KIGALI - The Minister of Trade and Commerce, Monique Nsanzabaganwa, yesterday tabled before parliament a proposal to reform business laws and also introduced new ones to facilitate doing business in Rwanda.

She told the House that the reforms are aimed at improving Rwanda’s ranking in the World Bank’s Doing Business report and also facilitate investors to start up their businesses in the country easily.

"Currently, registering a business in Rwanda takes less than 24 hours and done manually, we want to have a digital way of doing this and in a shortest time possible,” she said.
She added that acquiring land for business takes over 210 days and the government wants to come up with an easier way of doing it.

It is in this context that four new bills were introduced - credit information system, Condominium, Central Security Depositary and Electronic Transaction as well as revising the company act.

According to Nsanzabaganwa, the lack of a credit information system in Rwanda has limited the accessibility of Financial Institutions, as lenders give credit to the larger and better known borrowers.

"There is a disparity of knowledge (or information asymmetry), between the lender and the loan applicant, about a person or business, particularly about the past repayment behavior and current level of debt, known as moral hazard, which makes lenders more vulnerable,” she said.

"The fact that there are high non-performing loans in the banking and microfinance institutions is proof that lenders lack credible, comprehensive, easy to obtain, and inexpensive credit information”.

As a consequence, Nsanzabaganwa said that there is less credit granted at more expensive interest rates to what are good borrowers, and that credit granting is skewed to bad borrowers. 

The World Bank’s Doing Business rating gives Rwanda a lower score on the access to credit component and particularly on depth of credit information system; 2 indices out of 6 indices. This is mostly due to the lack of a credit information system.  
 
The Minister told MPs that, in this case, if the bill on credit information system is passed, it will to protect the confidentiality of private information and the rights of citizens, define a credit bureau and its operations, obligations, and rights under the law and set out the basic rules for data sharing, that is, for data access, management and dissemination.

Under this law, a credit bureau that is privately managed will be introduced and its role will be data sharing of both positive and negative payment data is permissible. 

Introducing the Bill on Central Securities Depositary, Minister Nsanzabaganwa said that in order to align our Country to international best practice as recommended by the Committee on Payments and Settlement Systems (CPSS) and the International Organization of Securities Commissions (IOSCO), Rwanda must ensure that there an institution (Central Securities Depository) that accommodates both Government securities and private equities/securities. 

Under this bill, a robust legal framework will enhance certainty and increase Rwanda’s attractiveness and competitiveness in the financial sector as the country aims to become a regional financial hub. 

According to the Minister, this draft law seeks to govern the Central Securities Depository, as well as the holding and circulation of Book Entry Securities. 

"Once enacted, this law will enable securities transactions to be effected without the need for physical delivery. It lays down provisions for securities to be deposited in book entry form and to circulate electronically,” she said.   

Under the Bill on electronic transactions, the Minister said that the Government’s stated objective is to ensure that Rwanda becomes an active player in the global information society.

MPs were convinced by all the Bills that the Minister presented and further scrutiny regarding the bills will be worked on in Parliamentary committees.

Ends