Business round up

Rwanda targets service industry in EAC As the East African Community (EAC) Common Market Protocol comes into effect, Rwanda is repositioning itself to become the region’s service hub. The EAC Common Market was officially launched last week to allow the free movement of people, goods, services, capital and labour in the region. “We have taken up a strategy to place ourselves as services and ICT hub. When you look at the way we are geographically located in the region, it gives us a competitive advantage to deal with various countries,” said Molly Rwigamba, the acting Chief Executive Officer (CEO) of the Private Sector Federation. Rwigamba, who was speaking during a press briefing about the EAC Common Market, said that the ongoing development of a free trade area in Kigali will facilitate the country in offering services to the region. “This is something we will take advantage of in terms of the region- someone will prefer coming to Kigali other than going somewhere to buy a similar good if it is tax exempt.” With the current campaign to promote the EAC as one tourist destination, Rwigamba observed that this would also boost Rwanda’s tourism sector. Transport fares to remain unchanged despite fuel price cut Despite a government decision to cut the fuel prices last week, ATRACO, a local transport association has said that it will not reduce transport charges across the country. ATRACO has welcomed the reduction in prices but maintains that it was too small a change to spur a decrease in transport tariffs. “We are still operating in losses even after this reduction in prices because fuel prices previously had been hiked too high thrice,” said Dodo Twahirwa the president of ATRACO. However, Twahirwa stressed that if the government reduced further the prices of fuel, they would also consider a reduction in transport charges. In the last two months, pump prices increased from Rwf918 to Rwf940 for both petrol and diesel per liter. The increase was attributed to the hike of a barrel of crude oil on the international market from $70 (Rwf40, 880) to $89 (Rwf51, 709). The government’s decision to reduce fuel prices has been induced by the global oil prices that have continued to fall in past few weeks on international market to below $76 (Rwf44, 156) a barrel from $86 (Rwf 51,709). BNR launches foreign private capital flow awareness campaign The foreign private capital flow awareness campaign that will help private sector investors and government share information on foreign private capital has been launched. The first of its kind, the exercise was launched this week by the National Bank of Rwanda (BNR) in partnership with the Private Sector Federation (PSF), Rwanda Development Board (RDB) and the National Institute for Statistics of Rwanda. “The government leadership has made it clear that relying on aid cannot help achieve our vision and the only solution is promoting trade investment where the private sector is key,” said Claver Gatete, the Deputy Governor of BNR. The International Monetary Fund (IMF) has also selected Rwanda among the 120 countries to conduct a survey and share information on foreign private capital given the need to create a conducive environment in Rwanda. The awareness campaign contains a comprehensive survey on foreign private capital by all the four partners where it will concentrate on 200 companies that were identified using the list of companies registered with BRD, NISR, PSF and BNR. Gatete emphasised the importance of data collection as being crucial for policy making but also key to addressing investor perception of Rwanda’s business environment. EABC calls for harmonisation of excise duty The business community in the region through their umbrella organisation—the East African Business Council (EABC)—has called for harmonisation of domestic taxes, specifically excise duty to facilitate the free movement of goods and services in the Common Market. This follows various consultations recently with its members who offer goods and services that attract excise duty in the region. “Excise policies across countries define the same product but excise duty is levied differently. For instance in Kenya beer is defined by content of malt or non-malt, while in Burundi it is defined as Primus (beer brand in Burundi),” a press release from EABC reads in part. The business community says that existing differences in application of excise taxes hinder free movement of goods on which the tax is levied and also encourages smuggling, illicit trade and unfair competition in the region. EABC also notes that excise duty for alcoholic and soft drinks in Rwanda and Uganda are taxed by ad valorem method while in other EAC member countries it is specific. “This creates differences in the market consequently creating incentives for smuggling across borders with all financial implications to government and firms,” the release said. SSSR increases investment The Social Security Fund of Rwanda (SSFR) has increased its equity investment, boosted by the fund’s efficiency that has improved collections from contributors. Statistics from SSFR show that its investment portfolio has grown at an annual average of 23 percent to Rwf157.3 billion this year from Rwf37.8 billion in 2003 as contributions rose from Rwf5.8 billion to 27 billion in the period under review. The Fund’s membership also increased as active employers rose from 4,099 in 2003 compared to 13,258 this year, an indication that more people are now saving their money through the public pension body. “As contributions increased, the Fund needed to reinvest the contributor’s money to make more returns. Before, we just had small investments in real estate so we had to expand our investment portfolio,” Afrique Ramba, the Acting Managing Director of SSFR said. SSFR’s major foreign equity investment is in Kenya’s largest telecom operator, Safaricom, in which the pension body invested $7.6 million (Rwf4.4 billion). The number of declared employees rose from 179,720 in 2003 to 306,561. Employers and employees increased at an average rate of 16.8 percent and 8.5 percent respectively. Ends