Supportive policies prop up Rwanda in inaugural global entrepreneurship index

Easy access to finance and supportive business-oriented policies that drive growth have propelled Rwanda as one of the top countries on the continent offering the best environment for entrepreneurs, according to the inaugural Ashish J Thakkar Global Entrepreneurship Index released this week.
Pierre Damien Mbatezimana, the MD of Shekina enterprises, an agro-processing firm that makes flavoured isombe for export, displays some of the products made by his company. Rwanda has been credited for good business policies . (Donata Kiiza)
Pierre Damien Mbatezimana, the MD of Shekina enterprises, an agro-processing firm that makes flavoured isombe for export, displays some of the products made by his company. Rwanda has been credited for good business policies . (Donata Kiiza)

Easy access to finance and supportive business-oriented policies that drive growth have propelled Rwanda as one of the top countries on the continent offering the best environment for entrepreneurs, according to the inaugural Ashish J Thakkar Global Entrepreneurship Index released this week.

The index developed by Mara Foundation, a pan-African investment group, ranked Rwanda second-best country for businesses on the continent behind Namibia that topped Africa in the survey carried out in 85 countries across the globe.

Overall, Namibia was ranked 42nd, Rwanda 43rd, while Botswana was 44th and South Africa followed in 46th spot, in global ranking, according to the report.

The Ashish J Thakkar Global Entrepreneurship Index measures entrepreneurial environments around the world, and assessed each of the 85 countries surveyed against a set of criteria that spans five pillars - policy, infrastructure, education, entrepreneurial environment and finance. Rwanda scored highly in the policy and finance pillars, which are driven by government initiatives to ease doing business.

According to the report, “credit is easily available and business transparency high”. The country ranked top in Africa on the policy pillar, with the report indicating that there has been large-scale decentralisation, including civil sector reform.

“This has ensured political stability, improved transparency, and rebuilt trust. To ensure contract enforcement, the government established additional commercial courts so that there would be practical repercussions for those who violated business contracts,” says the report.

By sending the message that no one is above the law, the economy and entrepreneurship in Rwanda has grown as demonstrated by their ranking in the index, especially coming among the top in Africa, it adds.

The report, developed in partnership with Opinium Research, is based on policy, infrastructure, education, entrepreneurial environment and finance as the key pillars.

These five pillars aim to give “a balance of physical barriers to entrepreneurship, such as poor infrastructure, government policies preventing entrepreneurship and also assessing the entrepreneurial environment”. However, the report indicated that the infrastructure and policy pillars had the highest correlation with the final results indicating that countries that have the right policies and infrastructure to support entrepreneurial behavior are more likely to succeed.

Recommendation

Significant challenges exist in terms of Africa’s political stability, poor infrastructure, poor education, and economies that are not diversified. Comparatively, lower scores for infrastructure are primarily driven by a lack of access to power, telecom services and the Internet.

The survey urges African governments to invest more in physical infrastructure, like electricity and transport networks, noting that they are key to establishing a business, promote and drive entrepreneurship growth.

“With more than 15 per cent of the world’s population still lacking access to electricity, one way for countries to increase electricity access is pay-as-you-go solar. This method has worked well in Tanzania and Rwanda,” the report said.

It noted that one solar energy startup connects 10,000 households per month in Tanzania, while off-grid energy covers a quarter of households in Rwanda.

The index noted that improved access to education creates a more sustainable environment for entrepreneurship to thrive. Namibia and Botswana scored strongly on the education pillar “because of comparatively higher levels of literacy and quality in education”.

The Mara Foundation has interest in banking, real estate, infrastructure, and technology, and is the majority shareholder in BPR, Rwanda’s biggest bank in terms of network.

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