Transcript Doing Business inThe East African Community 2012

Doing Business in
The East African Community 2012
Alfred Ombudo K’Ombudo
Coordinator, EAC Investment Climate Program
World Bank Group
Bujumbura, Burundi
April 11, 2012
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
Start-up
 Starting a
business
Minimum capital
requirement,
procedures, time
and cost
Expansion
Operations
 Registering property
 Dealing with
construction permits
Procedures, time and
cost
Procedures, time and
cost
 Getting credit
 Paying taxes
Credit information
systems
Payments, time and Total
Tax Rate
Movable collateral laws
 Protecting investors
 Trading across
Disclosure and liability in
related party
transactions
Documents, time and
cost
Insolvency
 Resolving
insolvency
(formerly
Closing a
business)
Time, cost and
recovery rate
borders
 Enforcing contracts
 Getting electricity
Procedures, time and
cost to resolve a
commercial dispute
Procedures, time and
cost
 Employing workers
(annex)
Entry
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Property rights
Investor protection
Access to credit
Administrative burden
Flexibility in hiring
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3
Recovery rate
Reallocation of
assets
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
OECD high income 30
Southern African Development Community:
Angola, Botswana, the Democratic Republic of Congo, Lesotho,
Madagascar, Malawi, Mauritius, Mozambique, Namibia,
Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe
Eastern Europe & Central Asia
East Asia & Pacific
Middle East & North Africa
Latin America & Caribbean
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87
93
95
114
115
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
South Asia 117
Sub-Saharan Africa 137
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170
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
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.
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.
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
DB2011
DB2012
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 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
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4
IMPROVEMENT IN PROTECTING INVESTORS
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Extent of
disclosure
Extent of
director
liability
Ease of
shareholder
suits
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Strength of
investor
protections
Rank DB2011
Rank DB2012
153
Kenya the only economy in 2010/11 to improve its judicial
system
4 out of the 5 EAC economies—
Burundi, Kenya, Rwanda and Uganda—
have 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” system—categorizing
cases as “small claims,” “fast track” or
“multi-track” was implemented.
Global good practice: specialized
commercial courts are very
common in the EAC
Where is resolving insolvency easy – and where not?
• Uganda stands out as the
easiest place to resolve
insolvency in the EAC.
Best Practice Highlight:
-Uganda’s insolvency
procedure has a going
concern outcome.
- Uganda has good
provisions for creditors'
committees.
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160
140
120
100
80
60
40
20
0
Seychelles
Rwanda
Madagascar
Swaziland
Sierra Leone
Malawi
South Africa
Kenya
Mauritania
Namibia
Zambia
Eritrea
Cape Verde
Equatorial…
Nigeria
Botswana
Gambia, the
Ethiopia
Senegal
Liberia
Burundi
Comoros
Tanzania
Mozambique
Cameroon
Sudan
São Tomé…
Ghana
Côte d'Ivoire
Uganda
Lesotho
Togo
Angola
Chad
Congo, Rep.
Burkina Faso
Guinea-Bissau
Zimbabwe
Mauritius
Central…
Niger
Gabon
Congo, Dem.…
Guinea
Mali
Benin
Average Rank Across DB Topics
EAC economies have a high degree of variability among
the different areas of regulation
The average rank in 11 areas of business
regulation in Rwanda is 45, but in fact
performance varies significantly across
indicators
Rwanda TOP 3 rankings
•Starting a Business: 8
•Getting Credit: 8
•Paying Taxes: 19
Rwanda BOTTOM 3 rankings:
•Dealing with construction permits: 84
•Trading across borders: 155
•Resolving insolvency: 165
Best practices from across the EAC region
If each East
African country
were to adopt
the region’s 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.
Key findings in Doing Business in the East African
Community 2012
Thank you. For more information:
www.doingbusiness.org
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