Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.
Rwanda is landlocked and transportation costs for imports and exports are among the highest in the world. The country lacks a link to regional railway networks, which means all trade is conducted by road or air. Non-tariff barriers add to high transportation costs and contribute to inflated prices of domestically manufactured products, as most raw materials used for manufacturing need to be imported. The COVID-19 pandemic has introduced further logistical problems with required testing of drivers. Trucks arriving in Rwanda from the EAC must offload at borders so local trucks may transport cargo from borders to final destinations, resulting in added costs and delays (however, trucks carrying relief goods, transit goods, fuel and perishable goods are expedited and escorted to the final destination free of charge)
Cost of electricity
Rwanda’s average residential and commercial electricity costs, at $0.20 per kilowatt-hour (kWh) before tax, exceed the rate in other East African countries and rank among the top 10 most expensive tariffs in Sub-Saharan Africa. However, preferential tariffs for industrial customers and other special projects are available. More information on electricity tariffs can be accessed here: https://www.reg.rw/customer-service/tariffs/.
Low purchasing power
Annual per capita income at $830 in 2019.
Low level of human resource development:
General shortage of skilled labor including accountants, lawyers, technicians, tradespeople, and other skilled professions.
Limited Access to finance
High interest rates and limited local capital markets.
Competition from state-owned enterprises
Some investors complain about competition from state-owned and ruling party-aligned businesses.
Investor aftercare issues
While business registration is easy, implementation can be less smooth due to delays in government payments for services or goods delivered, changes in memorandum of understanding (MOU) conditions during contract negotiations, and/or additional tax assessments. Investors also face difficulty in obtaining or renewing work visas for expatriates due to the government’s demonstrated preference for hiring local or EAC residents over third country nationals.
Investors have cited the inconsistent application of tax incentives and import duties as a significant challenge to doing business in Rwanda. Under Rwandan law, foreign firms should receive equal treatment with regard to taxes, as well as access to licenses, approvals, and procurement. Foreign firms should also receive VAT tax rebates within 15 days of receipt of relevant documents by tax authorities, but firms often complain that the process for reimbursement can take months or years and often involves lengthy audits by and negotiations with the Rwanda Revenue Authority (RRA). Some investors express frustration that audits are conducted with great frequency, even on businesses that have demonstrated excellent compliance.