Rwanda has maintained its position as the leading country in East Africa on the ease of doing business, the latest World Bank ‘Doing Business 2020’ shows.
This is despite dropping nine places to 38 globally from 29 last year.
Kenya comes in second in the region and 56th globally, having improved five places from position 61 last year.
Uganda and Tanzania come a distant 116 and 141 globally respectively while DR Congo and South Sudan are near the bottom ranking 183 and 185 respectively, out of the total 190 in the index. This places them third fourth fifth and sixth respectively in the region.
Indicators that make Rwanda top include starting a business which has been made easy by exempting newly formed small and medium-size enterprises from paying the trading license tax for their first two years of operation.
It has the lowest cost of doing business in the World joining Slovenia.
“Rwanda made dealing with construction permits faster by reducing the time to obtain a water and sewage connection. Rwanda also improved building quality control by requiring all construction professionals to obtain liability insurance on buildings once in use,” the World Bank says in the report launched in Nairobi on Thursday.
Rwanda has also improved the reliability of power supply by upgrading its power grid infrastructure.
In Kenya, the government has pegged the improved performance to reforms driven by multiple government agencies and private sector, which have helped the country make gains in six (6) indicators out of the possible 10 in the regulatory framework.
These are dealing with construction permits, getting credit, protecting minority investors, paying taxes and resolving insolvency.
The most improved business regulatory areas have been protecting minority investors indicator that now ranks first in the world, the getting credit indicator that ranks fourth globally and resolving insolvency that ranks 50th.
“The results of these reforms are vindicated by Kenya’s solid foreign and domestic investment flows,” Ministry of East Africa Community (EAC) and Regional Development Cabinet Secretary Adan Mohamed said.
Mauritius leads the continent in ease of doing business retaining its position ranking 13 globally. Africa giants South Africa and Nigeria ranks 82 and 131 respectively.
Kenya Private Sector Alliance (KEPSA) CEO Carole Kariuki said the private sector continues to support government efforts in making Kenya attractive to investments.
“We as private sector are fully behind these efforts and we hope to see more done to cement our place as a private sector focused economy,” Kariuki said.
Tanzania ranks poorly in executing contracts with government ranking at 180 out of 190. It has however improved on resolving procurement issues.
Tanzania has established the Public Procurement Appeals Authority as an independent and quasi-judicial administrative body to resolve appeals from challenges against procuring entities in an efficient and specialized manner.
“As a result, challenges against award decisions are decided in 41 days, and challenges on tender documents are resolved in 18 days,” World Bank notes.
Uganda on the other hand has improved the monitoring and regulation of power outages by improving its calculations of the annual system average interruption duration index (SAIDI) and system average interruption frequency index (SAIFI).
New Zealand tops the World in ease of doing business index followed by Singapore, Hong Kong SAR, China, Denmark, Korea, Rep, United States, Georgia, United Kingdom and Norway. Sweden closes the top ten list.
“A lot remains to be done if African countries are to compete with global economies,” said Augustine Langyintuo, specialist at the World Bank’s International Finance Corporation-Finance Competitiveness and Innovation Regional Focal Point.
The World Bank index accesses how easy it is to start a business, dealing with construction permits, getting electricity, registering property, getting credit and protecting minority investors.
It also looks at ease in paying taxes, trading across borders, enforcing contracts, resolving insolvency, employing workers and contracting with the government.
Meanwhile, the Department for International Development (DFID) has called on countries to address issued being raised by investors, both local and foreign investors.
“Resolving these issues makes a country more attractive,” said Julius Court, head of DFID Kenya.
The World Bank has noted that substantial barriers to entry in developing economies account for almost half of the income gap.
These barriers prevent growth and result in persistent poverty. Encouragingly, Doing Business 2020 continues to show a steady convergence between developing and developed economies, especially in the area of business incorporation.
Since 2003/04, 178 economies have implemented 722 reforms captured by the starting a business indicator set, either reducing or eliminating barriers to entry, the global lender notes.
In all, 106 economies eliminated or reduced minimum capital requirements; about 80 introduced or improved one-stop shops, and more than 160 simplified preregistration and registration formalities.
Despite this convergence, Doing Business 2020 data suggest that a considerable disparity persists between low- and high-income economies on the ease of starting a business.
An entrepreneur in a low-income economy typically spends about 50% of income per capita to launch a company compared to just 4.2% for an entrepreneur in a high-income economy.
“More remains to be done,” World Bank notes.
In Doing Business 2020, the 10 top improvers are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India, and Nigeria.
These economies implemented a total of 59 regulatory reforms in 2018/19—accounting for one-fifth of all the reforms recorded worldwide. Their efforts focused primarily on the areas of starting a business, dealing with construction permits and trading across borders.