Thursday, May 9, 2013

Doing business is getting slightly easier in East Africa

A new IFC and World Bank report launched on May 2, 2013 in Kigali, capital of Rwanda, shows that in 2011/12 all five economies of the East African Community (EAC)—Burundi, Kenya, Rwanda, Tanzania, and Uganda—implemented at least one institutional or business regulatory reform improving the business climate for local entrepreneurs.

Doing Business in the East African Community 2013 compares business regulations and identifies good practices across the EAC in 10 areas covered by the joint World Bank and IFC annual global Doing Business report. From June 2011 to June 2012, the five EAC economies implemented a combined nine regulatory reforms across eight areas measured by Doing Business.

The report finds that the EAC ranks on average 117th (among 185 economies) on the ease of doing business. But if all EAC countries adopted the best practices in the region across all areas of regulation covered, the EAC would rank 26th, equal to the United Arab Emirates. This is evidence that the ingredients of reform already reside in the EAC; what remains is for a stronger culture of peer learning to grow within the community.

Burundi is among the global top 10 improvers for the second consecutive year, with four regulatory reforms—in starting a business, dealing with construction permits, registering property, and trading across borders. Rwanda, the top performer in the EAC, stands out as having consistently improved since 2005.

“Drawing on the global Doing Business report, Doing Business in the East African Community 2013 provides policy makers with key measurements of business regulations in the EAC,” said David Bridgman, Manager, Investment Climate Africa, IFC/World Bank Group. “The report’s findings can be used to identify areas to improve the business environment in the EAC along with enabling the expansion of the private sector, the main driver of growth and job creation."

Over the past eight years, the five EAC economies implemented a total of 74 business regulatory reforms. The majority of the reforms focused on simplifying regulatory processes—such as registering property and starting a business. The average time to register property fell from 140 days in 2005 to 56 in 2012. The introduction of new information and communication technology has been a common feature of reforms making it easier to start a business. Both Kenya and Tanzania now offer online name search for companies, reducing time and cost. On average, the EAC countries reduced the time to start a business by 31 percent.

More and broader regulatory reforms, however, will be required for the EAC greatly to increase its share of trade and investment, including strengthening cooperation between business regulators across the five countries and adopting common and improved standards for business laws and regulation to be implemented at the country level.

Full text of the report can be downloaded here.

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