<h1 style="text-align:center;">A Brief on the Draft VAT Proclamation; The Changes Introduced</h1>Ethiopia introduced value added tax (“VAT”) two decades ago under VAT Proclamation No. 285/2002 (“VAT Proclamation”). The VAT Proclamation was introduced as a replacement for the sales tax that was in place. Since then, the VAT Proclamation has been amended twice in 2008 and 2019 per Proclamation No. 609/2008, and Proclamation No. 1157/2019 (collectively, the “Amendments”). The 2008 Amendments were mainly focused on VAT registration requirements and criminal liabilities associated with VAT. On the other hand, the 2019 Amendments were mainly on reducing the tax reporting burden for a certain category of taxpayers, withholding of VAT by taxpayers, and VAT refund. Despite the Amendments, however, the VAT Proclamation failed to cover new business concepts like e-commerce and other changes in the economy.&nbsp;Consequently, a new VAT proclamation has been drafted (“Draft Proclamation”) that will replace the age-old VAT Proclamation. The Draft Proclamation is introduced to reform the rules in relation to VAT. The revision is needed to recognize new concepts which are recognized by the international community, take into consideration the changes in the economy and make VAT easily understandable and executable.&nbsp;With the above policy background, the Draft Proclamation has made some major changes. In this blog, we will cover some of the major changes introduced by the Draft Proclamation.<figure class="image"><img src="/uploads/097_A2814_f27fb82728.jpg"></figure>Accounting period and VAT filing: Regarding accounting period and VAT filing, the Draft Proclamation seems to be in line with the 2019 Amendments, which has eased the cost of filing VAT by changing the VAT accounting period from one calendar month to three calendar months based on the annual turnover of a taxpayer. This is also expected to alleviate the cash flow problems of small VAT registered businesses. Whereas all taxpayers with an annual turnover transaction of more than 70M Birr will be required to file VAT every month.Definition of terms: Terms like body, person, tax officer, fair market value, related person, and capital goods are defined under Federal Tax Administration Proclamation No 983/2016. The Draft Proclamation has given the same meaning to the terms, which ensures consistency across different tax laws. This will eliminate the uncertainty that can arise on the meaning of terms, which technically have the same meaning but have different definitions under different tax laws.Taxable activities: The definition of the supply of goods and services is critical in defining what taxable activities are. The Draft Proclamation broadened the scope of a supply of goods to include any transaction that involves a change in ownership of the goods. Supply of service is also defined broadly and there has been a shift in the definition of supply of service to include thermal or electrical energy, gas, or water, which were defined as goods in the VAT Proclamation.Registration: There are two types of registration for VAT under the VAT Proclamation and the Draft Proclamation, which are: obligatory registration and voluntary registration.&nbsp;<ul><li>Obligatory registration: The VAT Proclamation imposes an obligation to register for VAT when the total value of taxable transactions during the 12 months exceeds ETB 500K. This was later raised to ETB 1M. The Draft Proclamation increased this amount to ETB 5M.</li><li>Voluntary registration: The VAT Proclamation allows voluntary registration if the applicant supplies at least 75% of its goods or services to a person/business registered for VAT. The Draft Proclamation has changed this requirement to a monetary requirement; if the taxable activity is more than ETB 2.5M the applicant will be allowed to register for VAT.</li></ul>Cancellation of registration: Under the VAT Proclamation, a VAT-registered person can apply for cancellation if he has ceased to make taxable transactions. Under the Draft Proclamation, notice to the tax authority within seven days is required when taxable transactions cease to exist. Another reason for cancellation under both proclamations is when the total taxable transaction annual turnover in the period of 12 calendar months is expected to be not more than ETB 1M (ETB 5M, in the Draft Proclamation). In this case, the registered person can ask for cancellation at any time after three years of the date of its most recent registration for VAT. Under the Draft Proclamation, the three year requirement is reduced to two.&nbsp;Zero-rated activities: Under the VAT Proclamation, there are mainly four taxable activities that are zero-rated; while the Draft Proclamation has maintained this list, it has included specific requirements to be fulfilled for each category. Furthermore, goods that are imported for the purpose of maintenance, renovation and improvement are zero-rated based on the Draft Proclamation.Exempted goods and services: Certain activities which are exempted from VAT under the VAT Proclamation are subject to VAT under the Draft Proclamation. The Draft Proclamation has specifically excluded all exemptions and other benefits (i.e., zero rated activities) other than those listed under the draft.&nbsp;The following are some of the activities which are currently exempted but will be subject to VAT when the Draft Proclamation becomes effective.&nbsp;<ul><li>Transportation: Although transportation is exempted under the Draft Proclamation, taxis that have less than the capacity of holding 8 persons including the driver (which includes those operating through ride-hailing platforms and taxis), renting of vehicles, and vehicles used for transportation of tourists do not fall under the definition of transportation based on the Draft Proclamation, which means they are subject to VAT taxation.</li><li>Supply or import of national or foreign currency: Although the VAT Proclamation exempts supply or import of national or foreign currency, the Draft Proclamation did not. The Draft Proclamation specifically noted that any exemptions or activities that are zero-rated under the previous laws will not be applicable unless such benefits are given by the Draft Proclamation.&nbsp;</li><li>Supply or import of fuel gas, pension funds, permit and license fees, lease of a dwelling for less than two months, and others are also excluded from VAT exemption.&nbsp;</li></ul>On another note, the Draft Proclamation has included tax exemptions that are not included under the VAT Proclamation. For instance, goods that investors import or buy locally that are exempted from customs duty per the investment incentive regulation, goods that are VAT exempted by international agreements and imported by international organizations, and goods that are imported by diplomats and missionaries are exempted from VAT. &nbsp; &nbsp;

Ethiopia is changing its two decades old Value Added Tax proclamation

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A Brief on the Draft VAT Proclamation; The Changes Introduced

<h1 style="text-align:center;">The New Investment Incentive Scheme is Expected to Change the Investment Ecosystem &nbsp;</h1>As part of the country’s <a href="https://www.imf.org/en/News/Articles/2019/12/23/na122319-six-things-to-know-about-ethiopias-new-program#:~:text=The%20IMF%20has%20approved%20a,for%20sustainable%20and%20inclusive%20growth">economic reform program</a>, the government of Ethiopia adopted a new investment proclamation and regulation in 2020, repealing the decade-old investment Proclamation No. 769/2012 (read our blog on the new investment proclamation <a href="https://www.renewcapital.com/resources/blogs/Having%20Skin%20in%20the%20Game%20Can%20Help%20with%20Investment%20Reform">here</a>) and Regulation No. 272/2012, hereinafter referred to as the Repealed Regulation. Despite the adoption of these investment laws, investment incentives provided under the Investment Incentives and Investment Areas Reserved for Domestic Investors Council of Ministers Regulation No. 270/2012 were not repealed and were kept as transitory provisions until a new Incentive Regulation is enacted. The business community has been waiting for the introduction of new investment incentives and after more than two years, the Council of Ministers has approved new regulations to provide for investment incentives, hereinafter referred to as the Incentive Regulation.&nbsp;&nbsp;Investment Proclamation No. 1180/2020 clearly stipulates the necessity to further increase and diversify foreign investment inflow into Ethiopia to accelerate inward transfer and diffusion of knowledge, skill, and technology. The adoption of a separate and detailed Investment Regulation compared to the previous one can be considered as a move to achieve this commitment and make the country a destination for Foreign Direct Investment (FDI). Nevertheless, whether the Investment Regulation will achieve its targeted goal will be seen in the coming years. With this in mind, we have covered the major highlights of the Incentive Regulation briefly below.<figure class="image"><img src="/uploads/097_A2846_254237521f.jpg"></figure>Administration of Investment Incentives - The Incentive Regulation has given the Ministry of Finance (MoF) a broad range of powers in administering investment incentives. Previously, various government bodies were empowered to govern different sections of the incentives. For instance, the Ethiopian Investment Board was assigned to come up with a directive to regulate the exemption of motor vehicles, and the Ethiopian Investment Commission had the power to decide on the importation of duty-free capital goods and construction materials. However, under the Incentive Regulation, the MoF has the power to issue directives to govern these matters. In addition to this authority, the MoF can grant tax incentives, issue directives on the eligibility criteria for tax incentives, and conduct a cost-benefit analysis on investment incentives to determine the impact of tax incentives on the economy. Furthermore, the MoF is empowered as an overseeing body over other regulatory institutions in ensuring whether tax incentives are used for their designated purposes.&nbsp;&nbsp;Investment Areas and Incentives - Investors which invest in areas that are far from Addis Ababa have additional investment incentives provided under the incentive laws. The Repealed&nbsp; Regulation clearly mentions these areas; however, the Incentive Regulation does not. It states that investors who invest in areas far from the urban center and/or with very low infrastructure development will be entitled to an income tax deduction of 30% for three consecutive years after the expiry of the income tax exemption period. The MoF is expected to come up with a directive listing these geographic areas. Similarly, investors who invest in new, atypical, and selected tourist destination areas in hotels, lodges, and resorts with a rank of a star will be entitled to a five-year income tax exemption. The MoF directive is also expected to list these atypical and selected tourist destination areas.&nbsp;&nbsp; Employment Opportunities for Ethiopians Abroad - Investors who provide job opportunities for Ethiopians abroad are provided with income tax exemptions. There are three requirements to be fulfilled by the investors in order to benefit from this exemption. First, the employee who will go outside of Ethiopia should obtain a qualification certificate from an institution recognized for providing training to persons who are to be placed in a foreign country. Nonetheless, the Investment Regulation does not state the type of qualification or training necessary for employees who will go outside of Ethiopia. Secondly, the employer should bring evidence from the Ministry of Labor and Skills that proves the employment of Ethiopians outside of Ethiopia. Lastly, based on the number of Ethiopians sent abroad, the income tax exemption schemes provided under the Incentive Regulation can differ. Nevertheless, the investor will not get more than six years of exemption, regardless of the number of Ethiopians it sends abroad for work.Exemption for Expansion or Upgrading of Existing Investment - In relation to exemptions provided for investors who expand and upgrade their existing investment, the Incentive Regulation has made some changes. Under the new law, investors should bring evidence to benefit from such incentives. They should show whether the investment has achieved the type and volume of product and other preconditions as mentioned in their investment license. In addition, the expansion should be in line with the eligibility criteria listed under the directive that will be issued by the MoF. Finally, to benefit from such exemption the investors are expected to submit audit reports about their existing investment.Incentives for the Mining, Petroleum and Geothermal Works - Section four of the Incentive&nbsp; Regulation gives detailed coverage for mining, petroleum and geothermal works. Investors who engage in these sectors can import machinery, equipment and vehicles without paying customs duty for the operation of their investment. However, capital goods that are imported into Ethiopia cannot be sold to other parties without securing prior approval from the MoF, but the investor can re-export these goods without paying customs duty. Expatriate employees of a contractor and/or a subcontractor that engages in petroleum and geothermal works are allowed to import household goods and personal effects of any kind free of customs duties in accordance with regulations.&nbsp;Commencement Period for Income Tax Exemption - The starting period for the income tax exemption under the Repealed Regulation is the date of commencement of production or provision of services by the investor. The Ethiopian Investment Commission is required to notify federal or regional tax organs about the commencement of production or provision of services by the investor. Under the new Incentive Regulation, income tax exemption starts after the investor obtains its investment license or expansion permit. The EIC or a federal government body delegated by the EIC to issue investment permits will notify the Ministry of Revenue about the obtainment of an investment license or expansion permit.&nbsp;&nbsp;&nbsp;

As part of the country’s economic reform program, the government of Ethiopia adopted a new investment proclamation and regulation in 2020, repealing the decade-old investment Proclamation No. 769/2012.

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The New Investment Incentive Scheme is Expected to Change the Investment Ecosystem 

<h1 style="text-align:center;">RENEW’s Legal Corner: May 2022</h1>Our take on May’s developments in the investment ecosystems of East Africa.<figure class="image image_resized" style="width:100%;"><img src="/uploads/097_A2836_15ec557b17.jpg"></figure><hr>ETHIOPIAThe New Directive by the Ministry of Revenues Eases the Deductibility of LoansThe Ministry of Revenues (MoR) issued a directive related to keeping tax books of accounts. The new directive No. 176/2014, which repealed Directive No 152/2011, aims at bringing clarity to the business community on keeping books of accounts and having supporting documents with an ultimate goal of creating consistency in terms of application. The new directive has made some noteworthy changes. However, perhaps the significant one is related to the registration and documentation of loans.&nbsp;Previously, taxpayers were required to show a loan agreement that was notarized at Documents Authentication and Registration Services (DARS) in order to recognize a certain entry to the company’s books as a debt. Otherwise, there is a high probability that the transfer will be considered an income and subject to tax. This has been a major dispute area between the taxpayers and the tax authority.The rigidity of the process at DARS to get a loan agreement notarized added to the fact that most businesses are family-owned and lack of awareness resulted in shareholders usually putting their personal money into their business at times of distress without DARS registration and facing excessive taxation.&nbsp;The new directive has provided some clarity to that. Even though the burden of proof still rests on the taxpayer, now a loan can be proven in different ways in addition to proof of notarization at DARS. Despite the upgrades to the law, be advised that not getting a loan agreement notarized at DARS will have consequences in terms of stamp duty penalty. The business community is still advised to get the loan agreement notarized at DARS, however, the consequence of not doing so is now less grave.&nbsp;NBE has Released a Complete Guidelines for Telecom OperatorsIn 2020, the National Bank of Ethiopia (NBE), came up with a <a href="https://nbebank.com/wp-content/uploads/pdf/directives/Payement%20system/ONPS-02-2020.pdf">Licensing and Authorization of Payment System Operators Directive - ONPS/02/2020</a>, which allowed telecom operators to engage in payment and related services in Ethiopia. As a follow-up to this, NBE has introduced a <a href="https://www.nbe.gov.et/wp-content/uploads/pdf/directives/Payement%20system/A-complete-Guide-on-licensing-process.pdf">Complete Guide on Payment System Operator License Process</a> that stipulates the details of the licensing process for the financial firms that want to engage in related businesses.&nbsp;The guideline has five phases detailing the application procedure to secure the license. These include to whom the application should be addressed, documents that should be submitted with the application, company formation and the authorization process.&nbsp;&nbsp;&nbsp;&nbsp;Basic Food Items Can Now Enter Ethiopia on Franco Valuta Basis&nbsp;In an effort to control the food inflation in Ethiopia, triggered by internal and international factors, the government is taking new measures. As part of this move, the Ministry of Finance has issued a circular allowing the Ethiopian diaspora and Ethiopians’ who live abroad to import basic food items into Ethiopia without a foreign currency permit.&nbsp;In a circular which is written to the Ethiopian Customs Commission, the Ministry of Finance has given permission to the diaspora and Ethiopians who live abroad to import oil, wheat, sugar, rice and instant milk under the franco valuta scheme. The new circular waives the restrictions that were imposed on the volume that is allowed. Under the new circular there is no minimum requirement and persons who are considered eligible can import any amount of the basic food items which are listed under the Directive.&nbsp;NBE Has Come up with a New Directive for the Implementation of Technology in Core Banking OperationsNBE has introduced a Directive that obligates commercial banks to automate their system, at least their core business processes. As per this law, commercial banks are required to automate their customer due diligence, loan processing, loan portfolio management, and interest banking services among others.&nbsp;NBE has set a time frame for banks to modernize their banking processes, which is within the next two years starting from the effective date of the Directive. Not complying with the Directive within the set time framework will result in an ETB 10,000 fine each month. If a bank fails to automate its core banking business within additional two years, it will face partial or full suspension of related core business in due consideration of the nature of the function.<hr>UGANDAThe End of Umeme’s Monopoly over the Supply and Distribution of ElectricityThe Ugandan Parliament has passed an Electricity Amendment Bill 2022 which, if ratified by President Museveni, will end Umeme Limited's (“Umeme'') monopoly as the sole bulk power supplier of the country. Umeme has been operating under a 20 years electricity distribution concession effective March 2005 from the Government. Umeme is Uganda’s main electricity distribution company, listed on the Uganda Securities Exchange and cross-listed on the Nairobi Securities Exchange of Uganda and is currently distributing about 97% of all electricity used in the country.&nbsp;The new bill permits suppliers to receive generation and transmission licensees to supply electric power in bulk directly to categories of customers specified by the Minister. The assent of President Museveni is the only remaining hurdle for the bill to be implemented.The implementation of the presidential directive will take away Umeme’s service territories where it is not licensed. It will also give a selling power to industries at a tariff that eliminates the current expensive distribution costs of Umeme.&nbsp;Uganda Import Rule Over Age-Old CarsIn a new directive by the Uganda Revenue Authority (URA), imports of vehicles older than nine will be cleared under the East African Community’s Single Customs Territory (SCT) which allows members of the bloc to jointly collect customs taxes. Complementary to this directive, any vehicle nine years old or more from the date of manufacture shall no longer be cleared under the current warehousing regime. As a result, based on CRSP The price of used cars will be inflated as it attracts an import duty of 25%, excise duty (ranging from 25% to 35%) and value-added tax of 16% payable cumulatively and in that order.The likely impact of this directive will be first, a decrease in vehicles sold on the automobile black market in Kenya and secondly, it will create a tough environment for Ugandan importers as they will be required to lodge import declaration forms in their respective home countries and pay relevant taxes upfront to facilitate the export process. Thus, the price of automobiles will likely imminently increase. However, for some, this is viewed as positive news from an environmental point of view because consumers will inevitably opt to purchase newer cars that have lower carbon emissions. Kampala, Uganda’s capital, is currently reported to have the second-worst air quality in Africa.<hr>RWANDARwanda to Benefit from $25m Initiative for Climate Resilient Crop VarietiesBurundi, Rwanda and the Democratic Republic of Congo (DRC) are part of the countries listed for consideration in the new initiative that strives to ensure environmental conservation and increase food security. According to an article in the New Times, the&nbsp; $25 million regional initiative dubbed “Transforming Agri-Food Systems in West and Central Africa” (TAFS-WCA) initiative has been launched by CGIAR, a global research partnership to improve nutrition and food security within the context of climate change in West and Central Africa through nutritious, climate-adapted and market-driven food systems. Rwanda depends greatly on agriculture for both domestic consumption and export. Earlier this year, a prolonged drought eroded more than 40% of Rwanda’s farmer’s produce, mainly beans and maize. This situation was exacerbated when the heavy rains that came, later on, damaged the crops that had survived the dry spells. This initiative will offer farmers some relief from the adverse and sometimes unavoidable effects of climate change subsequently ensuring food security and steady yields for consumption and export.Ukrainian Refugees Could be Sent&nbsp; to RwandaIn an interesting twist, senior officials in the UK have stated that Ukrainian refugees entering the country with illegal documentation may be relocated to Rwanda. The process will begin in the next few weeks following a $158M deal struck by the British government and Rwanda last month. Thousands of illegal migrants who haven’t yet been processed in the UK will be granted asylum or refugee status. According to an article in The Guardian UKTom Pursglove, the minister for justice tasked with tackling illegal migration stated in defense of the new immigration scheme that, “This is a new and untested policy at this point in time. I do think that in the fullness of time we will see this policy, as part of a wider package that we are introducing, really shift the dynamic.” The Migration and Economic Development Partnership will likely be beneficial in achieving Rwanda’s economic and social transformation by integrating the asylum seekers into the workforce.&nbsp;1. <a href="http://umeme.co.ug/">http://umeme.co.ug/</a>2. <a href="https://www.monitor.co.ug/uganda/news/national/mps-end-umeme-monopoly-as-electricity-distributor-3781812">https://www.monitor.co.ug/uganda/news/national/mps-end-umeme-monopoly-as-electricity-distributor-3781812</a>3. <a href="https://www.monitor.co.ug/uganda/news/national/uganda-import-rule-boosts-kenya-car-dealers-3779394">https://www.monitor.co.ug/uganda/news/national/uganda-import-rule-boosts-kenya-car-dealers-3779394</a>4. Current Retail Selling Price

Our take on May’s developments in the investment ecosystems of East Africa


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RENEW’s Legal Corner: May 2022

<h1 style="text-align:center;">White Paper: Current State of Ethiopia’s Angel Investing Landscape&nbsp;</h1>As a legal professional supporting RENEW’s investment practice in Ethiopia for five years now, I keep a close pulse on commercial, tax and economic related regulations that impact private equity investors including angel investors. I recently prepared a white paper to help you understand the opportunities that are on the horizon for local and foreign angel investors and the crucial work that must be undertaken by my government to increase the attractiveness of early-stage investing and the startup ecosystem in Ethiopia in the years to come.&nbsp;<figure class="image image_resized" style="width:100%;"><img src="/uploads/Screen_Shot_2022_05_12_at_11_13_40_AM_1d149622f5.png"></figure>I am hopeful that the Homegrown Economic Reform, the Digital Transformation Strategy, the Capital Markets Proclamation, and the draft Startup Proclamation will help set the stage for increased economic prosperity for Ethiopians and support for the private sector, but much work must still be done to ensure the legal frameworks are effectively implemented in support of an optimal environment for startups, angel investors and the private sector in general.&nbsp;&nbsp;As the famous quote by Walter Wriston says, “Capital goes where it is welcome and stays where it is well treated.” As I see it, the Ethiopian government has an important opportunity to ensure that more angel capital flows to Ethiopian startups through the following efforts:<ol><li>Coordinating the enactment of subordinate legislations&nbsp;</li><li>Broadening the label “startup”&nbsp;&nbsp;</li><li>Building a strong institutional backing&nbsp;</li><li>Providing a waiver for the sector restriction for angels&nbsp;</li><li>Easing the work permit and residence ID acquisition process</li><li>Reducing regulatory burdens&nbsp;</li></ol>To read more about my recommendations, download the white paper: <a href="https://latest-api.renewcapital.com/uploads/2022_05_2022_FINAL_Angel_Investing_Landscape_52783c12e3.pdf">LINK</a> &nbsp;

Ethiopia’s opportunities to increase early-stage investing

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The Current State of Ethiopia’s Angel Investing Landscape, A White Paper

<h1 style="text-align:center;">RENEW’s Legal Corner: April 2022</h1>Our take on last month’s legal developments in the investment landscapes of Ethiopia, Rwanda and Uganda.<figure class="image image_resized" style="width:100%;"><img src="/uploads/097_A2846_254237521f.jpg"></figure><hr>ETHIOPIAA Startup Proclamation that Incentivizes Startups and Investors is in the MakingEthiopia is in the process of enacting a Startup Proclamation that aims to create an innovative ecosystem that is able to promote innovation and job creation. The proclamation that is currently in the draft stage is expected to bring solutions to some of the challenges that startups and innovative businesses face in Ethiopia including barriers to entry and exit, administrative challenges, and access to finance.&nbsp;One of the major measures taken by the Startup Proclamation is incentivizing angel investors to invest in startups and innovative businesses in Ethiopia. The incentives to such investors include tax breaks on capital gains tax and allowing debt investment, among others. [We will be publishing a white paper next week on angel investing in Ethiopia, and will include details on how the Startup Proclamation will likely impact angels.]Road Transport Proclamation in the PipelineThe Ethiopian Ministry of Transport and Logistics released a draft Road Transport Proclamation (Draft Proclamation), which, once enacted, will repeal the nearly decade and a half old Transport Proclamation No. 468/2005 (Transport Proclamation). The revision is needed in order to restructure the road transport sector in a manner that makes it competitive, safe and efficient and cognizant of the economic and social developments of the country. Below, we have summarized some of the major changes that are proposed by the draft proclamation as compared to the current one.Railway Transport Sector RemovedThe current proclamation regulates almost all forms of land transport including railway transport and their operators. However, in reality, this hasn’t been the case since 2017. With the enactment of the Railway Transport Administration Proclamation 1048/2017, the sector has been removed from the Transport Proclamation. Reinforcing that decision, the draft proclamation removed the regulation of railway transport from the scope of application.&nbsp;Maritime Transport Sector RemovedSimilar to the railway transport sector, the maritime sector administration has been part of the Transport Proclamation. However, this has been removed from the transport sector and a separate regulation has been set up per the Maritime Sector Administration Proclamation No. 549/2007. Similarly, the draft proclamation reinforced that decision and left the maritime sector out of the scope of the transport sector regulation.&nbsp;&nbsp;&nbsp;Establishment of the National Road Transport CommissionUnder the current Transport Proclamation, powers in relation to regulating the transport sector are given to the Transport Authority, which is empowered to promote an efficient, adequate, economical and equitable transport system. The new draft proclamation changes the name of the regulator to the National Road Transport Commission, which will have similar mandates to the Transport Authority. However, since there is a need to tie the works of the regulatory body with cross-border activities and neighboring countries, the decision is being taken to elevate the body to a commission.The Use of Technology&nbsp;The draft proclamation emphasizes the need for integrating technology into the transport sector, which is also one of the major reasons for the need to revise the current Transport Proclamation. The use of technology is mainly introduced in relation to data collection and dissemination. The draft proclamation provides for the establishment of a data center for such purposes.&nbsp;<hr>UGANDAChanges in the Coffee Sector Continue to Raise Concern&nbsp;A recent deal between the Ugandan government and Uganda Vinci Coffee Company Limited (UVCC) to set up a coffee processing plant in Uganda has raised concerns based on the exclusive rights given to the company to purchase all the Ugandan coffee to the exclusion of other players in the coffee sector. UVCC has been given free land in the Namanve Investment Park on a 49-year lease agreement and has been granted priority rights over the purchase of coffee to ensure its supply. There is also concern around the tax exemption extended to the investor. According to an article in the <a href="https://www.monitor.co.ug/uganda/news/national/inside-multibillion-coffee-deal-govt-signed-with-uvcc-3769446">Monitor</a>, the agreement, which lasts for a 10 year period, states that ‘the exemptions shall extend to taxes and impositions applicable to all the activities of the company and its foreign staff in respect to the export of green coffee beans.’It further states that ‘where no exemption from tax is allowed under the law of Uganda or exemption provided is inadequate to provide the company with comprehensive relief from taxes or other impositions, then the government undertakes that it will bear the cost of all taxes.’ In effect, this ensures the company will not have to pay any taxes and puts taxpayer money at risk for a deal they had not previously been made aware of or approved.&nbsp;This agreement comes after the recent decision of the Ugandan government to withdraw its membership from the International Organization of Coffee Exporters where it previously has been a pivotal member. The timing also aligns with the new National Coffee Bill passed in August 2020, which requires the registration of coffee farmers and, according to the Monitor, has not been well received.&nbsp;<hr>RWANDAImproved land rights for foreign investors may increase Rwanda’s attractiveness&nbsp;&nbsp;In an effort to position Rwanda as an entrepreneurial hub of Africa, significant changes continue to be made to the country’s laws in order to attract investments from all parts of the world. The new amendments to the land law n° 27/2021 of 10/06/2021 will likely play an instrumental role in achieving this. New land rights regarding state land leases and land concessions were revised alongside the existing rights that apply to nationals and foreigners in Rwanda.Under the new amendments, an <a href="https://www.collinsdictionary.com/dictionary/english/emphyteusis">emphyteutic</a> lease that initially stipulated a lease term of 49 years for investments and 20 years for a residential house extended the term to 99 years for both types of lease. This will likely encourage investors.&nbsp;Regarding freehold titles, historically a foreigner was only allowed full and exclusive rights to land by virtue of international bilateral agreements between Rwanda and other states, if they co-owned the land with a Rwandan citizen who had at least a 51% ownership stake, or were apportioned land in a special economic zone. The new revisions to the land law grants freehold rights to foreigners if approved by a presidential order in exceptional circumstances of strategic national interest. Though this is undefined in the new land law, and no such presidential order has been issued yet, the hope is that the order would cover all strategic investment undertakings under the new investment laws.&nbsp;The additional inclusions to the land law consist of land concession that entails use of private state land for a period not exceeding 49 years for strategic investment like forestry, agriculture and livestock, among others. An article in <a href="https://www.newtimes.co.rw/opinions/foreigners-rights-land-rwanda-new-land-law-and-its-impact-investment">The New Times Rwanda </a>stated that “All projects of national importance are deemed as strategic investments, such projects focus on special impact to the development of the country and its people.” The article further details the state lands lease which is “a State private domain land lease agreement between the State and an investor for strategic investment in construction of infrastructure for commercial purposes such as trade centers, hotels, real estate, restaurants, public parks, tourism sites, schools, hospitals passengers or goods transportation stations and industries.” The lease term is 99 years and can be renewed pending fulfillment of the investor’s tax obligations and diligent land conservation.&nbsp;

Our take on last month’s legal developments in the investment landscapes of Ethiopia, Rwanda and Uganda

RENEW’s Legal Corner: April 2022

<h1 style="text-align:center;">&nbsp;Press Release: Roadrunner Technology Solutions to Expand in Ethiopia</h1>&nbsp;<a href="https://drive.google.com/file/d/1zHV1Spbj3_uXgJvTQyL0-2yt-VKhLeES/view?usp=sharing">Download the Full Press Release</a><hr>Addis Ababa, Ethiopia, March 8, 2022 -- Roadrunner Technology Solutions LLC (Roadrunner), a partner of <a href="https://deliveraddis.com/">Deliver Addis</a> (the d/b/a name of Universal Courier Services PLC), continues to see rising demand for its services and has attracted capital in its endeavor to be Ethiopia’s premier e-commerce and food delivery platform. The company has recently secured an investment from a blended finance vehicle that invests in Ethiopia, Uganda and Rwanda. The investment will help the company expand its delivery fleet, enhance its technology platform, and implement measures and systems to become a leading business in climate- and gender-smart practices.&nbsp;Deliver Addis is a pioneer in the e-commerce space and has been making deliveries in Ethiopia since 2015. Over the past three years, the company has expanded significantly, delivering food to tens of thousands of consumers around Addis. The company also proudly supports more than 130 restaurants and was one of the reasons hundreds of employees in the restaurant industry were able to stay employed during the pandemic. Through its online marketplace, Deliver Addis is now selling groceries, flowers and other consumer goods.&nbsp;<figure class="image"><img src="/uploads/DSC_0080_9599e166a0.JPG"></figure>“We're proud to bring on new partners that share our perspectives on sustainable growth and usher in a new era of service enhancements while continuing to build a forward-thinking workplace,” said Deliver Addis founder, Feleg Tsegaye, recently.&nbsp;“This investment will not only introduce new technology and an expanded fleet to increase Deliver Addis’s capacity, but will also introduce an expanded platform to improve the customer experience and lower delivery times, support women’s entrepreneurship through a new GIG model, and encourage a green economy through the use of E-bikes,” noted JC Oelofse, RENEW’s Group COO, Shared Growth Services. “We are excited about the opportunities this investment will bring and look forward to opportunities to better serve Deliver Addis’s customers.”About&nbsp; RENEW - RENEW is an impact investment firm with offices and teams across East Africa. RENEW specializes in small and medium enterprise (SME) investing and private sector development in Africa. RENEW believes that targeting employment through SMEs is, dollar-for-dollar, the most effective and sustainable way to reduce poverty. The investments made by <a href="https://www.renewcapital.com/what-we-do/investing">The Impact Angel Network</a> and other blended finance vehicles that RENEW manages have been made possible because of RENEW’s partnership with Global Affairs Canada (GAC), USAID and other development partners. RENEW’s blended finance partnerships aim to support high potential, responsible SMEs across East Africa, providing them with the tools, resources and training they need to attract and efficiently use finance to grow, thereby enabling them to play a stronger role in the economy.&nbsp; To find out more, please visit<a href="http://www.renewcapital.com"> www.renewcapital.com</a>.###&nbsp;

Roadrunner Technology Solutions to Expand in Ethiopia

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 Press Release: Roadrunner Technology Solutions to Expand in Ethiopia

<h1 style="text-align:center;">RENEW’s Legal Corner: March 2022</h1>Our take on the legal developments related to the investment landscape in Ethiopia, Rwanda and Uganda.<figure class="image image-style-align-center"><img src="/uploads/097_A2814_f27fb82728.jpg"></figure><hr>ETHIOPIAParliament Approves the Proclamation Lifting the State of Emergency &nbsp;Following the push several months ago from the Tigray People Liberation Front (“TPLF”) southwards to the capital, Addis Ababa, the federal government of Ethiopia declared a nationwide state of emergency, which later was enacted by the House of Peoples Representative (“Parliament”) as <a href="http://unidoseoul.org/en/?p=7249&amp;ckattempt=1">Proclamation No. 5/2021</a>. The main aim of the proclamation was to avert the threat posed by the TPLF, which is declared a ‘terrorist group’ by the federal government. Accordingly, a command post was established under the state of emergency proclamation, which was empowered to impose curfews, cause the termination of any means of communication and public transportation, and oversee activities of civil society organizations and activities of mass media and journalists, with the authority to revoke their license, among others. When enacted, the state of emergency had an expiry period of six months effective from the date of enactment, November 2, 2021.However, following the successful push back of the TPLF group to Tigray by the federal government, the Council of Ministers proposed for the state of emergency to be lifted as the threat from TPLF is no longer prevalent. As a result, the Parliament approved the recommendation and lifted the state of emergency on February 15, 2022, before the expiry date. According to the statement from the Prime Minister’s Office, the threat has reached a stage where law enforcement could be implemented by regular operation. The approval came after three weeks from the proposal by the Council of Ministers.The lifting of the state of emergency is seen as a positive development for the business community. Perhaps one of the most significant impacts of the lifting of the emergency is seen on the performance of the Ethiopian sovereign bonds. Following the expression of intention to lift the state of emergency by the government, the Ethiopian bonds witnessed a swing from near-worst to best performing. According to Bloomberg, “Ethiopia’s bonds are the best-performing sovereign debt in emerging markets this year.” The bonds have rallied 6 cents on the dollar following the announcement by the Prime Minister’s Office that the security threat had diminished. That brings returns this year to 13%, the best performance out of 80 developing nations tracked by Bloomberg. As a result of the war, the securities lost 28% last year alone, which was the worst performance after El Salvador.Executive Organs Proclamation Published&nbsp;One of the first tasks undertaken by the newly formed government when it took office on October 4, 2021 was restructuring the executive branch of the Federal Government. During its first session, the newly formed Parliament enacted a proclamation that defines the powers and responsibilities of the executive organs of the government. This has created a number of changes in the structure, from their nomenclature to restructuring their responsibilities and accountabilities. However, despite this being the first act of the Parliament, we had to wait for four months until the final proclamation defining their powers and accountabilities was published in the Federal Negarit Gazette. This month, the printouts of the Proclamation have been made available to the public, which is called the Definition of Powers and Duties of the Executive Organs Proclamation No. 1263/2021.&nbsp;One of the major reasons for the restructuring, per the preambles of the proclamation, is the need to establish an organizational structure that allows coordinated work that is efficient and cost-effective, helps reduce wastage and ensures accountability. Previous laws have not been able to establish an accountable organizational structure and designation of institutions and, as a result, it was impossible to ensure the continuity of institutions and uniformity of designation.&nbsp;Accordingly, the organizational structure has tried to classify government bodies into seven major categories, which are:Ministry - A ministry is led by a minister. It is mainly responsible for formulating sectoral policies, strategies and programs, and related matters and oversees and coordinates its implementation. Accordingly, 22 ministries are established per the proclamation. Major changes in this category are: the Ministry of Trade and Industry is divided into two different ministries, which are the Ministry of Trade and Regional Integration and the Ministry of Industry. In addition, the Ministry of Labour and Social Affairs changed its name to the Ministry of Labour and Skills, which under the new structure overtook the roles and responsibilities of the Jobs Creation Commission.&nbsp;&nbsp;Commission - A commission can be accountable to a Ministry, the Prime Minister’s Office or the Parliament. It coordinates the activities of different executive organs, formulates policies and strategies and oversees its implementation. The Ethiopian Investment Commission and the Customs Commission are the noteworthy organs in this category.&nbsp;Authority - An authority performs a regulatory function, issues standards and ensures their compliance with the same. It could be accountable to a Ministry, however, if there is a potential conflict with the activities of an institution to which it is accountable, it could be made accountable to the Prime Minister or other government organs. The Ethiopian Food and Drug Authority is a regulatory organ to note in this category.&nbsp;Administration or Development - An administration or development organ mainly conducts regular development and infrastructure development activities and oversees the same. One major introduction in this category is the introduction of Ethiopian Investment Holdings as a sovereign wealth fund that is independent of the Public Enterprise Holding and Administration and reporting to the Prime Minister. The Ethiopian Entrepreneurship Development is another organ established, which took over the roles and responsibilities of the Federal Small and Medium Manufacturing Industry Development Agency.&nbsp;&nbsp;Service - This is a new designation for government organs. It is used for institutions that are mainly established to provide centralized services necessary for government organs or provide services mainly to citizens. One of the major introductions under this category is the Documents Authentication and Registration Services, which used to be an agency in the past.&nbsp;Office - An office is an institution established for temporary or permanent purposes under special circumstances to conduct mainly activities that require special attention and institutional arrangement by uniformly coordinating different institutions.&nbsp;Institute - An institute is accountable to the relevant Ministry or another government organ that mainly focuses on training, study, research and consulting services. One of the major introductions in this category is the establishment of the Innovation and Technology Gifted and Talented Development Institute, whose powers are to be defined by regulation.&nbsp;&nbsp;Furthermore, one may notice that the number of executive organs that are accountable to the Prime Minister has increased. There are now seventeen executive organs that directly report to the Prime Minister.English Version of Commercial Code PublishedAs part of the economic reform program and to improve the country’s ranking in the World Bank's Ease of Doing Business ranking, the government started the process of updating the <a href="https://www.wipo.int/edocs/lexdocs/laws/en/et/et014en.pdf">six-decade old commercial code</a>. Accordingly, the Parliament adopted the new Commercial Code under Proclamation No. 1243/2021 (“<a href="https://chilot.me/2021/10/25/proclamation-no-1243-2021-commercial-code-english-version/">New Commercial Code</a>”), which came into effect in March 2021. However, the business community, especially foreign investors, has been waiting to get the printouts of the English version of the code. The wait has come to an end this month. The printouts of the English version of the New Commercial Code were made available to the business community.&nbsp;The New Commercial Code has made several changes to the old one, which principally is associated with its incompatibility with the current state of doing business. Many things have changed during the past six decades which made the repealed code outdated and inadequate to regulate current trade developments. Learn more about the changes <a href="https://www.renewcapital.com/resources/blogs/The%20Commercial%20Code%20of%20Ethiopia%20is%20Changing%20How%20the%20Country%20Does%20Business">here</a>.Parliament Approves the Enactment of the Private Employees Pension Proclamation&nbsp;The Parliament enacted a new <a href="https://chilot.me/2021/12/22/private-employees-pension-_draft_-proclamation/">Private Employees Pension Proclamation</a>. This will repeal the decade-old <a href="https://www.ilo.org/dyn/natlex/natlex4.detail?p_lang=en&amp;p_isn=89585&amp;p_country=ETH&amp;p_count=141">Private Employees Proclamation No. 715/2011</a> as amended by Proclamation<a href="https://chilot.files.wordpress.com/2017/04/proclamation-no-908-2015-private-organization-employees-pension-amendment.pdf"> No. 908/2015.</a> Adopting the new proclamation is required to strengthen and improve private organization employees' pension schemes and funds to ensure sustainability and reliability, benefit citizens better, and finally expand and consolidate to contribute to social justice, industrial peace, poverty reduction and development.&nbsp;As we understood from the final draft of the new proclamation, it has made some changes associated with the compliance requirements of employers and employees, manner of payment of retirement pension and gratuity. Now the new private employees pension proclamation is adopted, it will come into full effect once published in the Federal Negarit Gazette. We will be providing a detailed analysis of the changes introduced in the future.<hr>UGANDAUganda Declines to Renew Membership with the International Coffee Organization&nbsp;Uganda recently announced a two-year suspension of its membership from the International Coffee Organization (ICO), noting that the country needed to put pressure on the organization to address unreasonable terms in the International Coffee Agreement drawn up for member states, such as the unfair tariffs and restrictions imposed on imports of value-added coffee. According to an article in the East African, Uganda’s other concerns are the coffee price volatility, which it says is threatening the incomes of local farmers and sustainability of the coffee sector, unfair membership votes and contributions, and the increasing role of the private sector in the decision making of ICO, among other issues.The International Coffee Organization is the principal body in charge of fostering cooperation between international coffee exporters and importers. The surprising decision Uganda made to suspend its membership with the international body has left coffee farmers disgruntled especially considering Uganda is currently the second largest exporter of coffee in Africa with coffee comprising 22% of the country’s total exports and has a goal to be the world’s third-largest exporter of coffee by 2025 behind Brazil and Vietnam. The Uganda Coffee Development Authority has maintained that Uganda’s withdrawal from the International Coffee Agreement will not hamper coffee trade and export. Uganda can continue to export, but there are concerns that the withdrawal might limit market opportunities.&nbsp;<hr>RWANDAEALA Receives Key Bills Paving Way for Regional Monetary Union&nbsp;The completion of the discussion of three pertinent laws by the legislative arm of the East African Community (EAC) finally came to an end on March 1, 2022 with a plenary session to discuss the inception of the long awaited East African Monetary Institute (EAMI). The EAMI is charged with establishing the East African Monetary Union (EAMU) to create regional economic integration among the six member states of the EAC (Burundi, Kenya, Rwanda, South Sudan, Tanzania and Uganda). According to a Rwanda Times article, the bills under discussion are:&nbsp;<ul><li style="text-align:justify;">The EAC Standardization, Accreditation and Conformity Assessment Bill, which will provide for standardization, accreditation and conformity assessment of products traded in the EAC to facilitate industrialization development and trade to make provision for ensuring protection of health and safety of society and environment in the community;</li><li style="text-align:justify;">The EAC Financial Services Commission Bill, which will promote integration of financial systems in the EAC and harmonize regulation and supervisory practices in the non-banking financial sector; and</li><li style="text-align:justify;">The EAC Surveillance Compliance and Enforcement Bill, which will have the function of assessing the attainment of macroeconomic convergence by EAC partner states and to regularly monitor and enforce adherence to the macroeconomic convergence criteria by the participating partner states.</li></ul>These bills are critical to finally establishing the EAMI. The EAMI aims to pick up from where the East African Central Bank left off by issuing a single currency by 2024 as a means of achieving the ultimate goal of regional economic integration. These efforts were stifled last month when members of the Council of Ministers failed to attend or send representatives to the sitting, consequently leading to the postponement of the discussion on major business. The delay in decision making has been a recurrent obstacle in finally realizing all the EAC pillars of regional integration.&nbsp;Photo by Imran Mazar

Our take on the legal developments related to the investment landscape in Ethiopia, Rwanda and Uganda

RENEW’s Legal Corner: March 2022

<h1 style="text-align:center;">Lets #BreakTheBias for International Women’s Day</h1><a href="https://www.internationalwomensday.com/theme">International Women’s Day</a> (IWD) is fast approaching on March 8, 2022, and this year's theme is “Break the Bias” (#breakthebias). The goal for this year’s campaign aims to turn a spotlight on the gender biases people carry around with them, and to actively move forward to collectively create a world free of bias, stereotypes and discrimination.&nbsp;At RENEW, we aim to encourage ourselves and those around us to examine and change our biases. Below is a video we’ve been sharing during <a href="https://www.renewcapital.com/what-we-do/market-building">The Exec’s Program</a> to help highlight the biases many tend to have. Watch the video, answer the riddle and consider sharing it in your community.&nbsp;<div class="raw-html-embed"><iframe src="https://www.facebook.com/plugins/video.php?height=314&amp;href=https%3A%2F%2Fwww.facebook.com%2Fmindspace.me%2Fvideos%2F550888202442564%2F&amp;show_text=false&amp;width=560&amp;t=0" width="1000" height="562" style="border:none;overflow:hidden" scrolling="no" frameborder="0" allowfullscreen="true" allow="autoplay; clipboard-write; encrypted-media; picture-in-picture; web-share"></iframe></div>&nbsp;

International Women’s Day (IWD) is fast approaching on March 8, 2022, and this year's theme is “Break the Bias” (#breakthebias)

Gender Bias.jpg

Lets #BreakTheBias for International Women’s Day

<h1 style="text-align:center;">RENEW’s Legal Corner: February 2022</h1>RENEW’s Legal Corner is designed to keep you updated with the regulatory progress and changes&nbsp;happening throughout the different jurisdictions in which RENEW operates. This month has seen several regulatory changes in Ethiopia, Rwanda and Uganda. Below are the highlights:<figure class="image"><img src="/uploads/097_A9519_bd9d899233.jpg"></figure><hr>ETHIOPIA<h3>The Regulation that Defines the Activities and Structure of the Ethiopian Holding Company Comes into Effect</h3>The Ethiopian Holding Company (EIH) was formed as a sovereign wealth fund by Proclamation No. 1263/2021. On January 31, 2022, the regulation that defines its activities and structure was issued in the Federal Negarit Gazette, which in effect brings the EIH to life. The regulation is cited as “The Definition of Objectives and Function of the Ethiopian Investment Holding Council of Ministers Regulation No. 487/2022.” Below are a few things we learned about the EIH:<ul><li>What is EIH? - EIH is a sovereign wealth fund that holds state-owned enterprises under an umbrella. It is structured as a holding company that holds shares, debentures, bonds and securities in enterprises that are in its ownership. In addition to structuring currently existing state-owned enterprises, EIH will also invest in businesses and investment opportunities as it sees profitable.&nbsp;&nbsp;</li><li>Accountability - The EIH will be accountable to the Prime Minister of the country.</li><li>Legal Status - EIH and its subsidiaries will be considered as private business organizations disregarding the shareholding percentage of the government.</li><li>Objectives - EIH is mainly established for the following reasons:<ul><li>To serve as a strategic investment arm of the government;</li><li>To introduce professional management and best corporate governance practices to maximize the value of government assets; and</li><li>Provide a strategic vehicle to attract foreign investment.</li></ul></li><li>Capital - EIH is established with an authorized capital of 100B ETB (approximately $2B USD).</li><li>Source of Funds - EIH sources its funds from:<ul><li>A pool of state-owned assets administered by EIH;</li><li>Returns and revenues of the investment of its assets;</li><li>Proceeds from the sale of its assets;</li><li>Loans and issuance of transferable securities; and</li><li>Other resources allocated to it and approved by the Board.</li></ul></li><li>Governance - EIH will be managed by a Board of Directors consisting of six members appointed by the Prime Minister of the country. The Prime Minister will chair the Board. Each board member will be appointed for a term of three years, which could be renewed. The Board will have a regular meeting every month.&nbsp; Decisions of the board will be made with a simple majority vote, however, in case of a tie, the chairperson shall have a casting vote. EIH will have a CEO reporting to the Board of Directors, who will have an ex-officio non-voting seat on the Board.&nbsp;</li></ul><h3>AfCFTA Hit an Important Milestone to Enhance Intra-African Free Trade</h3>African intra-regional trade accounted for just 17% of Africa’s exports in 2017 (1). This compares with 59% in Asia and 69% in Europe. However, the African Continental Free Trade Area (AfCFTA), which Ethiopia signed along with 53 other African members and subsequently ratified in April 2019, is projected to increase this figure with a potential to lift 30M people out of extreme poverty (2).&nbsp;The agreement’s purpose is to boost trade, economic growth and integration among African countries. It establishes a free trade area that provides member countries with free access to the markets of other members. For that effect, member states are obliged to progressively eliminate tariffs and similar charges on goods and services originating from member states. This month has seen the member states concluding their negotiation on the ‘rules of origin’. The adopted rules could cover 87.7% of goods on the tariff lines of the AU member states.&nbsp;Although trading under the AfCFTA had started officially on January 1, 2021, the problems regarding rules of origin remained unresolved, making it difficult to identify products that could enjoy the preferential tariff regime under the agreement (3). Now the member states have agreed on 87.7% of rules of origin and once member states publicize these rules at the national level, the free trade area is expected to be active.Once fully implemented, AfCFTA will create the largest free trade area in the world measured by the number of countries participating. The agreement connects 1.3B people across 55 countries with a combined GDP valued at $3.4T (4).&nbsp;<hr>UGANDA<h3 style="text-align:justify;">Uganda and Tanzania Ink Final Oil Drilling and Pipeline Deal</h3>Uganda and Tanzania have agreed on the “final investment decision” in a landmark $10B deal for crude oil production in East Africa. TotalEnergies EP Uganda, CNOOC Uganda Limited, the Uganda National Oil Company (UNOC) and the Tanzania Petroleum Development Corporation (TPDC) will all be working together to develop the East African Crude Oil Pipeline (EACOP) that will cross the ten districts in Uganda. The major oil project that is on Lake Albert is expected to yield significant results that boost the energy and mineral development sector. It will mainly involve setting up oil fields, developing the pipeline network in Uganda and exporting the rest of the oil through Tanzania to the coastal ports. The government has also made several infrastructural improvements to the Albertine region where the oil project is based by constructing an airport in Hoima district and completing more than 700km of the road network. According to an article in FurtherAfrica, government geologists estimate Uganda’s gross reserves at 6B barrels, while recoverable oil is seen at 1.4B barrels (5).<hr>RWANDAIMF says Rwanda’s Economic Outlook is Positive in a January 2022 ReportRwanda entered into a three-year Policy Coordination Instrument (PCI) with the International Monetary Fund (IMF) in June 2019. The PCI is a non-financial instrument that any member of the IMF can utilize. It’s designed to help support member countries implement macroeconomic policies and receive IMF advice and guidance, in an effort to facilitate policy reforms and catalyze financing from other, non-IMF sources. As part of the PCI, the IMF visits Rwanda on an annual basis, holds discussions, collects data and prepares a report on the outlook for Rwanda and progress under the PCI.The IMF released its most recent report in January 2022 following its fifth review of the PCI (6). In the report, the IMF states that Rwanda’s medium-term outlook is positive with GDP growth projected at 10.2% for 2021. The economy had strong improvements in 2021 coming out of the COVID-19 pandemic due in large part to the country’s vaccination efforts, continued government support programs and reopening of economic activities. In the medium term, GDP growth is predicted to gradually slow back to 7.5% (similar to pre-COVID levels). That said, the IMF cautioned that Rwanda must still address several issues stemming from the pandemic - namely protracted unemployment and rising poverty, particularly for women - to ensure the country’s economic recovery continues and that the social and economic progress Rwanda has made over the past twenty years is not lost.&nbsp;Under the PCI, policy recommendations from the IMF included a continued focus on fiscal spending to support social policies and recovery from the pandemic, balanced with advancing growth-friendly policies and safeguarding financial stability. In addition, the IMF noted that continued focus on advancing the Sustainable Development Goals, particularly by supporting human capital and climate change-readiness and adaptation, will be key to enabling a sustainable and inclusive recovery from COVID.&nbsp;&nbsp;<h3 style="text-align:justify;"> Rwanda’s National Budget Increased by 16%</h3>The Government of Rwanda has proposed a 16% increase to the national budget in a revised proposal presented to parliament last week. The approximate $610M increase will be geared towards offering support to public institutions and helping them successfully execute their projects in key sectors such as agriculture, health and education. The government’s expenditure policies in fiscal year 2021/22 are guided by the National Strategy for Transformation priorities and objectives (7) with 58.7% of the resources allocated to economic transformation which includes most of the priority private sector areas such as agriculture, energy, hospitality and financial services.&nbsp; Social transformation takes up 27.2%, catering for access to electricity and clean water. The Minister of Finance and Economic Planning mentioned that he is very confident the increase in national spending from the original $366M to $428M will be beneficial to the economy after carrying out numerous surveys on how Rwanda can mitigate the financial loss suffered during the COVID pandemic. The recovery of the different economic activities across the country will ensure a steady and gradual rise to the country’s domestic revenues.<hr>Footnotes:<ol><li style="text-align:justify;">&nbsp;<a href="https://www.brookings.edu/blog/africa-in-focus/2019/02/22/figures-of-the-week-increasing-intra-regional-trade-in-africa/">https://www.brookings.edu/blog/africa-in-focus/2019/02/22/figures-of-the-week-increasing-intra-regional-trade-in-africa/</a></li><li style="text-align:justify;">&nbsp;<a href="https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area">https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area</a></li><li style="text-align:justify;"><a href="http://www.xinhuanet.com/english/africa/20220130/fc286d5fb2dd405980a48f06ca489019/c.html">http://www.xinhuanet.com/english/africa/20220130/fc286d5fb2dd405980a48f06ca489019/c.html</a></li><li style="text-align:justify;">&nbsp;<a href="https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area">https://www.worldbank.org/en/topic/trade/publication/the-african-continental-free-trade-area</a></li><li style="text-align:justify;"><a href="https://furtherafrica.com/2022/02/02/totalenergies-cnooc-make-final-decision-on-10-bln-uganda-tanzania-oil-project/">https://furtherafrica.com/2022/02/02/totalenergies-cnooc-make-final-decision-on-10-bln-uganda-tanzania-oil-project/</a></li><li style="text-align:justify;"><a href="https://www.imf.org/en/Publications/CR/Issues/2022/01/13/Rwanda-2021-Article-IV-Consultation-and-Fifth-Review-Under-the-Policy-Coordination-511923">https://www.imf.org/en/Publications/CR/Issues/2022/01/13/Rwanda-2021-Article-IV-Consultation-and-Fifth-Review-Under-the-Policy-Coordination-511923</a></li><li style="text-align:justify;">&nbsp;https://www.minecofin.gov.rw/news-detail/government-to-spend-frw-38-trillion-in-2021-22-fiscal-year</li></ol>Photo by Imran Mazar