May 2021 –
I am Rwandese. I am a charted accountant, a fellow member of the ACCA UK (Association of Charted Certified Accountants) I started working at Deloitte in 2006 and in 2008 I was promoted to partner in Deloitte. Then, in mid-2012 I left to take a year off.
By that time BDO had already been operating in Rwanda in “fly-in-fly-out” but wanted to re-establish themselves more permanently in Rwanda and they were looking for some other local firm to partner with. At the end of 2012, I was speaking to my former colleague who recommended them to come to me and that is when we started discussing.
We agreed on the approach that I would first register a firm, and then that firm would acquire the BDO franchise. So, in fact, by the time I registered Corner Stone Great Lake Consulting, it was already in the dynamics of a letter to acquire the BDO franchise.
In 2013, I registered Corner Stone and started running it out of the BDO network – as it has to be the way to enter the network. I also filed my own proposals internally with BDO itself.
By December 2013 we had a second discussion with BDO East Africa (headquartered in Mauritius) and then, in April 2014, we signed the agreement.
In June we registered the company as ‘BDO’ with the Rwanda Development Board (RDB). You need to register with all the institutions, the Central Bank etc and so by December we had all the documents ready and we could operate as BDO.
Though because our business cycle here normally ends in June, we only did the official launch in May 2015.
At the time of taking the BDO franchise, Corner Stone was still a young firm with 6-7 staff, myself included. Today, we have close to 58 staff, all based in our office in Kigali. We are expanding rapidly and expect to have close to double that in a couple of years.
Now, I also have a partner, who is looking after the advisory services and I remain focused on our core businesses: tax, auditing, and accounting services
[International clients] probably will link to BDO itself.
For us, entering the local market after all Big Fours had been established for quite some time has pushed us to look for our niche.
So here, we’ve looked for our place within the market conditions and today we confidently pledge to be in the 3rd – 4th position. This is very good progress if you compare it with other firms that have been here for 20 years so.
Our clients are a mixture. We have government or gov-based clients who are more or less tender-based. We also have an international network of referred clients (i.e. we’ll get clients referred to us by BDO firms in other countries).
Then we also have our local clients for whom we offer the standard services as well.
Currently, we maintain the No1 position in the Tier 2 sector.
This is one of the key pillars of BDO international. The franchise model means that our clients are accompanied and receive the same quality of services. If a client comes from BDO UK, then they can come to Rwanda and expect the same quality of service and a smooth transition.
We are required to offer audit services, tax services and BSO (Business Support Outsourcing) services at a minimum and our franchise is reviewed on an annual basis.
All our services are standardised. The way you’ll get audited in Rwanda is the same as the way you’d be audited in Mauritius or Indonesia. We have the same process, staff structures, same skill-level, harmonised software platforms, same quality assurance and reviews.
Collaborating with my colleagues in Kenya or Ethiopia is more or less like collaborating with my partner here. We have our separate portfolios, of course, but we freely share recourses (such as staff) between the firms.
Like that there is no assignment I could possibly get short of. If I have an assignment here which requires some expertise (e.g., an expert in the operational management of brick factories) I know I can get that within the network. When the expert comes, of course, the original firm will bill you but at least you will have access to the expert’s competence.
Within each service line, we also have “levels”. So, if I’m going to audit a highly exposed company I’ll be allowed only if you co-sign with another partner who has the clearance to audit that size of the company.
Regionalising makes things easier for the BDO head office in London. It means they can control poles rather than all the individual country-entities. In our case, Madagascar, Ethiopia, Seychelle, Uganda, Kenya, Tanzania and Rwanda are all connected to the East Africa region with our regional head office in Mauritius.
Then, from here in Rwanda, we also cover Burundi and DRC. Similarly, Uganda covers Southern Sudan, Kenya covers Somalia, and Ethiopia also covers Eritrea and Djibouti.
Almost all international networks in our services industry tend to do the same.
That way, legally speaking, when I sign here I sign as Emmanuel and take responsibility as the signing partner. So currently there is no difference in the eyes of the regulator: it is still me with my team (just holding the flag of BDO).
The franchising model is useful because when going into different jurisdictions each county has its own regulatory framework. So, it would be very tricky to have an international company with local branches.
The second reason is that our service model is based on proximity. I am the best to know my clients here in Rwanda. It would be very tricky for my colleagues from Mauritius to know my clients.
At BDO our philosophy is to leverage our networks’ competencies but to empower locals.
In my 50+ team currently, I only have one foreigner and he is always on a 3-year renewable contract. And in those 3 years, BDO East Africa will ask me to reassess if I could not replace them with a local instead.
Whenever we occasionally require foreigners to leverage expertise for specific assignments, the directive is that they should also transfer their competencies to the local staff in order to make the local firm less dependent.
In contrast, other firms that are here, after 20 years of operation still fly in Junior employees. There is less focus on building local capacity.
Sourcing talent is a challenge. But then you also need to ask yourself: what are you trying to build?
If you’re building a “profit-focused” business you can do what the others do: Fly people in when they have assignments or run a very lean team and source consultants as required.
On the other hand, if you’re building a business in the long run and you’re looking to create a truly locally established company, with a 5-year vision of growing presence and portfolio then you need to build your capacity and do training. And the best way to do training is to get fresh learners.
Here, we get about 10 graduates annually for 6-month internships. From those, more or less 60% will become permanent staff. So, after 6 or 7 years of operation, you have close to 30 – 40 people who you have trained internally and who have grown into management levels. Of course, an audit firm is an easy place to head-hunt from, but you also have a natural rotation. In our case, we have about 20% resignations per year. But that’s the only way to build a company long-term. If I judged my performance solely on annual profit, I would not invest in training people.
We have been experiencing very big economic growth, especially in the services sector and we feel the shortage of talent. At the same time, we are exposed to losing people because they get easily hired elsewhere (even with our own clients as they like to have their auditor become their finance manager). It is part of the dynamics. But still, the only way to build organisational stability is to train. Even if that means the best talent goes first.
Often, they go into other businesses, some go to work for the Government. So far, we haven’t lost much staff to the non-profit.
As a tax professional, I know that the easiest way to come and operate in a new country is to get a local partner who understands the business itself and who also understands the “dos and don’ts”, including regarding exposure for tax and compliance.
Another thing is that
Secondly, people think that because they are coming on the red-carpet laid out by the RDB they can easily grab tax incentives. But the RDB is doing its role of “marketing”. Then when you go to the Rwanda Revenue Authority (RRA) they might tell you: ‘Look, this is how the tax system operates. You’re in or you’re out.’
someone might come from another country which is more “tax-strict” and think “Ok, now we’re going to Africa and in Africa you can easily dodge taxes”. But then, when they arrive in Rwanda, they quickly become disappointed…
Just cos a minister signed for you a paper saying you are tax exempt doesn’t mean that you will necessarily be given a tax exemption. You need to make sure you double check with the RRA
Within this region, most tax systems are more or less harmonised. Even tax rates tend to be similar. The only difference is how rigorously a country enforces them.
In Rwanda, the system is more effective at enforcing tax regulation. These neighbouring countries are sometimes more “relaxed” with enforcement.
If you compare Tax Revenues with the Country’s GDP, you see that Rwanda is the most effective at collecting tax in the East African region.
Also, when you compare how much tax the Government collets and how much the public feels the benefit of public investments, Rwanda is again the best in the region. People feel like they are getting back what they are putting in. You see security, you see cleanness, a well-maintained road network, you see a vibrant city and you know this comes from the taxes. No one here will tell you they don’t feel like they are not getting something out of their taxes.
People might tell you taxes here are ‘very touch’, but not because the rates are particularly high or because they are applied differently, it’s just because of the difference in enforcement and the greater regularity of the checks.
For example, with the new EBM (Electronic Billing Machine) system the Rwanda Revenue Authority (RRA) is trying to get your tax performance before you even come to declare it. Neighbouring countries are also implementing the EBM system, but not at that level of, let’s say “intelligency”.
Then, of course, if you have been operating in a country where you’ve been able to easily play the system without paying taxes, you’ll come here and you’ll find it disappointing.
What is written in the investment law, is what’s effective. But people often prefer to hear than to read. So, if you hear what the RDB preach to you you’ll only hear about the tax incentives and exemptions. But when you come here, you’ll still need to see which exemptions you’re actually eligible for.
Someone might hear that “under certain conditions, we offer you 7 years tax-free!”. So, people like to retain the easiest interpretation which is: “tax-free!” but there are always some pre-requisites, and you have to pay attention to those.
I would strongly advise him or her to get a tax advisor. It won’t cost a full-time job, but they’ll benefit from it a lot.
Some will navigate of course, but the fines are so heavy that it’s easy to lose the entire business because of one.
I don’t see someone doing their business with peace of mind without having a tax advisor.