Common Law Lecture Series: Reforming Rwandan Business Laws – Ross Agim

Thanks to ComSec for the image via CC licence on Flickr.com

Hello, my name is Ross Agim and I am a second year law student at The City Law School. Over the coming months I will be writing some articles based on a wide range of topics related to the law. The articles may just be aimed at giving you an insight into aspects of the law profession, gaining opinions from prominent legal figures or just propagating a unique opinion on what is going on in the law. I hope you enjoy reading! 

On October 8th 2009, Justice Sam Rugege, Deputy Chief Justice of the Republic of Rwanda came to speak at City University London.

The date is April 6, 1994, a plane carrying Habyarimana and Burundi Pres. Cyprien Ntaryamira is shot down over Kigali; the ensuing crash kills everyone on board. The next day Prime Minister Agathe Uwilingiyimana, a moderate Hutu, is assassinated. Her murder is part of a campaign to eliminate moderate Hutu or Tutsi politicians, with the goal of creating a political vacuum, and thus allowing for the formation of the interim government of Hutu extremists that is inaugurated on April 9. Over the next several months the wave of anarchy and mass killings continue, involving the army and Hutu militia groups and the Tutsi-led FPR.

During the genocide more than 800,000 civilians, primarily Tutsi, were killed. As many as 2,000,000 Rwandans, both Hutu and Tutsi, fled, most of them into eastern Zaire. However, fifteen years on from the conflict, I was at City University London to hear Justice Sam Rugege of the Supreme Court of Rwanda give a lecture titled Reform of Rwandan Business Laws. The lecture gave details of laws that have reinvigorated the Rwandan economy and imbued the nation with a spirit of optimism.
Rwanda has carried out more reforms than any other country in the past few years to make it easier to do business there. Entrepreneurs can now start a business in Rwanda in three days.

The reforms Rwanda needed to create a better business environment stretch as far back as the aftermath of the Rwandan genocide. The events of the genocide caused not only loss of lives but also destruction of property, infrastructure and public institutions. Justice Rugege therefore stated that “The process of rebuilding the country has necessarily involved reform of institutions and laws to bring them up-to-date”. The most significant reform in this vein was the democratic Constitution of 2003. Among other things, it guarantees the separation of powers, independence of the judiciary, respect for the rule of law, the democratic form of government and power-sharing.

However, after the success of these constitutional reforms Justice Rugege explained that “economic development is now the main concern of Rwanda” as he felt that it this concern that will reduce poverty and consolidate national unity. He reasoned that, “As living conditions get better, more and more people see the advantages of participating in national programmes and investing their time, energy and resources in the interest of the country as a whole”.

The Administration of Justice

In addition to the general judicial reform aimed at making courts more efficient, measures were introduced to address the need to restore business confidence in the justice system.

In 2008 separate specialized commercial courts were established. These courts were set up at regional level in the three major commercial centres. Commercial court judges are now able to specialize as they hear nothing but commercial cases. In conjunction with this, a new training regime for judges, attorneys and court clerks has been initiated. The law relating to procedure in commercial matters was revised to ensure efficiency. As a result of these changes the backlog of commercial cases has been dramatically reduced while the administration of commercial justice has increased confidence in the judicial system and the country.

The Reform of Business Laws

To bolster these procedural changes, there has been need for reform of the laws themselves.
The laws have the specific aims of:
(1) Encouraging more foreign investment to support the Rwandan business community,
(2) Encouraging the involvement of small-scale business sector and encouraging more businesses to move from the informal sector to the formal sector,
(3) Eliminating legal constraints to the development of the private sector and enabling it to play its role as the engine of economic growth
(4) Incorporate international best practices.

By June, 2009, the Laws establishing the Commercial Courts, the Companies Act, Secured Transactions Law, the Law on Insolvency, the Law on Arbitration and Conciliation, the Law Establishing the Registration Services Agency and the legal framework for land registration were already in operation. Most of these laws are modelled on laws of countries with common law backgrounds such as UK, New Zealand and Australia.

The Reform of the Business Environment

In order to speed up registration of businesses and rights, cut down costs and ensure transparency, a new registration service was created. Registration of companies now goes though only 2 procedures instead of the previous 9 and can be completed within 48 hours, where previously it could take months.

The Future

A culture of entreneurship is essential to every successful economy and this culture is facilitated in countries where the government knows when to get out of the way, thus Justice Sam Rugege stressed that “private sector growth is key” and that “the government of Rwanda will not be involved in providing services and products that can be delivered more efficiently” via the private sector. Consequently “The State will only act as a catalyst”. To achieve this he reiterated that the war on corruption will continue.

As part of the Vision 2020 scheme there has been the promotion of small enterprise, Science & IT, there is now a child programme that aims to guarantee that every child has a computer by 2020, there is also the intention to set up advanced research, there is an emphasis on sustainable energy resources which has involved a big US investor.
There has also been regional integration which has aimed to make use of the potentially large market of East Africa and COMESA.

On the current state of Rwanda and the hopes for the future Justice Sam Rugege finished off with saying:

“There are still many challenges…we are not yet there, but one can say with a measure of confidence that Rwanda is on the right path towards social and economic progress that will make it a decent place to live and a model of success among post-conflict societies.”

Rwanda’s development in stats

The World Bank Report for 2008 shows steady growth over the past 15 years. In 2008, in the midst of the economic crisis, Rwanda’s economy grew by 11%.

According to the World Investment Report 2009, inflows into Rwanda increased from $16 million in 2006 to $67 million in 2007 and $103 million in 2008.

The World Bank Doing Business indicators for 2010 show that Rwanda has not only jumped 76 places in overall ranking for ease of doing business (from 143rd to 67th) but has also been recognized as the number one reformer in the world for its reforms in several assessment categories. The jump is said to be an all time record.

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