Rather than waiting for protracted international negotiations, Rwanda is continuing to implement its own reforms to improve domestic business conditions and to become one of the world’s most business-friendly economies. This was bolstered by recent news that it will now take just one hour to set up a new business, at very little cost. The rewards of freeing up business continue to be significant: foreign investment has increased five-fold in the last few years and growth remains strong, in spite of the global contraction. Rwanda is now considered the 5th best economy in Africa in which to “do business”.
This very good news can be immediately contrasted with Rwanda’s monolithic neighbour in East Africa. For instance, 149 days and almost four year’s average wages are required to register a business in Democratic Republic of Congo. The DRC, like many other African countries, can learn from the emerging economic success story that is Rwanda.
However, despite the positives there is much room for improvement. A recent World Bank appraisal of the East African Community (EAC) found that practices varied greatly within the region. For example, in Rwanda (as with 12 other sub-Saharan African economies) there is still no procedure for dealing with bankruptcy. Positive reforms require independent and transparent institutions, including an independent judiciary capable of dealing with insolvency. Limiting the role of the increasingly powerful President, Paul Kagame, is equally important to quell legitimate fears about corruption and mismanagement. In both regards Rwanda has a long way to go.
Yet the potential of continuing on the path of reform is tantalising: If the best practices were adopted across the East African Community its members (Kenya, Tanzania, Burundi, Rwanda, Uganda) would collectively rank 12th in the world in terms of business-friendly conditions—better than, say, Japan or Sweden. Mauritius and Botswana have proven African economies can compete internationally. Entrepreneurs across Africa must be allowed to prove that they are capable of following suit, but they will only be able to do so if their governments implement the right series of reforms.