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Can EAC Adopt Rwanda’s Business Reform Template?

Monday last week, Vivian Kayitesi, the Rwanda De­velopment Board’s (RDB) investment promotions director, at­tended a business round-table or­ganized by South Africa’s envoy to Rwanda, George Twala.

That same day, the World Bank was to release the Doing Business Report 2013—an important document for RDB. She was so confident of the out­come.

“We know the report is coming out today. I am not worried [because] the results will be positive,” she casually told prospective investors from South Africa.

When the report became public lat­er in the day, it bore Kayitesi’s confi­dence.

Rwanda was ranked the 52nd best country in the world for a business entity to thrive. At least 185 coun­tries were surveyed.  With the likes of Mauritius (19) South Africa (39), Tu­nisia (50) and Botswana (59), Rwanda is one of the only six African coun­tries to make it to the top 60.

Of the 46 economies surveyed in Africa, Rwanda is in third place after only Mauritius and South Africa. The new rankings show Rwanda as the only shining star in east Africa—an issue that must be looked at if the re­gion is to improve its competitiveness as a bloc.

Delegates at a recent World Bank Group sponsored reformers’ work­shop in Kigali agreed that the only way other countries can improve their competitiveness is by adopting best practices of successful reformers.

The EAC is lucky to have Rwanda to learn from. Considering the coun­try’s consistent good performance over the last two years, Rwanda can indeed captain the region’s business reforms to make the EAC attractive to foreign investment as a bloc.

Of the 10 indicators upon which economies base their reforms, Rwan­da is ranked in the top five in seven of them. RDB’s six-hour business regis­tration process was recognized beat­ing Mauritius and Madagascar to the number one rank in Africa.

In Africa, Rwanda is ranked the second easiest place to get electricity, the third in protecting investors, pay­ing taxes and enforcing contracts.

In the 2014 reform year, Rwanda will need to improve further on the process of acquiring construction permits that is currently ranked 15th, trading across borders in which the country is rated 32nd. The other is re­solving insolvency currently at num­ber 37.

The Trading across border index brings into clear perspective the need for neighbors to put in as much work as possible to compliment Rwanda’s own efforts.

Last week, Rwanda was at work again and managed to squeeze some concessions out of Tanzania with promises made to clear that problem­atic rout of nagging non-tariff barri­ers.

On a closer look though, Rwan­da can count on Uganda and Kenya who have been ranked in the top ten reformers in Africa at 9th and tenth place respectively. Tanzania and Bu­rundi were ranked 15th and 28th re­spectively.

Burundi, though still lagging be­hind the rest of the pack has been rec­ognized as being one of the top global reformers, a performance mainly at­tributed to its improvement in busi­ness registration ranked 4th in Africa and 5th  in protecting investors.

“That is a good trend with obvi­ous intentions, luring investors and ensuring they are retained with good policies to protect them,” said Theo­gen Mbarushimaana a coffee export­er.

Since 2005, Rwanda has imple­mented 26 regulatory reforms (over half of Sub-Saharan Africa’s annual reforms) as recorded by Doing Busi­ness.  By June 2012, Rwanda had started implementing an electronic filing system for initial complaints whereas the cost of obtaining a new  electricity connection was reduced by 30% helping it to be ranked 39 and 49th respectively on the two indica­tors.

Uganda’s strongest points are get­ting electricity and resolving in­solvency ranked at 7th and 5th re­spectively while Kenya excels in obtaining construction permits and getting credit placed at 3rd and sec­ond respectively in Africa.

While it’s true Rwanda’s perfor­mance in this year’s index is a sign of the country’s commitment to achiev­ing its economic goals, according to Clare Akamanzi, the Chief Executive Officer of RDB, it’s also obvious that EAC states will need to integrate their reforms to adopt the best ones to im­prove as a region.

Some analysts have mulled about creating a regional reform’s commit­tee but how many shall there be?

If Rwanda can’t help change neigh­bours then it can exploit the situation, be the base of foreign investors who seek to benefit from the region’s 135 million consumers.

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