Doing Business rankings: What next for Rwanda?

Tailors working at C&H Garment Factory located in Kigali economic zone. The government is aiming at rolling out 34 business reforms across multiple indicators in the next year to ease doing business. Nadege Imbabazi.

After improving 11 places to 29th globally in the latest release (2018) of the World Bank Doing Business rankings, can Rwanda improve further? Is the country stretched in terms of possible reforms?

In the World Bank Doing Business report that was released at the end of October, Rwanda was ranked at 29, from 41 the previous year.

This represents an improvement of 11 places from last year.

To maintain improvement and further improve on ranking, the government is aiming at rolling out 34 business reforms across indicators in the next year.

Of the 34 reforms, 25 are set to be implemented in the next five months to beat the May 2019 deadline when the World Bank considers implemented reforms.

The ranking considers reforms instituted and implemented to improve the business environment across 11 indicators, and ranks countries by order of the most and impactful reforms.

However, the ranking has often come under scrutiny from some experts as it considers ascension in positions which some say is not a very sustainable measure.

Given the rise of Rwanda on the ranking, some fear that possible reforms are nearing exhaustion, which could lead to lower positioning despite an improvement in conditions.

The reforms will involve reviewing and realigning operations of key agencies including Rwanda Development Board, Rwanda Revenue Authority, Lands Authorities, Ministry of Trade and Ministry of Justice among others.

Other institutions involved include Rwanda Social Security Board, City of Kigali, Rwanda Housing Authority, Association of Architects and Engineers, Central Bank and Rwanda Energy Group among others.

On starting a business, authorities will merge online employee details with business registration details, install EBM Version 2 on RDB website to increase uptake of the software as well as waive the trading license tax (commonly known as patante) on start-ups for twoyears.

This is set to ease tax remittance processes as well as reduce the cost for start-ups in the country.

In dealing with construction permits where the country performed worst at position 106 globally, Rwanda Housing Authority and City of Kigali are moving to reduce high costs and streamline procedures for obtaining construction permits.

Among the procedures to be revised include geo-technological studies, topographic surveys and Environmental Impact Assessment. The authorities will also amend the land policy and law to issuance of freehold titles.

Louise Kanyonga the Head of Strategy and Competitiveness Department at the Rwanda Development Board said that the indicator being the lowest ranking will see review of procedures to reduce costs.

“This was our lowest ranking and we have the largest room for growth. The key reasons is for the low ranking is due to the cost of certain procedures like geo-technological studies, topographic surveys and Environmental Impact Assessment. We are trying to see how we can lower the costs without compromising the integrity of the process,” Kanyonga said.

Under the getting electricity indicator where Rwanda was ranked 68 globally, the processes will be eased by integrating the lands database, and the National ID for authorities to acquire location and address of businesses.

The new process will also involve online application for electricity connection to reduce connectivity times and rehabilitate and develop new power stations and substations to increase reliability of electricity supply.

Property registration processes will also be reviewed in the coming year to amend the land policy and land law to merge issuance of freehold titles and occupancy permits as well as introduce online notarization in property transfers.

Rwanda Revenue Authority will also introduce automatic risk-based system for tax audit to reduce the percentage of cases subjected to tax audit as well as roll out EBM version 2 to all businesses to reduce the time it takes to pay taxes.

Kanyonga said other aspects that will be reviewed in the coming months include trading across borders where there will be a reduction of border compliance documents and time taken to import and export.

The Ministry of Justice has also been tasked to improve resolving insolvency by building a strong insolvency administrators’ association as well as engaging lending institutions to opt for more productive recovery outcomes for financially distressed companies such as restructuring or sale as a going concern.

The private sector welcomed the development but called for speedy implementation in aspects such as construction permits issuance.

The Private Sector Federation Chief Executive Stephen Ruzibiza said that the construction permits issue requires speedy and relevant intervention. He also called on the government to consider promoting arbitration for commercial cases in the area of dispute resolution.

Ruzibiza said that the increased reforms had ensured growing confidence in aspects such as Joint Ventures and partnerships.

Hamidou Sorgo, a senior private sector specialist at the International Finance Corporation noted that there has been an improvement in technical expertise by the government in the handling of reform in recent years. This he said is characterized by the impact of the reforms after improvement.

Rwanda Development Board Chief Executive Officer, Clare Akamanzi said that the new reforms will seek to be private oriented to have maximum relevance and impact.

“Over the next five months we will implement new reforms to ensure that we build on the very solid gains that were made in improving the business environment and make Rwanda an even more attractive place to do business, “she said.