The Independent (Kampala)

18 December 2012

East Africa: Rwanda Could Be Investment Hub - Experts

Photo: In2EastAfrica
Rwandan Franc.

As the world already knows, Rwanda is once again the easiest place to do business in the East Africa trade block. What has not been recognised is what it stands to gain if it tackles the area dealing with construction permits which, according to the 2013 Doing Business Report of the World Bank, is one area it has to do better at.

Rwanda Development Board's Acting CEO, Clare Akamanzi has already pledged to initiate fast reforms to ease dealing with construction permits.

She reportedly told The New Times that RDB recognizes that easing of construction permits is fundamental to attracting foreign exchange revenue.

"It is our priority this year and we want to have a very big cut in terms of the time it takes and the procedures involved in attaining construction permits," Clare Akamanzi reportedly said.

In Sub-Saharan Africa, Rwanda is the third easiest place to do business after Mauritius and South Africa. Globally, Rwanda was in 2008 at ranked 150. It is now at rank 52.

TOPIC RANKINGS

DB 2013 Rank

DB 2012 Rank

Change in Rank

Starting a Business

8

8

No change

Dealing with Construction Permits

98

90

-8

Getting Electricity

49

50

1

Registering Property

63

62

-1

Getting Credit

23

23

No Change

Protecting Investors

32

29

-3

Paying Taxes

25

29

4

Trading Across Borders

158

159

1

Enforcing Contracts

39

40

1

Resolving Insolvency

167

168

1

It could have had a better rank if it had not dropped eight ranks on dealing with construction permits.

Rwanda is, in fact, better than the average country whether developed or developing. But dealing construction permits appears to be the single hurdle to improving the doing business climate in Rwanda.

It is unclear why it takes 12 procedures and 164 days; about half a year, to get a construction permit in Rwanda.

By contrast it takes just 6 procedures in to top performers, New Zealand and Hong Kong and just 43 days in Bahrain. Hong Kong, which is the best performer if both procedures and time taken are considered, requires 67 day while the worst performers of the 185 countries surveyed, Ukraine, China, and India require 196, 270, and 375 days respectively.

Dealing with construction permits appears to be a bad problem that is getting worse in Rwanda.

Last year, the country was at rank 90. This year is dropped to 98. Although doing business across borders, an area where Rwanda must depend on the performance of its neighbours, is the worst rank, it in fact improved from rank 159 to 158.

The areas to look at when dealing with ways to improve construction permits procedures include time required to obtain a location permit and building permit, 45 days; registering the warehouse and title deed, 60 days, and paying fees and obtaining a water connection, 30 days.

The 2013 report shows that Rwanda has dropped four ranks from 48 last year to 52 this year mainly because of construction permit requirements, registering the property, and protecting investors.

The best performing areas are starting a business, getting credit, and paying taxes.

According to Trademark East Africa (TMEA), a donor funded not for profit technical and monetary support organization, Rwanda Development Board's (RDB) six-hour business registration process was recognised for beating Mauritius and Madagascar to the number one rank in Africa.

The TMEA report praised the confidence of Vivian Kayitesi, the RDB Investment Promotions Director, during the business roundtable organised by South Africa's envoy to Rwanda, George Twala.

On the day the World Bank Doing Business Report 2013 was to be released, Kayitesi reportedly casually told prospective investors to Rwanda from South Africa that her country would come out shinning.

"We know the report is coming out today. I am not worried [because] the results will be positive," she reportedly told them.

The delegates at the World Bank Group sponsored reformers' workshop in Kigali agreed that the only way other countries can improve their competitiveness is by adopting best practices of successful reformers.

The TMEA report said EAC is lucky to have Rwanda to learn from. Considering the country's consistent good performance over the last two years, Rwanda can indeed captain the region's business reforms to make the EAC attractive to foreign investment as a bloc.

Of the 10 indicators upon which economies base their reforms, Rwanda is ranked in the top five in seven of them.

The TMEA report said while it is true Rwanda's performance in this year's index is a sign of the country's commitment to achieving its economic goals, according to Clare Akamanzi, the Chief Executive Officer of RDB, it is also obvious that EAC states will need to integrate their reforms to adopt the best ones to improve as a region.

It said some analysts have mulled about creating a regional reform's committee but how many shall there be?

If Rwanda cannot help change neighbours, the TMEA report said, then it can exploit the situation, be the base of foreign investors who seek to benefit from the region's 135 million consumers.

No.

Procedure

Time to Complete

Associated Costs

1

Apply for location permit and building permit

1 day

no charge

2

Receive inspection of the land plot

1 day

no charge

3

Obtain location permit and building permit

45 days

RWF 677, 530

4

Receive excavation inspection

1 day

no charge

5

Receive final inspection and obtain occupancy permit

21 days

no charge

6

Register the warehouse and obtain title deed

60 days

RWF 195,000

7

Apply for water connection

1 day

no charge

8

Receive an inspection by EWSA to prepare an estimate of water connection fees

1 day

no charge

9

Pay fees and obtain water connection

30 days

RWF 65,000

10

Apply for a telephone line

1 day

no charge

11

Telephone company inspects the site to prepare an estimate of fees

1 day

no charge

12

Pay fees and obtain connection to the telephone network

30 days

RWF 30,000

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