The government has tabled, before Parliament, a draft law on simplified insolvency for micro and small enterprises (MSEs), which is aimed at supporting investors faced with financial distress, The New Times reported. The new law, once enacted, could mean a difference for small businesses in Rwanda that often struggle with financial difficulties with limited options to recover from these difficulties.
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Rwanda
Fifty-one local firms have filed for bankruptcy, according to a public notice released by the Rwanda Development Board in October, Taarifa reported. Majority of these companies are from Gasabo, Kicukiro, Nyarugenge and Musanze districts. As per the notice, any person or institution can deliver a notice of objection to the Registrar General at RDB to halt the closure in a period of 20 days.
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The economic fallout from the Covid-19 crisis is likely to tip several of the world’s poorest countries into debt distress, forcing official creditors and private-sector lenders to accept a reduction or restructuring of loan repayments, the Paris Club group of creditor countries said on Tuesday, the Financial Times reported.
Rwanda’s central bank reduced its benchmark interest rate for the first time in about a year and lowered cash reserve requirements for banks to stimulate output amid the Covid-19 shock to the economy, Bloomberg News reported. The National Bank of Rwanda lowered the lending rate to 4.5% from 5%, according to an emailed statement. It was last cut in February 2019 by 50 basis points. Inflation could average 6% this year, slower than 8.2% in the second quarter, central bank Governor John Rwangombwa said in a phone interview after the rate decision.
RDB (Rwanda Development Board) this Wednesday commenced a three-day workshop in Kigali to train Rwanda’s insolvency practitioners, judges and other stakeholders including bankers and academics on the new insolvency law and matters around it, Taarifa reported. The insolvency law is part of commercial laws which the World Bank considers in the annual evaluation exercise for ranking Rwanda in the ease of Doing Business global index. The insolvency law is assessed together with its implementing institutions on how they facilitate doing business in the country.
The Private Sector Federation (PSF) has called for a review of the 2017 draft law on insolvency and bankruptcy, saying it is silent on some key issues, like how to handle cases of bankruptcy among individuals and NGOs, the New Times reported. Deus Kayitabarwa, the director of advocacy at the Private Sector Federation (PSF), explained that the proposed law mainly focuses on business enterprises, but is silent on how an individual or a non-governmental organisation goes bankrupt.
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Rwanda's Ministry of Trade is struggling to popularize the Law of Insolvency among the business community here but success continues to elude its efforts. Since its enactment in May 2009, the Insolvency Law still struggles to be accepted in the business community and is yet to serve its purpose, that of helping insolvent firms sort out their affairs. The law hands down procedures through which indebted businesses that can't pay creditors can declare themselves insolvent or bankrupt.
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