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OVERVIEW
The financial sector of Rwanda continues to be stable, well capitalized, profitable, liquid, sound and stable. As of June 2016, total assets of the financial sector expanded by 13.7% to reach FRW 3.4 trillion. The size of the financial sector, as measured by total assets, relative to GDP increased to 55% in June 2016, up from 53.8% in June 2015.
In total, 89% of adults in Rwanda are financially included (including both formal and informal financial products/services, around 5.2 million individuals). Levels of financial inclusion vary significantly from 97% in Nyarugenge and Kicukiro districts; to 78% in Karongi and Rutsiro districts (FinScope, 2016).
In driving the Country towards a cashless economy, by June 2016, the number of ATMs and POS increased by 10% from 361(June 2015) to 398 and by 27% from 1,339(June 2015) to 1,707. The volume and value of POS transactions increased tremendously by 139% (from 208,357 in June 2015 to 497,075 in June 2016) and by 65% (from Frw 18,877 in June 2015 to 31,200 million in June 2016). The number of cards slightly increased by 4% from 658,024 end June 2015 to 685,385 end June 2016.
The ratio of electronic payments transactions to GDP has increased from 0.3% in 2011 to 16.5% as of end December 2015.
Other developments in the sector include:
1 Integrated Payments Processing System (RIPPS) efficiently serving the payment industry (credit transfers, cheques and interbank transfers) and the capital market (IPO process) via Automated Transfer System (ATS); 1 Central Securities Depository (CSD); Seven banks offering internet based tax payment services; 1 Commodity Exchange operating as a spot market for beans, Maize , Soya, wheat, Sorghum, and paddy rice in Rwanda and East Africa Community (EAC) common markets , 1 Credit Reference Bureau currently operating a new credit risk analytical tool “Credit Score” to help aggregate the risk profiles of households and firms. The number of subscribers to the credit reference bureau increased from 41 institutions in 2011 to 514 institutions in June 2016. The percentage of adult population (15 years and above) covered by credit reference bureau increased to 21.2% in June 2016 from 18.8% in June 2015.
INVESTMENT OPPORTUNITIES
Incentives under Capital Market:
Income tax exemption
Income accruing to registered collective investment schemes and employees’ shares scheme are exempted from income tax.”
Capital gain tax
Capital gain on secondary market transaction on listed Securities shall be exempted from capital gains tax.
Corporate income tax
Newly listed companies on capital market are taxed for a period of 5 years on the following rates:
Venture capital
Venture capital companies registered with the capital markets Authority in Rwanda benefit from a corporate income tax of zero percent (0%) for a period of five (5) years from the date the decision has been taken.
Withholding tax on dividends and interest
Withholding tax on dividends and interest income on securities listed on capital markets and interest arising from investments in listed bonds with a maturity of 3 years and above are reduced to 5% when the person who withhold is a resident taxpayer of Rwanda or of the East African Community.
VAT
The following are exempted from VAT:
Other Incentives specific to Financial services:
Preferential corporate income tax rate of fifteen per cent (15%)
For a registered investor operating in the following financial services: global business activities, private equity funds, fund management, wealth management; mutual funds, collective investment schemes, captive insurance schemes, venture capital, and asset backed securities. This incentive excludes locally oriented fund and wealth management, retail banking and insurance activities.
Corporate income tax holiday of up to five (5) years
Microfinance institutions approved by competent authorities are entitled to a tax holiday of a period of five years (5 years) from the time of their approval.
Other General Incentives:
The Rwandan Financial Sector is composed by:
The sector also has:
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