in the vicinity of the
Kigali Genocide Memorial Centre and in rural areas of the
country. There have been no incidents involving politically
motivated damage to projects or installations since the late
1990,s.


56. (U) Parliamentary elections in 2008 were peaceful.
Although the region of the Democratic Republic of the Congo
(DRC) neighboring Rwanda remains unstable, rebel groups
operating in the DRC have not conducted insurgent activity in
Rwanda since the late 1990s. In 2009, Rwanda reestablished
diplomatic ties with the DRC and the two countries are now
cooperating to establish peace in the eastern DRC and improve
regional economic ties. Rwanda acts in concert with its
neighbors to fight crime and terrorism, and it actively
cooperates in efforts to identify and freeze the assets of
known terrorist individuals or organizations.

CORRUPTION
--------------


57. (U) The government maintains a high-profile
anti-corruption effort and senior leaders articulate a
consistent message that combating corruption is a key
national goal. There are relatively frequent public reports
of investigations into allegations of misconduct by officials
using their office for personal gain. The government
regularly investigates such incidents and prosecutes and
punishes those if found guilty. Enforcement is the same for
both foreign and local investors. High-ranking officials
accused of corrupt activities often resign during the
investigation period and many have been prosecuted. Senior
government officials take pride in Rwanda,s reputation for
being tough on corruption, and numerous governmental
institutions play an active role in investigating public
officials accused of corruption.


58. (U) Rwanda has signed and ratified the UN Anticorruption
Convention. It is a signatory of the OECD Convention on
Combating Bribery. It is also a signatory of the African
Union Anticorruption Convention. Giving and accepting a
bribe is a criminal act under law, and penalties depend on
circumstances surrounding the specific case. U.S. firms have
identified the relative lack of corruption in Rwanda as a key
incentive to investing in the country.


59. (U) Some businesses report occurrences of petty
corruption in the customs clearing process, but there are
limited reports of corruption in transfers, dispute
settlement, regulatory system, taxation or investment
performance requirements. A local company cannot deduct a
bribe to a foreign official from taxes. A bribe by a local
Qbribe to a foreign official from taxes. A bribe by a local
company to a foreign official is a crime in Rwanda.


60. (U) Institutions including the Ombudsman,s office, the
Anti-Corruption Unit in the Rwanda Revenue Authority, and the
Auditor General,s Office identify corruption cases. The
police and the NPPA prosecute cases. Since 2009, the
Ombudsman,s office has criminal investigative powers that
allow it to pursue corruption cases.


61. (U) There is a local chapter of Transparency
International in Rwanda. Other similar regional
non-governmental organizations do not operate in Rwanda, yet
periodically issue reports about the country. Transparency
International reported in November 2009 that Rwanda has
improved its ranking in the Corruption Perception index from
2.7 in 2007 to 3.3 in 2009.

BILATERAL INVESTMENT AGREEMENTS AND AGOA
--------------


62. (U) Rwanda is eligible for trade preferences under the
African Growth and Opportunity Act (AGOA),which the United
States enacted to extend duty-free and quota-free access to
the U.S. market for nearly all textile and handicraft goods
produced in eligible beneficiary countries. The U.S. and
Rwanda signed a Trade and Investment Framework Agreement
(TIFA) in 2006 and a Bilateral Investment Treaty in 2008.

OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS
--------------


63. (U) The Overseas Private Investment Corporation (OPIC)
has provided a single investment guarantee in Rwanda to
Sorwathe, an American-owned tea factory. Given Rwanda,s
political, economic and currency stability, OPIC officials
have expressed interest in expanding OPIC involvement in
Rwanda and are currently evaluating several projects in
energy, education, construction and tourism.


64. (U) The Export-Import Bank (EXIM) continues its program
to insure short-term export credit transactions involving
various payment terms, including open accounts that cover
exports to the U.S. of consumer goods, services, commodities,
and certain capital goods. Rwanda is a member of the
Multilateral Investment Guarantee Agency (MIGA) and the
African Trade Insurance Agency (ATI).

LABOR
--------------


65. (U) General labor is available, but there is a shortage
of skilled labor, including accountants, lawyers, and
technicians. Higher institutes of technology, many private
universities, and vocational institutes are improving and
producing more and more graduates each year. Starting in
2010, English, instead of French, is the language of
instruction from elementary school grade three onwards.


66. (U) Rwanda attempts to adhere to the International Labor
Organization (ILO) convention protecting worker rights.
Policies to protect workers in special labor conditions
exist, but enforcement remains inconsistent. The government
encourages but does not require on-the-job training of and
technology transfer to local employees.


67. (U) The government revised the national labor code in
2000 to eliminate gender discrimination, restrictions on the
mobility of labor, and wage controls. A new labor code is
currently under review in Parliament. Companies find skill
deficits in many sectors when hiring, but these deficits will
continue to shrink as literacy rates increase and more
qualified people graduate from Rwandan institutions of higher
learning. The general population,s literacy rate continues
to improve.

FOREIGN TRADE ZONES/FREE PORTS
--------------


68. (U) Rwanda is a member of several sub-regional economic
organizations, such as the East African Community (EAC) which
put in place a customs union on July 1, 2009. That union
facilitates the movement of goods produced in the region and
permits an EAC citizen with certain skills to work in any
member country. The EAC seeks to put in place a common
market in 2010. Rwanda is also a member of the Economic
Community of the Great Lakes (CEPGL) together with the DRC
and Burundi, and of the Common Market for Eastern and
Southern Africa (COMESA). COMESA countries have a free trade
QSouthern Africa (COMESA). COMESA countries have a free trade
agreement that permits goods originating in member countries
and that comply with certain rules of origin to enter other
member markets duty free. Value addition on imported raw
materials must be 3 percent to qualify for duty free entry.
Rwanda plans to establish a free trade zone outside Kigali in

2010. Bonded warehouse facilities are now available to
businesses importing duty free materials.


FOREIGN DIRECT INVESTMENT STATISTICS
--------------


69. (U) Foreign direct investment in Rwanda surged from 2006
to 2009, by any measure. According to the World Bank,s World
Investment Report 2009, Foreign Direct Investment (FDI) flows
into Rwanda increased from USD 16 million in 2006 (3.3
percent of gross capital formation) to USD 103 million in
2008 (12.2 percent).


70. (U) The Rwanda Development Board (RDB) announces foreign
direct investment in the year registered or committed, not
when actually expended. Many of those registered are
multi-year investments. For example, in 2008, the RDB
reported registering USD 541 million in 40 foreign investment
projects. Of those, reportedly, only 15 had begun operating
or had merged with local companies over the following year.
Of these, reportedly 15 projects had begun operations or
merged with local companies over the following year.


71. (U) On December 31, 2009, the RDB reported to the press
that Rwanda attracted $600 million in new investment during

2009. The RDB figure reflects the total value of agreed
investments, not actual capital in flows. Delays in starting
projects or subsequent changes in planned amounts will
determine actual FDI inflow.
SYMINGTON