VZCZCXYZ0003
PP RUEHWEB

DE RUEHLGB #0041/01 0220709
ZNR UUUUU ZZH
P 220709Z JAN 10
FM AMEMBASSY KIGALI
TO RUEHC/SECSTATE WASHDC PRIORITY 6593
INFO RUEHXR/RWANDA COLLECTIVE PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY
RUCPCIM/CIMS NTDB WASHDC PRIORITY

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