Last week, Rwanda stunned the world and itself by gaining a record 76 places in the Doing Business ranking. That, however, means that improving the country’s position even further will be so much harder.

Clare Akamanzi: “Our main task right now is to consolidate our results and improve on what we have achieved.”

And as recent as last May, the national coordinator for Doing Business reforms, Frank Twagira, expressed doubts that the target would be reached. “It is not going to be as easy as many people might think,” he told The Rwanda Focus at the time. “More work by all the stakeholders is needed.”

As we know now, the work has been done, and very well indeed. Rwanda did not just reach the top-100, it planted its feet firmly within the top-75 by jumping a record 76 places to the 67th spot out of 183 countries. In doing so, it also became the first sub-Saharan African country to become the world’s top reformer. No wonder, then, that the mood at the launch of the Doing Business report 2010 was ecstatic.

Dubbed “Reforming through Difficult Times”, the Doing business Report was launched in Kigali and communicated through a video conference linking Sierra Leone, Liberia, Mauritius, South Africa and Rwanda – the best performers in the Sub Saharan region in the 2010 Doing Business report.

“We have witnessed 67 reforms in 29 African countries and we get to celebrate the fact that there are two African countries in our top 10 reformers (Liberia is the other one, ed.), and Rwanda is our top reformer world wide,” Penelope Brook, the World Bank’s acting vice-president for financial and private sector development, said amidst wild cheers.

She pointed out that consistence in reforms has a wide range of advantages. Citing a few, Brook said that not only do reforms help governments find their way out of the current economic crunch through devising clear policies on how the private sector can restructure and remobilize resources to stay afloat, but also it ensures that consistence reformers act as role model to other countries who would like to follow their examples.

“Active reformers also attract investments as investors are assured of high returns,” she added.   

Amazed

She also congratulated Rwanda on its spectacular performance. “I am amazed by the ranking,” Brook said. She attributed the historic leap to the tremendous efforts by the government in speeding up reforms.   

Rwanda has also been the most consistent reformer followed by Mauritius which ranks 17th, having moved 7 places up in the 2009 Doing business report.

The achievement has been attributed to the number of legislations passed earlier in the year. For example, the passing of the Company law has reduced starting a business from 14 days to 2 days. Other important laws passed include the new labor law and the insolvency law.

The progress also means that Rwanda is now miles ahead compared to other EAC member countries. Only Kenya managed to squeeze into the two digits ranking at number 95, while Uganda, Tanzania, and Burundi languished in positions 112, 131 and 176 respectively.

The achievements left even top performers in rankings such as Mauritius wanting to borrow a leaf from the country. “History has been made by the exceptional achievement” Claire Akamanzi, the deputy CEO business operations and services said.

Rwanda managed to carry out reforms in seven of the ten indicators studied by the Doing Business report. They include starting a business employing workers, registering property getting credit, protecting investors, trading across borders and closing a business. However, performance was poor in trading across the borders and closing a business, where it ranked 170 and 183 respectively.

While the necessary legal reform had been put in place by passing the law of insolvency, there were no companies that declared bankruptcy so Rwanda was regarded as a non-performing country in this respect.

“For the Doing Business to regard closing a business as a performing indicator, at least five companies must declare bankruptcy,” Akamanzi explained.

Faustin Mbundu, the vice-chairman of the Private Sector Federation and recently appointed as the chairman of the East African Business Council, observed that the reason why the indicator was inactive might be the fact that the business community is not yet aware of the bankruptcy law. “I think it is a matter of time before the business community realizes that the law exists and will begin to use it,” Mbundu said.

Regional mechanisms

However, any athlete will tell you that the higher you get in a ranking, the harder it becomes not only to improve your position, but even just to maintain it. And indeed, RDB officials have acknowledged that they have so far focused on so-called “quick wins” – reforms that are rather easy and have a big impact on the business environment.

The issues that remain will often prove more tricky to deal with. For instance, despite numerous efforts towards facilitating trade across borders such as removal of unnecessary roadblocks and reduction of time spent while declaring goods, the reforms in this field are complicated. National coordinator Frank Twagira even thinks it is one of the trickiest reforms to achieve.

“We can reform our own laws to facilitate quick and easy movement of goods around the country, but we cannot control what goes beyond our borders,” Twagira pointed out, adding that better results in the indicator cannot be achieved unless a regional mechanism is adopted to ensure seamless flow of goods.

“As you cross the border, you are bound to meet uncertainties such as axel load limits where you are not supposed to exceed a certain weight, and high traffic police roadblocks across the corridors which mostly results into corruption,” Twagira said. “Unless our neighbors develop a mindset like we have, it won’t be easy to excel in this indicator.”

It is worthy to note however, however, that efforts spearheaded by President Kagame to reduce the non-tariff barriers along the northern and southern corridors have been effective to some extent and the situation has improved.  

Implementation

The tricky question of the cross-border trade is a good incentive, however, for the RDB to work even harder. “Our main task right now is to consolidate our results and improve on what we have achieved,” Akamanzi said, adding that the next step was to focus on reforms that had not been prioritized.

Asked whether it was possible to achieve single digit ranking in the 2011 ranking, Twagira pointed out that the Doing Business task force team’s aim was to achieve the best result possible.

 “Whether we achieve, single digits or not, we are committed to keeping the reform momentum and our aim is to do the best we can for the private sector,” he said.

Despite the good performance in the rankings, the big question mark remains the implementation of the reforms. As Prime Minister Bernard Makuza put it, “we need to remain focused to ensure that the reforms trickle down to all administrative levels”.

From the business point of view, PSF vice-president Mbundu, who is also the managing director of coffee exporting company CAFERWA, said he was happy with the reforms since they aimed at helping the SME’s have a better and clear environment of conducting businesses.

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