Doing Business in The East African Community 2012

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• Doing Business inThe East African Community 2012

Alfred Ombudo KOmbudo Coordinator, EAC
Investment Climate Program World Bank Group
Bujumbura, Burundi April 11, 2012
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What does Doing Business measure?

• Doing Business indicators
• Focus on regulations relevant to the life cycle
  of a small to medium-sized domestic business.
• Are built on standardized case scenarios.
• Are measured for the most populous city in each
  country.
• Are focused on the formal sector.

DO NOT measure all aspects of the business
environment such as macroeconomic stability,
corruption, level of labor skills, proximity to
markets, or of regulation specific to foreign
investment or financial markets.
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Doing Business indicators 11 areas of business
regulation
Property rights Investor protection Access to
credit
Entry
Administrative burden Flexibility in hiring
Recovery rate Reallocation of assets
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A record number of economies in Sub-Saharan
Africa reformed business regulations in 2010/11
All 5 EAC economies reformed their business
regulations in 2010/11
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EAC economies rank on average higher than the
regional average in SSA in the ease of doing
business
East African Community Burundi, Kenya, Rwanda,
Tanzania, Uganda
Southern African Development Community Angola,
Botswana, the Democratic Republic of Congo,
Lesotho, Madagascar, Malawi, Mauritius,
Mozambique, Namibia, Seychelles, South Africa,
Swaziland, Tanzania, Zambia, Zimbabwe
Economic Community of West African States Benin,
Burkina Faso, Cape Verde, Côte dIvoire, The
Gambia, Ghana, Guinea, Guinea-Bissau, Liberia,
Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo
Economic Community of Central African
States Angola, Burundi, Cameroon, Central
African Republic, Chad, the Democratic Republic
of Congo, the Republic of Congo, Equatorial
Guinea, Gabon, São Tomé and Príncipe
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EAC economies improve in Starting A Business, but
regional solutions still few for cross-border
businesses

• Today, starting a business in the EAC takes on
  average 23 days and costs 55 of income per
  capita.
• Since establishment of the customs union,
  intra-EAC trade rose from 2.2bn to 4.1bn in
  2010
• This growth points to need for standardization
  and exchange of company information to facilitate
  EAC companies seeking to establish operations in
  other EAC member states.

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How do East African Community economies rank on
the ease of getting electricity?
In EAC it takes an average of 4 procedures, 116
days and 24,450 to get a new electricity
connection for a warehouse. Long wait and high
cost associated with purchase of dedicated
distribution transformers. Increased
transparency of connection costs and processes
will significantly improve ease of getting
electricity.
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Burundi is the economy that most improved in the
area of investor protection in 2010/11
adopting a new company law yields big results in
Burundi

• introduction of new requirements for the
  approval of transactions between interested
  parties
• requirement for greater corporate disclosure to
  the board of directors and in annual reports
• made it easier to sue directors in cases of
  prejudicial transactions between interested
  parties

Improvement in protecting investors
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Kenya the only economy in 2010/11 to improve its
judicial system
Global good practice specialized commercial
courts are very common in the EAC

• 4 out of the 5 EAC economies Burundi, Kenya,
  Rwanda and Ugandahave implemented a total of 7
  improvements in their judicial systems since
  2005.
• Kenya, the only economy in 2010/11 to improve its
  judicial system
• a case track systemcategorizing cases as
  small claims, fast track or multi-track was
  implemented.

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Where is resolving insolvency easy and where
not?

• Uganda stands out as the easiest place to
  resolve insolvency in the EAC.
• Best Practice Highlight
• -Ugandas insolvency procedure has a going
  concern outcome.
• - Uganda has good provisions for creditors'
  committees.

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EAC economies have a high degree of variability
among the different areas of regulation

• Rwanda TOP 3 rankings
• Starting a Business 8
• Getting Credit 8
• Paying Taxes 19

The average rank in 11 areas of business
regulation in Rwanda is 45, but in fact
performance varies significantly across indicators

• Rwanda BOTTOM 3 rankings
• Dealing with construction permits 84
• Trading across borders 155
• Resolving insolvency 165

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Best practices from across the EAC region
If each East African country were to adopt the
regions best practice for each Doing Business
indicator, East Africa would rank 19th instead of
115th bringing the community closer to the global
top performers such as Germany.
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Key findings in Doing Business in the East
African Community 2012
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Thank you. For more informationwww.doingbusines
s.org
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