Can the EAC Adopt Rwanda’s Business Reform Template?


Monday last week, Vivian Kayitesi, the Rwanda Development Board’s (RDB) investment promotions director, attended a business round-table organized by South Africa’s envoy to Rwanda, George Twala.

That same day, the World Bank was to release the Doing Business Report 2013–an important document for RDB. She was so confident of the outcome.

“We know the report is coming out today. I am not worried [because] the results will be positive,” she casually told prospective investors from South Africa.

When the report became public later in the day, it bore Kayitesi’s confidence.

Rwanda was ranked the 52nd best country in the world for a business entity to thrive. At least 185 countries were surveyed. With the likes of Mauritius (19) South Africa (39), Tunisia (50) and Botswana (59), Rwanda is one of the only six African countries to make it to the top 60.

Rwandan capital and business center, Kigali.

Of the 46 economies surveyed in Africa, Rwanda is in third place after only Mauritius and South Africa.

The new rankings show Rwanda as the only shining star in east Africa–an issue that must be looked at if the region is to improve its competitiveness as a bloc.

Delegates at a recent World Bank Group sponsored reformers’ workshop in Kigali agreed that the only way other countries can improve their competitiveness is by adopting best practices of successful reformers.

The EAC is lucky to have Rwanda to learn from. Considering the country’s consistent good performance over the last two years, Rwanda can indeed captain the region’s business reforms to make the EAC attractive to foreign investment as a bloc.

The new rankings

Of the 10 indicators upon which economies base their reforms, Rwanda is ranked in the top five in seven of them. RDB’s six-hour business registration process was recognized beating Mauritius and Madagascar to the number one rank in Africa.

In Africa, Rwanda is ranked the second easiest place to get electricity, the third in protecting investors, paying taxes and enforcing contracts.

In the 2014 reform year, Rwanda will need to improve further on the process of acquiring construction permits that is currently ranked 15th, trading across borders in which the country is rated 32nd. The other is resolving insolvency currently at number 37.

The Trading across border index brings into clear perspective the need for neighbors to put in as much work as possible to compliment Rwanda’s own efforts.

Last week, Rwanda was at work again and managed to squeeze some concessions out of Tanzania with promises made to clear that problematic rout of nagging non-tariff barriers.

On a closer look though, Rwanda can count on Uganda and Kenya who have been ranked in the top ten reformers in Africa at 9th and tenth place respectively. Tanzania and Burundi were ranked 15th and 28th respectively.

Burundi, though still lagging behind the rest of the pack has been recognized as being one of the top global reformers, a performance mainly attributed to its improvement in business registration ranked 4th in Africa and 5th in protecting investors.

“That is a good trend with obvious intentions, luring investors and ensuring they are retained with good policies to protect them,” said Theogen Mbarushimaana a coffee exporter.

Since 2005, Rwanda has implemented 26 regulatory reforms (over half of Sub-Saharan Africa’s annual reforms) as recorded by Doing Business. By June 2012, Rwanda had started implementing an electronic filing system for initial complaints whereas the cost of obtaining a new electricity connection was reduced by 30% helping it to be ranked 39 and 49th respectively on the two indicators.

Uganda’s strongest points are getting electricity and resolving insolvency ranked at 7th and 5th respectively while Kenya excels in obtaining construction permits and getting credit placed at 3rd and second respectively in Africa.

While it’s true Rwanda’s performance in this year’s index is a sign of the country’s commitment to achieving its economic goals, according to Clare Akamanzi, the Chief Executive Officer of RDB, it’s also obvious that EAC states will need to integrate their reforms to adopt the best ones to improve as a region.

Some analysts have mulled about creating a regional reform’s committee but how many shall there be?

If Rwanda can’t help change neighbors then it can exploit the situation, be the base of foreign investors who seek to benefit from the region’s 135 million consumers.

Download the “Doing Business Report 2013” (PDF)

Source: KENNETH AGUTAMBA, 29 OCTOBER 2012, Rwanda focus, allAfrica.com, doingbusiness.org
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