Rwanda follows Mauritius in rankings
The Rwanda Development Board CEO, Francis Gatare said the annual World Bank/International Finance Corporation Doing Business survey is important to RDB, but their own internal reform agenda is also considerably wider in scope in terms of making Rwanda more competitive, writes AGNES BATETA
Rwanda was ranked the second easiest country to do business in Africa by the latest World Bank/International Finace Corporation doing business report, 2016.
Rwanda was ranked second behind Mauritius and followed by South Africa in third position.
However the country came in at the 62nd position out of all the 189 countries ranked globally. This is a climb of seven places compared with last year’s ranking.
The change in the methodology used by the World Bank in establishing such rankings has also affected Rwanda’s more favourable position.
“We do see that Rwanda has improved substantially over time. Over the last 12 years the data we have in doing business is that Rwanda was a country that improved most in Africa, and globally was the second next to Georgia,” Dr. Rita Ramalho, Manager Doing Business unit, World Bank Group, said.
“It is really remarkable of all the efforts that Rwanda has been doing over the past 12 years to improve the business environment,” Ramalho said.
However, Francis Gatare (above) the CEO of the Rwanda Development Board (RDB) said: “We have acknowledged the reforms that have been embraced, reflected in the report but we have also had an opportunity to express some of the disagreements that we had with the report particularly with respect to some of the reforms that we submitted and wished they would be recognized, but which have not been internal to the unit itself.”
Ramalho was leading a World Bank delegation to Rwanda recently to launch the World Bank doing business report and to discuss Rwanda’s performance in the report and the overall implications of the report globally.
“We cover eleven different areas which are the life cycle of a firm. We look at what one has to do in a certain city, hiring workers, the location (either buy a place or build own place), financing (what is the process of getting credit or getting equity), paying taxes, logistics process in case the firms exports or imports, process of resolving insolvency problems, among others,” Ramalho said.
According to Ramalho, Doing Business is measuring business regulations and how they affect small and medium size companies that operate in a country that is owned by its citizens.
It focuses mainly on main cities such as Kigali for the case of Rwanda.
“Here we look at the different processes and interactions one is supposed to have with different government agencies and how efficient those things take place,” Ramalho said.
This year the World Bank expanded five of the indicators which are in the easy of doing business labour market regulations, and this affected the performance of many countries in its doing business report.
“This is because now the project is in its 13th edition and so the world has changed over time and there is a need to expand and update the different areas that we measure to make them more relevant to what happens today, plus there was an independent panel review of doing business two years ago and as a result of that there were a few changes some last year and some this year,” Ramalho said.
For last year, the WB expanded three of the ten indicators in the doing business and this year five of them were expanded with a total of eight indicators being expanded over the past two years.
Ramalho said, “The idea behind the expansion is to also look at the quality of regulations”.
“We don’t just look at efficiency, so we continue to measure the quality for instance of the land administration: what are the systems that land registry has to ensure the quality of the data that they have, for instance the validity of the titles or in getting electricity among others,” Ramalho said.
The whole process involves indicators and is narrowed down by definition. It does not look at aspects of macro- economic stability or security or crime. I
t focuses mainly on the regulations that affect businesses and how the government implements them.
Ramalho said, “In areas like getting credit, registering property, Rwanda is really at the top in their performance but there are other areas where there is more room for improvement”.
“The doing business report is obviously important to us, but our reform agenda is also a lot wider,” Gatare said.
Some of the concerns expressed on the report, included the changes in methodology and the expansion of indicators without prior notification of the countries that subscribe to the report.
“This new methodology does not affect Rwanda only but also other countries in Rwanda’s income bracket,” Gatare said.
The new methodology introduced usually measures with the per capita income as the basis which has an inbuilt bias that makes low income categories reflect into higher cost of doing business the opposite to higher income countries that are reflected well when such a measure is used.
The doing business report is a very important initiative by the WB which has been creating a lot of interest within the developing world.
“All of us are interested in improving the doing business environment. Rwanda during the last 20 years has been recognised globally as a country which is striving to be a best practice in terms of economic governance,” Rwanda’s Minister of Trade and Industry, Francois Kanimba said.
According to the Minister, Rwanda did the business reforms at a time when the WB doing business initiative ranked the country almost amongst the ten countries where doing business environment was still very bad but over the years the country’s performance has been picking up.
“This process has been positively impacting the country. It is actually one of the key factors that have shaped a new image for the country to an extent that the country is now known in many countries as one that is doing very well,” Kanimba said.
Kanimba said, “However this cannot be only explained by this report but also the country’s leadership which has been going around the world to shape this image”.
The WB has been closer to Rwanda to explain to the country’s experts how this process works. There are a number of key indicators the WB looks at with a lot of technical content to these indicators for someone to improve.
“There is need to understand the criteria used to make the assessment for every country,” Kanimba said
He said, “The WB has always been willing to provide technical assistance to Rwanda to improve, to support and to accompany the country’s overall goodwill to continue with its journey to perfect its business environment hence attract more investors”.
“The visit by the manager of the whole process will give our experts an opportunity to sit with the WB team to understand exactly if there are some indicators where Rwanda is not doing well hence be in position to enhance our reforms to make sure we go back to our good ranking like in the past,” Kanimba said.
According to the Worlld Bank, 85 developing economies implemented 169 business reforms during the past year, compared with 154 reforms the previous year