Rwanda is the most favourable investment destinations in East Africa.

The country moved 76 positions from last year’s 143 to 67 out of 183 economies under study. According to the World Bank-sponsored Doing Business in East African Community 2010 survey, the major strides taken by Kigali are in areas of the ease of employing workers where it moved from position 113 to 30 and credit availability to investors from rank 147 to 61. In spite of falling 11 positions to ninety-fifth rank, the report recognises Kenya as one of the “constant” reformers. From 2004 when the Doing Business report was first published, East African countries have implemented several regulatory reforms aimed at making it easier to do business.

INDICATOR

Today, the average ranking of the region stands at 116 as a result of the different levels of regulatory reforms. However, there is a mismatch between the obtaining status and the region’s proposed ideal. If each East African country were to adopt the region’s best practice for each indicator, the region would rank 12 globally.

In what could be the driving force behind the increasing investor-appetite for Rwanda, it only takes three days and two procedures to set up a business there. This is a major departure from the region’s average of 9.4 procedures that consume more than 45.6 days to fulfill.

Overall, the study says East Africa is “home to one of the easiest” places to start a business, the positive comments clearly riding on the boost for the region by Rwanda. While starting a business in the country takes just two procedures, entrepreneurs must go through 11–18 steps in the other East African countries. These are attributable to a decentralised registration process.

In Burundi, Kenya, Tanzania and Uganda, entrepreneurs must interact with numerous agencies including the registrar of companies, revenue authority, ministry of trade, ministry of labour, social security fund, health authority, town planning as well as commercial banks. In Rwanda, by contrast, the entire company registration is conducted at a one-stop shop; the Commercial Registration Department. Once an application has been made, it is transmitted to all other relevant agencies, limiting the number of procedures.

“The cost of starting a business in the region ranges from 10.1 per cent of income per capita in Rwanda to 151.6 per cent in Burundi. Rwanda is the only country in East Africa where a company is registered with a single fee of about $43. In Burundi, Kenya and Uganda, entrepreneurs must pay to have company documents verified by a commissioner for oaths,” the report says.

INVESTMENTS

Compared with last year’s ranking, Uganda dropped six points to 112 but maintained its third position in the region. It, however, undertook major reforms in the registration of property, payment of taxes as well as the enforcement of contracts. To launch a business in Uganda, an entrepreneur has to undergo an estimated 18 procedures that will last approximately 25 days to clear.  The entire process in Uganda costs an average of 84.4 per cent of income per capita.

The survey puts East Africa on the spot over its apparent reluctance to simplify business procedures

By JOHN NDIEMA