East African countries have embarked on several regulatory and competitive reforms aimed at improving the ease of doing business to attract investors and market the region as a single investment destination.

Kenya, Uganda, Rwanda and Tanzania have all launched policies to improve their individual rankings.

Kenya’s industrial sector is being revived through the elimination of unnecessary procedures to do with business operations. The country’s micro and small enterprises are among those profiting from the reforms.

In Uganda, the Registration Services Bureau (URSB) is piloting online registration of Kampala-based businesses as part of the government’s efforts to improve the country’s competitiveness. Tanzania has computerised the registration of businesses while Rwanda has improved its policies for accessing finance.

Kenya’s Industrialisation and Enterprise Development Ministry has identified several reforms relating to starting a business; getting electricity and credit; registering property; getting a construction permit and trading across borders.

Cabinet Secretary Adan Mohammed said the elimination of unnecessary procedures and processes is an indication of public and private sector efforts to transform the country’s investment climate.

“The reforms will set a foundation for sustainable development of the private sector and create a competitive and diversified economy in the long-term. This will position Kenya as an ideal destination for investment, which is critical for job creation,” said Mr Mohammed.

The process of registering a business in Kenya has been reduced to 12 days from 32 days while it takes about 75 days to connect electricity for a business premises, down from 158 days.

In 2014, Kenya established a Business Environment Delivery Unit, to address challenges facing investors in the country. The unit, together with other arms of government and the private sector, have been facilitating reforms focused on procedures and processes that reduce the ease of doing business.

According to Mr Mohammed, ways of reducing business processes include automating them; enabling small businesses to obtain single permits by allowing self-declaration and eliminating the requirement for declaration of compliance.

“Kenya is keen on improving its global rankings by implementing key reforms for a better and more conducive business environment for private-sector development and economic growth,” said Mr Mohammed.

Last week, Kenya emerged as China’s preferred African industrial nerve centre owing to its reforming business environment and incentive framework, beating Ethiopia and Tanzania — who are key business partners for China within the region.

According to Lin Songtian, China’s Director-General for African Affairs, Kenya’s enabling policies were the decisive factor with the country’s Special Economic Zones Bill providing the best option for an open and conducive environment for Chinese investments in industrial manufacturing.

“We are confident of Kenya’s legal mechanisms and incentivised framework, which will attract and retain Chinese investors,” said Mr Songtian.

Kenya’s Industrialisation Principal Secretary Wilson Songa said that the country has a 23-year head-start on Ethiopia in the development, operation and management of industrial zones.

“Kenya offers more advantages to Chinese investors than its East African partner states. It has a larger middle-income economy with purchasing power and offers access to a market of 400 million people drawn from its membership in the EAC and Comesa.

Ethiopia is not a member of the EAC and has stalled on ratifying its Comesa Customs Union. Kenya’s founding membership status in the World Trade Organisation ranks the country as being consistent with WTO rules and experienced in global trade,” said Dr Songa.

Uganda’s online registration of Kampala-based businesses is expected to improve the country’s position in the World Bank’s doing business rankings. Uganda has been ranked the second hardest place to do business in East Africa, after Burundi. The doing business ranking is divided into 10 different categories including dealing with construction permits, getting electricity and starting a business.

Arthur Kwesiga, the URSB manager in charge of information technology, said that the process has already improved co-operation between different government institutions, like the Uganda Revenue Authority and the Kampala Capital City Authority (KCCA), which both issue licences for starting a business.

Uganda performs the worst in the starting a business category. It takes seven days to start a business in Rwanda; five in Burundi; 30 in Kenya and 26 in Tanzania compared with Uganda’s 32 days.

“We are seeking to improve our ranking in the starting a business category where Uganda fell four places from 162 to 166 out of the 189 economies ranked in 2015, through the automation of business registration processes,” said Mr Kwesiga.

Uganda received a $100 million loan from the World Bank to improve its business environment, and 10 per cent of this money has been given to URSB to automate the business registration process and improve collaboration with other government entities that issue licences for operation of a business.

The automation now makes it possible for an individual intending to register a business, to find out the number of licences necessary to start the registration process.

It is also possible to find out whether the name of a company is already taken. A business that is fully registered must have a tax registration number and a trading licence from the local government — in this case URSB, which is working with KCCA.

URSB got Diamond Trust Bank to open a branch on the same floor where the registration is done, to make it more convenient for those who are paying the registration fees. The fees used to be paid in a different location, which the World Bank said would add an extra day to the registration process.  

“We have used the money from the World Bank to create a one-stop centre, so that registering a business is done on one floor,” said Mr Kwesiga.

The 2015 World Bank Doing Business Report on Uganda shows that it takes a day to get a pay slip for the payment of registration fee and the stamp duty from URSB. Another day is required to pay these fees, which adds to the number of days it takes to start a business.

Mercy Kyomugasho, the director of business registration at URSB, said the number of days it takes to start a business have since reduced to between two and three after automating the process. It has also become easier to get a tax registration number from URA for a company that has been registered by URSB.

Phillip Gava, a member of the Kampala City Traders Association, said that since URSB will have verified identification, URA can easily give ot a tax registration number. However, he said that the collaboration between URSB and KCCA also creates problems for traders and could compromise the success of the process.

Double charging

“We think that KCCA is double charging investors who own business premises and warehouses. Asking one owner to pay two licences in such cases could compromise the URSB process,” said Mr Gava.

Rwanda, in 2014, fared better in addressing access to credit, dealing with construction permits, and insolvency.

READ: Rwanda’s case shows the flip side of WB’s ‘Doing Business Report’

The Rwanda Development Board chief executive officer Francis Gatare said that the country was in constant dialogue with the private sector to determine their perspectives and needs so as to perform better in the ease of doing business rankings.

“Rwanda is motivated to continue engaging in the business-related reforms that have seen us be among the most competitive economies in the world,” said Mr Gatare.

Rwanda is currently working on strategies and policies aimed at promoting the business environment especially in the areas where the country is not performing well, according to the 2014 Ease of Doing Business Report.

By Allan Olingo and Dicta Asiimwe