The dangers of doing business in Rwanda, foreign investors beware!

union trade centerBy: Jennifer Fierberg

TheConstitution of the Republic of Rwanda makes for good reading and at first glance, one feels hope and prosperity for the landlocked country of Rwanda. However, once one embarks on further research of how these amendments are put into practice it is a quick lesson in the saying “not worth the paper it is written on.”  For example, the constitution declares there is freedom of speech, freedom for political groups to exist and protection of human rights. Anyone who has researched issues on Rwanda knows that these three areas are not in existence in the country. The political groups that do exist inside Rwanda are all connected to the ruling party of the RPF of which President Paul Kagame leads.  Human right violations are rampant throughout the country as well as in neighboring countries and freedom of the press does not exist.

Further entertaining reading is the Law No. 07/2009 of 27/04/2009 relating to companiesand business management within Rwanda. One such case is that of the Union Trade Center (UTC) which is the largest shopping center in the country.  Tribert Rujugiro Ayabatwa, who now lives in South Africa, is the founder of the Union Trade Center (UTC), in August the Rwandan government set into motion a move to amend its laws to justify illegal seizure of his property. The Rwanda National Prosecuting Authority on Aug. 8 instructed Ayabatwa’s bank, Access Bank LTD, to freeze Ayabatwa and his wife Nathalie Mukagatete’s 12 accounts, citing an “ongoing criminal investigation.”

This move to takeover of the UTC is an illegal move on the part of the government of Rwanda. The shopping mall, which opened in 2006, is a major commercial center, home to 81 shops, restaurants and other businesses. It is valued at $20 million (USD).

David Himbara, senior advisor to Ayabatwa and the UTC, called the bank account closure illegal, unethical and unprovoked. The government, Mr. Himbara said, neither notified Ayabatwa of its plans to freeze the accounts nor did it allow for any legal recourse.

“There is no basis for this illegal act,” Mr. Himbara said. “The government is abusing its own laws to stop independent investment and take over one of the country’s most successful privately owned businesses.”

The following release comes from Tribert Rujugiro Ayabatwa, founder of the Union Trade Center:

The Rwandan parliament is currently drafting legislation to give the government legal cover to take over the mall. Mr. Ayabatwa cited language in the legislation targeting property owners who “may (1) have died and there is no legal heir; (2) be living in exile due to various reasons; (3) be staying abroad due to various reasons.”

rujugiroThe government previously has tried to allege that Mr. Ayabatwa abandoned the UTC because he no longer resides in Rwanda. With no existing law to justify that claim legally, the parliament must now go back and create a new one, Ayabatwa said. The government has tried to allege that the UTC has been abandoned, citing a 2004 law that was enacted to address abandoned properties after the 1994 Rwanda genocide. That law, he said, gave the government the authority to seize property abandoned by individuals who fled the country during the tragedy.

“Actions such as this amount to economic suicide,” Mr.  Ayabatwa said. “The UTC is one of the country’s most successful private businesses. Its businesses support more than 400 employees and contribute thousands of dollars in tax revenue each year. The message here is that the government is not interested in private investment.”

This is the latest in a series of steps by the government to seize the UTC. In an October 1stletter, the Rwandan Commission of Abandoned Properties informed UTC tenants that they must deposit their rent in the commission’s bank account, effective immediately. The UTC, which opened in 2006, is home to 81 privately owned shops, restaurants and other retail establishments.

“Clearly, the government has failed to find an existing law to justify the unlawful seizure of the UTC,” said David Himbara, senior advisor to Mr. Ayabatwa. “So now it is asking parliament to arbitrarily create a legal instrument for expropriating a $20 million business. It is illegal and absurd.”

Mr. Himbara added, “Mr. Ayabatwa is a Pan-African businessman with operations all over Sub-Saharan Africa and the Middle East. He cannot – nor should he be expected to – reside in every country in which he does business. This move by the government is outrageous.”

Mr. Himbara said that UTC shareholders will pursue every available means to recover their assets, including through the courts.himbara

End

In order to justify this illegal move the Rwandan Parliament has begun to draft a new law relating toManagement of Abandoned Property in which it defines what constitutes an abandon business. In the case of Mr. Ayabatwa he does live out of the country but his board of directors for the UTC do reside within Rwanda and oversee the UTC. Further, Mr.  Ayabatwa has a representative who attends to his interests regarding the board in the country.

Interestingly, this is not the first time the Rwandan Government has used this maneuver to seize “abandoned businesses” in Rwanda. Valens Kajeguhakwa’ bank was seized and went into exile in late 1990s. Alfred Kalisa suffered same face – imprisoned for 5 years in the mid-2000s. Miko Rwayitare who sought to buy the national telecom was the opportunity and instead the company collapsed, leaving RPF’s MTN enjoying monopoly.

All of these facts call into question an event that will be hosted in Rwanda October 28-31, 2013 called Transform Africa Summit, which seeks to bring together investors from all over the world to invest in broadband services throughout Africa. A noble cause indeed for everyone deserves access to information and services that only broadband can deliver. Yet, how can investors feel safe in such an environment?

President Paul Kagame has apparently acted in a vindictive manner in seizing the businesses listed above under false pretenses. His attack on Tribert Rujugiro Ayabatwa and subsequent seizure of the UTC is nothing more than a move to steal the wealth that this private business earns. Yet, what some may not know is that Mr. Ayabatwa was the single largest financier of RPF struggle from 1990-1994 as the RPF prepared to return to Rwanda by force.

Foreign investors beware! According to new laws, your business too could be seized as “abandoned” if you do not reside in Rwanda. Simply look to the examples listed above.  If President Paul Kagame will turn on his former advisors then there is no limit to his malicious nature.

For more information about Ayabatwa, his businesses and his philanthropy, go to: http://tribertrujugiro.com/

Media Contact: David Himbara

ptgpr@fastmail.com

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