Doing Business in the East African Community 2013 Alfred Ombudo K’Ombudo Coordinator, EAC Common Market Diagnostics World Bank Group 2 May 2013 Kigali 1

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

Doing Business indicators – 11 areas of business regulation 3

The EAC has more efficient regulatory processes and stronger legal institutions than ECOWAS 4

88% 47% 38% 46% 61% 68% OECD high Income Eastern Europe and Central Asia Sub-Saharan Africa Middle East and North Africa Latin America & the Caribbean South Asia East Asia and Pacific Pace of reforms remains strong in 2011/12: share of economies with at least one reform making it easier to do business 5 45% All 5 EAC economies implemented reforms improving their business regulations for small and medium sized business in 2011/12 Worldwide, 108 economies implemented 201 reforms in 2011/ % EU % EAC

Key findings of the Doing Business in the EAC 2013 report  All 5 EAC economies implemented institutional or regulatory reforms - making it easier to do business across 8 different areas in 2011/12.  The EAC ranks 117 (out of 185) - but there is great variation in business regulations among the EAC economies—from Rwanda (52) to Burundi (159) – this wide variation in business regulations is among the issues that the EAC needs to tackle.  If a hypothetical EAC economy were to adopt the region’s best regulatory practices in each area measured by Doing Business, it would stand at 26 in the global ranking on the ease of doing business – showing the region’s potential.  Burundi was among the world’s most active economies in implementing regulatory reforms in 2011/12. It implemented policy changes in 4 areas measured by Doing Business: starting a business, dealing with construction permits, registering property and trading across borders.  In 3 of 5 EAC economies (Rwanda, Tanzania, Uganda) the company registry makes fee schedules for incorporation easily accessible. In only 2 EAC economies does the relevant agency make fee schedules for electricity connections, property registration or building permits easily accessible. 6

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 East African Community: Burundi, Kenya, Rwanda, Tanzania, Uganda Economic community of West African States: Benin, Burkina Faso, Cape Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo Southern African Development Community: Angola, Botswana, the Democratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe EAC economies rank on average higher than the regional average in SSA in the ease of doing business

8 Who in the EAC made starting a business easier in 2011/12? Rwanda continues to make it easiest to start a business – and it is the only low-income economy ranking among the top 10 globally on the ease of starting a business. Burundi moved up to 28 in the global ranking in 2011/12.

9 Kenya is the top performer on the ease of dealing with construction permits. Since 2005, Rwanda implemented 3 reforms making it easier to deal with construction permits: besides setting up a one-stop shop, it introduced time limits for processing the building permit and the occupation permit. Who in the EAC makes dealing with construction permits easy – and who does not?

10 Burundi reduced the time required for property transfers by a month in 2011/12 Reforms in 2011/12 Burundi established a statutory time limit for processing property transfer requests through an administrative order calling for improved workflow processes at the land registry. The land registry now issues a new title in the property purchaser’s name 30 days faster.

11 Among African regional blocs, an EAC member tops the ranking on each of the 3 aspects of investor protections measured 1/2

12 Among African regional blocs, an EAC member tops the ranking on each of the 3 aspects of investor protections measured 2/2

13 Who in the EAC makes exporting and importing easy? Who in the EAC makes exporting easy – and who does not? Who in the EAC makes importing easy – and who does not?

14 The EAC compares well globally on the speed of contract enforcement

15 How Rwanda cut the time to enforce contracts by more than a third in Kigali

16 Reforms in 2011/12 Uganda has substantially improved its foreclosure proceedings and has also undertaken a revision of its insolvency law. The new act is expected to strengthen creditors’ rights; clarify rules on the appointment of liquidators, managers, administrators and trustees; and allow debtors to enter into an arrangement intended to avoid insolvency. Resolving insolvency takes longer and is costlier in the EAC than in other regional blocs in Africa

Looking Ahead  The EAC It has been among the fastest growing regional blocs in Africa in the past decade and has made much progress in harmonizing national policies in different areas: many good regulatory practices can be found, especially in the areas of starting a business, getting credit and protecting investors.  Examples of remaining challenges: harmonization of commercial laws, implementation of a regional e-registry, completion of the tax simplification and harmonization agenda.  Aggressive implementation of peer learning.  Implementation of the EAC Common Market Scorecard 17

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