East Africa’s Doing Business Ranking Drops
By Eric Sande
As East African Community (EAC) continues to deepen and widen its cooperation among its 5 member states: Burundi, Kenya, Rwanda, Tanzania and Uganda, spurred by the need to expand markets, boost competitiveness and attract investment, A latest indicator shows a notable drop of the region in global ranking as an environment fit for business.
Doing Business in East African Community 2011 report release Wednesday by the World Bank at the EAC's headquarters in Arusha, gives researched statistics that the regional bloc had an average global ranking of 117, one point short of the previous year's average of 116.
Kenya, East Africa's strongest economy dropped 4 places in the rankings on the ease of doing business (from 94 in the previous year to 98). Tanzania dropped 3 places (from 125 to 128). Burundi remained at 181. On the other hand, Uganda improved 7 places (from 129 to 122).
Burundi placed last in the bloc, with persistent strife blamed for the poor showing. The EAC with its 5 members states, plans to increase its capacity as the newly independent South Sudan has applied to join.
Rwanda retained its position as the easiest place to do business in East Africa for the second year in a row, according to the new ranking. It attained 58 points globally, emerging first among the East African Community (EAC) states in the ten indicators used to rank 183 countries globally, moving up from 70th position in 2010.
Rwanda features in the ten economies that had most improved the ease of trading. Its advances reflect concerted efforts. In 2003 Rwanda started to reach out to East Asian economies such as Singapore to learn from their reform success stories. Since 2005 it has implemented 22 business regulation reforms in the areas measured by Doing Business, using the report to track progress on an annual basis.
The study took a detailed look at business regulations and environment such as the ease of setting up a new business, securing credit and permits, paying taxes and the enforcement of contracts. It however said critical obstacles to entrepreneurship in the bloc still remained and said that reforming business regulations would accelerate their growth.
It indicates that between June 2009 and May 2010, East African countries implemented eight reforms making it easier to do business. This brought the region's total to 54 since 2004. Of the eight reforms, three were carried out in Rwanda, two each in Kenya and Uganda, and one in Burundi.
The report draws on data from the annual global Doing Business study and takes a detailed look at business regulations in Burundi, Kenya, Rwanda, Tanzania, and Uganda. It states that East Africa could benefit from sharing good practices in business regulation as measured by Doing Business.
"If each East African country was to adopt the region's best practice for each Doing Business indicator, East Africa would rank 18, bringing the community closer to the global top performers," said Sabine Hertveldt, World Bank Senior Private Sector Development Specialist and co-author of the report.
In the region, Kenya, was placed second while Tanzania became fourth after Uganda, casting the spotlight on Dar es Salaam's pitch that the country was a favoured destination for investors and a reliable partner in global trade.
The East African Community is the regional intergovernmental organization of the economies studied in this report. In recent years EAC economies have worked to harmonize EAC Customs Union legislation and common market protocols while establishing peer-to-peer networks such as the Network of Reformers, based on similar models in the Organization of Economic Cooperation and Development and the European Union. In July 2010, EAC countries officially entered into a common market.
Doing Business in the East African Community 2011 was supported by the World Bank Group and PRO¬INVEST, a partnership programme developed and undertaken by the European Commission on behalf of the African, Caribbean and Pacific Group of states, as part of the EAC Investment Climate Program.