Rwanda Still East Africa’s Business Leader

Rwanda's capital kigali
Rwanda's capital kigali

Rwanda has once again topped the East African Community (EAC) in ease of doing business as the region as a whole improved its business environment for entrepreneurs.

But the region would have done a lot better had member states improved peer to peer learning, ensured region-wide standards, became more transparent and established e-registrar of companies.

According to the World bank report, Doing Business in the East African Community 2012, released yesterday in the Burundian capital of Bujumbira, Rwanda eased the procedures for starting a business, cutting them to two and spanning a period of two days, as opposed to an average of ten procedures in the other EAC partner states.

The survey was conducted before Kigali further reduced the period it takes to register a business; from 24 hours, down to six hours – last month.

The country has also undertaken ambitious land and judicial reforms, introduced new corporate, insolvency, civil procedure, and secured transactions laws, the report added.

Last year, Rwanda was ranked the most improved country in Africa and the second most improved country worldwide.

It came in the 58th position overall, from 70th in 2010.

But the latest report indicates that Rwanda was performing poorly when it comes to addressing insolvency and trading across borders.

It also cites registration of property, where an extra procedure was added, with the process taking two days with additional Rwf937, 361 ($1,600) fees.

Burundi came among top ten reformers worldwide, thanks largely to improvements in construction permits; Kenya performed well in judicial systems; Uganda ranked high in solving insolvency; while Tanzania performed well in trading across borders.

Launching the report, the EAC Secretary General Dr Richard Sezibera demanded further reforms across the bloc to avert a potential decline in the near future. “Let me sound a warning; going by this year’s results, I see both our reform potential and average showing signs of dropping,” said Ambassador Sezibera.

He talked of the need to step up the momentum in sharing best practices amongst partner states.

On average, EAC ranked 115th of 183 economies last year.

Yet, had partner states each adopted the best practices in the region for each Doing Business indicator, the bloc would have ranked 19th globally, to be at par with Germany.

“Let me reiterate that we will only be globally competitive if we intensify peer learning. We should realise that different EAC countries are good at different Doing Business indicators,” Sezibera emphasised.

He called for faster reforms in business taxation, harmonisation of commercial laws, setting up the pillars for an EAC e-registry, strengthening the quality and cost-effectiveness of regulatory proposals and procedures, as well as supporting the implementation of the Common Market Protocol.

“If we succeed in doing this, I am very certain we shall transform this market into one of the most thriving regions, globally,” he said.

He encouraged the five partner states to critically reflect on the report, look into its relevance to the ordinary East Africans, and then take the necessary action.

According to the report, a total of 10 reforms representing an increase of 25 per cent were implemented from the previous year.

William Kayonga, Rwanda’s Permanent Secretary in the Ministry of EAC, told reporters that some of the issues such as addressing liquidation were still new and required more time to address.

“The report is a good tool in our discussion and sharing of best practices; for instance, we hope to learn from Uganda that scored highly in that area (insolvency),” he said. “We did not have such procedures; we are just starting to sensitise the public about it.”

He called on the EAC members to cooperate in improving trading across borders by reducing the costs and time involved in shipping goods, particularly by eliminating non-tariff barriers. “Individual countries do not have full control of trade across borders,” he noted.

Alfred Kombudo, Coordinator, EAC investment climate programme, said the regional bloc needed to seek, not only a larger market, but a better market as well.

“We have succeeded in creating a larger market, of 125 million people, a GDP of $79 billion annually, but we have to do more for this market to be attractive,” he said.

The report compares business regulations and identifies good practices across the EAC in the 11 areas covered by the World Bank Group’s annual Doing Business report.

It analyses the procedures involved in starting a business, dealing with construction permits, getting electricity, getting credit, protecting investors, paying taxes, and trading across borders, among others.