East Africa eases business regulations to spur investments

Five east African countries have improved business environment for entrepreneurs in their respective nations by implementing critical regulatory reforms, a report by the World Bank has said.

The report, Doing Business in the East African Community 2012, showed the five countries of the East Africa Community (EAC) implemented a combined 10 regulatory reforms across nine areas measured.

"To start a business in the EAC now requires an average of 10 procedures and costs an average of 55 per cent of income per capita, compared to 12 procedures and a cost of 140 per cent of income per capita 7 years ago, in 2005," said the joint report by WB and International Finance Corporation (IFC). Last month, the regional countries signed a deal to remove non tariff barriers (NTBs) amongst themselves that will see the number of road blocks and weight bridges along the transit corridors reduced.

The deal enabled Kenya to reduce amount of road blocks along the northern transport corridor, which links the port of Mombasa to Uganda border, from the current 36 to five, while Tanzania will reduce their roadblocks along the central transport corridor from 30 to 15 to speed up integration process.

Analysts said barriers like customs documentation requirements, varying systems of customs formalities and non-harmonized standards requirements among others continue to impede trade within the region. They also said if NTBs were removed on maize, for example, Uganda would benefit significantly in form of increased production and trade compared to Kenya and Tanzania.

The report showed that the business environment for entrepreneurs in all five economies of the EAC, including Burundi, Kenya, Rwanda, Tanzania, and Uganda, improved in 2010 and 2011, as the countries implemented critical regulatory reforms. It compared business regulations and identified good practices across the EAC on the 11 areas covered by the World Bank Group's annual Doing Business report.

The report found that Burundi is among the top 10 most improved economies worldwide in period from 2010 to 2011, with four regulatory reforms: dealing with construction permits, protecting investors, paying taxes, and resolving insolvency. "New data show the importance of access to regulatory information. The rise in e-government initiatives in the region and around the world provides an opportunity to increase access to information and transparency," it said. According to the study, Rwanda, the top performer in the region, made the most progress over the past six years. "Worldwide, Rwanda made the second-most progress. Over that period, Rwanda implemented 22 reforms, making it easier to do business across nine areas of regulation," it said.

Additionally, the report said Rwandan economy has undertaken ambitious land and judicial reforms, introduced new corporate, insolvency, civil procedure, and secured transactions laws. "Rwanda has also streamlined and remodelled institutions and processes for starting a business, registering property, trading across borders, and enforcing a contract through the courts," the report said.

The study found that adopting the region's best practices for each indicator measured by the global Doing Business report can reap many benefits, landing the EAC member countries' average at 19 on the ease of doing business, comparable to Germany which ranked 19 in the 2011 published report, rather than the 115 current average of EAC member countries.

Over the past seven years, regulatory reforms in the EAC have focused on simplifying regulatory processes, such as trading across borders and starting a business. "A popular trade facilitation reform among the EAC economies has been implementing electronic systems for customs declaration. Export time in the region dropped from an average of 40 days in 2006 to 29 days in 2011," the study said. Meanwhile, import time was cut nearly in half, from 60 days in 2006 to 33 days in 2011.  (Xinhua)