Rwanda 2nd best place for business in Africa

Rwanda has overtaken  South Africa to become the second best place to do business in Africa, according to a new World Bank’s Doing Business Report released this week.

The annual World Bank report, which assesses country-by-country performance in ease of doing business, indicates that, overall, Rwanda moved 22 places, to 32nd out of 189 countries globally.

Mauritius (20th globally) retains its number one spot in Sub-Saharan Africa and on the continent in general.

Rwanda was also named the most improved country worldwide since 2005, Ukraine, the country that has improved most over the last one year, while Singapore, for the eighth consecutive year, remained overall best performer globally, followed by Hong Kong, New Zealand, the United States and Denmark in that order.

This year’s annual report, released under the banner, ‘Doing Business 2014: Understanding Regulations for Small and Medium-Size Enterprises’ said Rwanda had substantially improved in property registration and processing of construction permits.

Out of the 10 criteria, Rwanda topped the Sub-Saharan region in three, namely; starting business, registering property and getting credit, and second in getting electricity and enforcing contracts.

In Sub-Saharan region, South Africa comes third (41st globally), Botswana fourth (56th worldwide), Ghana fifth (67) and Seychelles sixth (80).

Rwanda is the only member of the East African Community (EAC) in top ten.

The second top performer among the EAC partner states is Kenya, which ranked 12th in the Sub-Saharan Africa region and 129th globally, followed by Uganda, in 13th position at the regional level and 132nd worldwide.

Tanzania is the worst performer among the EAC countries, ranking 19th in the Sub-Saharan Africa region, and 145th globally; while Burundi ranked 16th and 140th, respectively. Tunisia is the star of North Africa, ranking 51 globally, 19 places behind Rwanda. Democratic Republic of Congo is among the seven worst performers (all from Africa), ranking 183rd globally and 42nd in the Sub-Saharan region.

While Rwanda continues to perform strongly overall, the country performed lowly in two topics, namely trading across borders (ranking 31st out of 47 countries in the Sub-Saharan category) and resolving insolvency (22nd).  Particularly, the report cites high cost of importation and exportation of goods. Exporting a container from Rwanda costs $3,245, compared to the region’s average of $2,108, while importing to Rwanda costs $4,990, way above Sub-Saharan Africa’s average of $2,793. On insolvency, the report says that it takes 2.5 days to close a business in Rwanda, bankruptcy proceedings may take up to 29 per cent of the estate value, while on average it goes up to 23 per cent yet it takes  just nine per cent of the estate in industrialised nations.

Significant strides 

Areas where the country made significant strides over the past one year include property registration, where it moved 54 places to become number eight globally and first in the Sub-Saharan Africa category, and issuance of construction permits where it moved 37 places to become 85th globally and 14 in the region.

Property registration is measured in the form of the total number of days it takes to register property and “the measure captures the maiden duration that property lawyers, notaries or registry officials indicate is necessary to complete a procedure.”

On construction permits, the World Bank’s ‘Doing Business’ report says that in Rwanda, it takes 13 procedures to build a warehouse which is slightly better than the Sub-Saharan Africa average of 15 procedures, while construction of a warehouse takes an average of 104 days against the region’s average of 171 days. Some of the procedures in construction that were cited include procurement of a copy of the leasehold title which the report says takes just a day at a cost of Rwf5,000, while obtaining a survey plan takes five days and costs $500.

At the international level, the report was launched in Washington DC on Monday.

In Rwanda, it was launched last evening at the World Bank Country Office in Kigali.

Speaking at the event, Cabinet minister and CEO of Rwanda Development Board Valentine Sendanyoye Rugwabiza said that the report was an important planning and evaluation tool.

“It serves as a barometer which helps us to further improve our performance,” she said.

Rugwabiza, however, noted that a lot still needs to be done in the area of SMEs and export industry.

According to Claver Gatete, the Minister of Finance and Economic Planning, the report will help the government “work on those areas where we are not doing well so as to attain the desired 11.5 per cent annual growth rate by 2018.”

The targets are part of the country’s 2013-2018 Economic Development and Poverty Reduction Strategy (EDPRS 2), which seeks to deliver Rwanda to a middle-income economy.

Creating business friendly environment has been at the heart of the country’s business reforms in recent years, with a person now able to open business within just six hours.

Addressing the issue of high import and export costs, the Commissioner General of Rwanda Revenue Authority, Ben Kagarama, said that over 80 per cent of the costs are avoidable, since much of them are non-tariff barriers.

Performing better 

These costs, he said, will significantly come down, courtesy of the Single Customs Territory which was launched in Kigali on Monday, by the Presidents of Rwanda, Kenya, Uganda and Southern Sudan.

He also pointed at other ongoing Integration Projects, which are designed to help ease doing business along the Northern Corridor, including plans to construct a railway line and an oil pipeline, as well as use of IDs as travel documents and introduction of a single tourist visa.

The four partner countries are among those using the Northern Corridor; which is served by Kenya’s Mombasa port. Dar el Salaam port of Tanzania serves markets along the Central Corridor.

The same sentiments were echoed by Mark Priestley, the country manager, TradeMark East Africa, who said the Single Customs Territory will have a huge positive impact on businesses in Rwanda.

“I see Rwanda improve further in terms of doing business because latest developments in the region are lessening the effects caused by the fact that it’s a land-locked country,” he said.

Lucy Mamganga, a Senior Private Sector Development Specialist at World Bank-Rwanda, said much as the country was doing well, more reforms in the areas of capacity building, informal sector, and insolvency were needed.

Rwanda 2nd best place for business in Africa