CORPORATE GOVERNANCE STATUS IN RWANDA PRESENTED BY A

CORPORATE GOVERNANCE STATUS IN RWANDA PRESENTED BY: A. KANTENGWA THIRD PAN AFRICAN CONSULTATIVE FORUM ON CORPORATE GOVERNANCE DAKAR – SENEGAL NOVEMBER 8 TH TO 10 TH 2005

CORPORATE GOVERNANCE ISSUES AND ASSESSMENT üTO PROMOTE AN ENABLING ENVIRONMENT FRAMEWORK FOR CORPORATE ACTIVITIES üTO ENSURE VOLUNTARY ADHERANCE TO GOOD CORPORATE CITIZENSHIP AND SOCIAL RESPONSIBILITY üTO PROMOTE ETHICAL CORPORATE BEHAVIOR AND ADOPT BEST PRACTICES üTO ENSURE FAIRNESS AND PROTECTION OF ALL STAKEHOLDERS ü TO ENHANCE ACCOUNTABILITY AND TRANSPARENCY 2

STATUS Ø TO INCREASE AWARENESS AND ACCEPTANCE OF CORPORATE GOVERNANCE PRINCIPLES. ØTO SENSITIZE ALL STAKEHOLDERS TO IMPROVE AWARENESS OF THE PRINCIPLES. ØTO ADOPT NEW LEGAL AND REGULATORY FRAMEWORK IN LINE WITH INTERNATIONAL BEST STANDARDS AND PRACTISES. ØTO ESTABLISH REGULATORY BODIES TO IMPROVE COMPLIANCE. ØTO INCREASE CAPACITY BUILDING IN ORDER TO UPGRADE SKILLS AND OWNERSHIP. 3

CHALLENGES ØLOW LEVEL OF AWARENESS OF CORPORATE GOVERNANCE PRINCIPLES Ø LACK OF RELIABLE &UP-TO-DATE STATISTICS Ø FAST CHANGING REGULATORY FRAMEWORK Ø LARGE PUBLIC AND INFORMAL SECTORS Ø LANDLOCKED POSITION AND POOR INFRASTRUCTURE Ø HIGH COST OF DOING BUSINESS, FINANCING, UTILITY COST Ø INADEQUATE SKILLED PROFESSIONALS Ø HIGH POVERTY LEVELS 4

ACTION TAKEN TO ADDRESS THE CHALLENGES ØCOMMERCIAL LAW REFORM ØTRADE LIBERALISATION AND TAX REFORM Ø PUBLIC ENTERPRISE REFORM AND PRIVATISATION Ø FINANCIAL SECTOR STRENGHTNING Ø ESTABLISHEMENT OF REGULATORY AND INSTITUTIONAL FRAMEWORK TO FOSTER PRIVATE SECTOR DEVELOPMENT Ø COMMISSIONING CONSULTANCIES Ø INVESTMENT IN INFRASTRUCTURE AND LIBERALISATION OF UTILITY SECTOR 5

ASSESSMENT LEGAL FRAMEWORK: ONGOING LAW REFORM TO BE USER-FRIENDLY FOR BOTH STAKEHOLDERS AND ADMINISTRATION LAW STATUS v COMPANY , BANKRUPTCY SOLVENCY LAWS OUTDATED-UNDERGOING REFORM TO MODERNISE AND CONSOLIDATE v REGISTRATION / ORGANISATION COMMERCIAL ENTREPRISES CUMBERSOME-UNDERGOING REFORM - TO ESTABLISH A REGISTRAR OF COMPANIES v BANKS AND FINANCIAL INSTITUTIONS CENTRAL BANK AND BANKING ACTS TO BE AMENDED TO ENHANCE COMPLIANCE WITH BASLE PRINCIPLES AND BEST PRACTICES v. INCOME TAX ACT FRAGMENTED, RESULTING INTO INCOHERENCE AND CONFUSION. BEING AMENDED, CODEFIED AND CONSOLIDATED v. DOMESTIC AND FOREIGN TRADE LAW TO BE UPDATED 6

ASSESSMENT INSTITUTIONAL FRAMEWORK ü RWANDA BUREAU OF STANDARDS REGIONAL CAPACITY BUILDING BEING STRENGHTENED TO COVERAGE - WORKS CLOSELY WITH BUREAUX. ü RWANDA INVESTMENT AND EXPORT PROMOTION AGENCY RESTRUCTURED TO FOCUS ON INVESTMENT AND EXPORTS ü RWANDA NATIONAL TENDER BOARD RESTRUCTURED AND DECENTRALISED TO EMPOWER SELF-ACCOUNTING MINISTRIES AND AUTHORITIES. EXPAND ENTITIES, LOCAL üNATIONAL BANK OF RWANDA MONITORING SUPERVISORY ROLE 7 CAPACITY BUILDING IS ON-GOING TO STRENGHTEN AND

ASSESSMENT INSTITUTIONAL FRAMEWORK Cont’d üINSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS BEING SET UP TO REGULATE THE PROFESSION, ENFORCE STANDARDS AND PROFESSIONAL ETHICS. üPRIVATE-PUBLIC’S SECTOR ECONOMIC FORUM BRIDGING COMMON VISION FOR ECONOMIC DEVELOPMENT üTRADE BOARD CAPACITY BUILDING TO TAKE INTO ACCOUNTS STAKEHOLDERS RIGHTS üPRESIDENTIAL ECONOMIC COUNCIL UNDER THE CHAIRMANSHIP OF THE PRIVATE SECTOR FEDERATION ADVISES THE PRESIDENT ON ECONOMIC ISSUES 8

ASSESSMENT § INSTITUTIONAL FRAMEWORK Cont’d üRWANDA REVENUE AUTHORITY TAX CODE AND TAX SYSTEM BEING AMENDED TO BE USER FRIENDLY. ONGOING CAPACITY BUILDING TO IMPROVE EFFICIENCY AND EFFECTIVENESS ü OFFICE OF AUDITOR GENERAL CAPACITY BUILDING ONGOING TO IMPROVE SKILLS AND ENHANCE ABILITY TO DELIVER QUALITY SERVICE. üOMBUDSMAN RECENTLY SET UP, DEVELOPING OPERATING PROCEDURES AND BUILDING CAPACITY. ü RITA IMPLEMENT NATIONAL STRATEGY IN INFORMATION AND COMMUNICATION TECHNOLOGY 9

ASSESSMENT INSTITUTIONAL FRAMEWORK Cont’d üRURA REGULATES PUBLIC UTILITIES. ONGOING CAPACITY BUILDING üINSURANCE COMMISSION INSURANCE ACT IS BEING DEBATTED IN PARLIAMENT üCIVIL AVIATION AUTHORITY ENSURES SAFETY OF AIR TRANSPORT üREMA IMPLEMENT AND MONITOR ENVIRONMENT POLICY. LAND WATER ACTS ADOPTED. 10

ASSESSMENT INSTITUTIONAL FRAMEWORK Cont’d üORTPN TOURISM POLICY AND RATING OF HOTELS, RESTAURANT AND TRAVEL AGENCIES üPRIVATISATION SECRETARIAT ENSURES FAIR AND TRANSPARENT PRIVATISATION OF PUBLIC ENTITIES üPROFESSIONAL BODIES LAW, MEDICAL, INSURANCE, BANKERS, LAWYERS, ACCOUNTANTS, … 11

CODES AND STANDARDS “Rwandan law establishes the primacy of international legal instruments over domestic legislation. Duly ratified or approved international treaties or agreements rank above domestic legislation once they have been published in the Official Gazette » Ø INTERNATIONAL ACCOUNTING ADOPTED FOR USE BY ALL BANKS STANDARDS(IAS) ALSO USED BY MULTI-NATIONALS. TO HARMONISE NATIONAL CHART OF ACCOUNTS WITH IAS. Ø INTERNATIONAL STANDARDS AUDITING (ISA) COMPLIED WITH BY ALL INTERNATIONAL AUDIT FIRMS AND THEIR AFFILIATE OPERATING IN RWANDA. Ø LABOUR CODES RATIFIED 27 ILO CONVENTIONS INCLUDING 8 COMPULSARY ONES. 12

CODES AND STANDARDS Cont’ ØBANKING AND FINANCIAL INSTITUTION TO Ø CORPORATE GOVERNANCE PRINCIPLES Ø STOCK EXCHANGE REGULATIONS CENTRAL BANK , BANKING AND FINANCIAL ACT BEING REVIEWED ENSURE COMPLIANCE. CENTRAL BANK TO ADOPT DEVELOPPED FRAMEWORK FOR FINANCIAL INSTITUTIONS TO BE DEVELOPED FOR OTHER ENTITIES BEING DEVELOPED 13

CODES AND STANDARDS Cont’ Ø INSURANCE REGULATIONS BEING DEVELOPED ØAFRICAN CHARTER ON HUMAN AND PEOPLE’S RIGHTS RATIFIED ØCODES ON INDUSTRIAL AND ENVIRONMENTAL SAFETY AND HYGIENE OF THE W. H. O RATIFIED BUT ENABLING LAW NOT YET ENACTED. STEPS BEING TAKEN TO EFFECTCOMPLIANCE 14

ACTION PLAN Objective Task To ensure proper running of the stock exchange and protection of shareholders. Develop Core Task Force Principles of Stock Exchange To create Establishing oversight body to Insurance supervise Commission insurance industry. To enhance efficient and effective running of insurance industry. Responsibility MINECOFIN Core Principles of Insurance Commission Supervision Time Frame December 2005 June 2005 September 2005 0

ACTION PLAN cont… Objective Task Responsibility Time Frame To modernize and make commercial laws consistent. Company Law Reform. MINICOM/ MINIJUST Dec 2005 To fight fraud corruption and comply with best practice guidelines. Anti Money Laundering. BNR / Insurance Commission Dec 2005 To ensure total compliance with Basle I principles. Banking act amendment. BNR Dec 2005 To establish the status of Corporate Governance in the country. National Evaluation PSF/ of Corporate MINECOFIN Governance. Dec 2005 0

ACTION PLAN cont… Objective Task To assess level of National corruption in the Corruption country. Survey Responsibility Time Frame Ombudsman Dec 2005 To govern the profession and ensure compliance with standards. Established Steering Institute of Committee / Certified Public MINECOFIN Accountants ( R ) May 2005 To ensure consistence and compliance with IAS. Harmonize MINECOFIN/ National Chart of AUDITOR Accounts with GENERAL IAS. Dec 2005 To improve skills Institutional (HR & MCBA) efficiency and Capacity Building effectiveness. March 2005 – Dec 2010 0

THANK YOU FOR YOUR ATTENTION ! 18