Rwanda Among Nations With Most Business Reforms in 14 Years, Says World Bank Official – interview

The New Times Kigali Collins Mwai
Displayed with permission from allAfrica.com

The World Bank Doing Business Report’s 14th issue released this month shows that Rwanda rose up six positions to feature in the 56th position and second in Africa after Mauritius.

The New Times’ Collins Mwai caught up with the report’s manager Dr. Rita Romalhofor insights into Rwanda’s performance over previous years as well as general observations from the report.

EXCERPTS:

Weeks ago, you presented the 14th issue of the World Bank Doing Business Report, what are some of the general observations in regards to Rwanda’s performance?

Rwanda improved this year and for the last 14 years of the report. When we count all the reforms that Rwanda has conducted since we began doing the report, they are 47 and are among the highest. It is one of ten countries that reformed in all the different areas of doing business. Rwanda has improved the most over the years in Sub-Saharan Africa and is among the two countries that improved the most globally alongside Georgia.

The improvement is in parallel though Georgia ranked 16 while Rwanda was 56th. There is not an area that Rwanda has not touched to improve on in the last 14 years.

This year, the focus was more on things like registering property, enforcing contracts and trading across borders. One of the areas that Rwanda has improved the most over the last 14 years is registering property. It used to take over one year to have your property registered and now it is 12 days.

Its not an easy area to reform because you have to make sure that the registry caters for all the land parcels in the country. It was nevertheless very successful.

There was improvement in aspects like getting credit where Rwanda is also very much at the top globally. There were a lot of areas that they have improved over time.

What has been the greatest facilitator of the progress based on your observation?

The government’s willingness to reform and being a reform minded government has helped. Rwanda has reformed in many other areas as well beyond what we measure. Their commitment to improve as well as the pressure from the private sector whereby there has been need to simplify the business environment for people on the ground.

Are your ten indicators designed to consider the business interests of Small and Medium Enterprises or multinationals?

The indicators are designed to impact on the small and medium sized companies. The objective is to improve the conditions for small and medium sized companies. That does not mean that large firms and foreign firms are not benefiting.

By design, the main objective is to improve the daily lives of SMEs.

Do your report’s findings in anyway go along with figures of increase in investments considering that it indicates improvement in the business environment?

We do not have data of FDI but in terms of local firms, there was a large increase in the number of firms that have been registered over time. From a previous report, it showed that there has been an increase with about 3 firms registered per every 1000 adults in 2012.

Doing business measures part of the things that make up a business environment, there are things such as security or macro-economic factors that are outside the scope of the report. But on average countries that have a good score in this indicator tend to have a good business environment.

On more than one occasion, the Rwandan government has come out to refute aspects of your report on the basis of last minute changes of indicators. What has been your response?

The report has gone through several methodology changes in the past few years. We have had a number methodology changes and that we did try to communicate them to government well in advance but sometimes we did a better job in some countries than in others. Last year, they were probably not as well informed as they were this year.

The government is quite interested in understanding the changes in the new measures and how they can improve. That is what we also saw last year when five indicators were expanded.

Rwanda is part of the East African Community which aims at attracting multinationals into the region, the performance of various countries in the rankings is different, could this negatively affect Rwanda?

Rwanda is still a relatively small country and it is important to be integrated and make the most out of a bigger market. If they are part of bigger market, they are much more likely to succeed. That can be a driver of reforms where you do see that countries that would like to join the EU start reforming on their business environment to be competitive.

I think that also creates the fact that Rwanda has improved in the last few years, it creates a competition within the EAC for countries to improve. You can see that Kenya was a top improver this year in doing business. I am sure there are many reasons why they choose to focus on improving but also being part of a group with a top performer like Rwanda could have contributed.

What are the top trends in the EAC region based on your report?

One of the highest areas with the largest number of reforms is on starting a business. There are countries that are trying to facilitate the process of starting a business. Getting credit is another area where the laws regarding the credit market are quite business friendly.

Trading across borders in regards to the logistical process of importing and exporting is also an area that the region has shown improvement in.

Your report comes at a dull time in the global economic environment where global economic slowdown is expected to affect growth of countries. Any projections on when recovery is likely?

Business regulations are building blocks of sorts for a system. When tough times come, it is better to have a system that has the right building blocks. Though it may not prevent you from having a bad time, it’s probably easier to deal with the consequences. Having the right business regulations provides the right resilience to those types of macro-economic shocks. It may be a bad time but faster to overcome it as opposed to when the regulations were not in place.

This year, you added a gender dimension to the report, why was this important for you?

There is another report by the World Bank called Women Business and the law which looks at regulations and how they vary across women and men in various dimensions beyond the ones we look at in doing business reports.

From that we could see that yes there are differences in doing business between men and women and we felt that the report was lacking by not looking at it since half the population is made up of women.

What has influenced your changes in methodology in previous years?

In the first 2 years, it was more about the expansion of the new indicator sets. When we began we had six indicators and now we have ten. Over the years, new indicators were added and we also expanded the scope within each one. Over the course of the years, people mentioned that it might be important to measure the process of paying taxes and the process of trading across borders. It has largely been about making it more complete. It was largely from feedback from users and looking and thinking to have a complete picture.

What are some of the likely changes in methodology changes that are likely to take place in coming years?

One of the things we are considering doing in the future is to add an indicator to establish procurement regulations. We have an annex that looks at the process of providing services and goods to the government and how are the tenders assigned and how long it takes for the government to pay the firms on completion of the services. It is still in the pilot stage and is likely to be added in coming years though not next year.

Your report looks at countries individually as opposed to a perspective approach as most reports often do. Why is this approach important for you and does it not come with a lot of backlash?

There are countries in other parts of the world that are richer than countries in Africa and often they ask how we can say that they are worse than countries in Africa in certain aspects. I think it is good because it creates a debate and people can look at countries in different lenses.

People also are awakened on why countries they did not expect to be better than them beat them in certain aspects.

That is one of the advantages of avoiding perceptions and being fact based and when people can start questioning on how they can do better.

Who are your interviewees during the preparation of your reports and what do you consider when picking them?

We basically talk to people on the ground that deal with the various transactions. We talk to accountants to figure out tax issues, in construction we talk to architects and engineers for trading across borders we talk to logistics firms while judges and lawyers for aspects such as contract enforcement.

If you were to tip Rwanda on taking the top position in the continent, what more should be done?

The government is designing an action plan based on the new results and has things in motion to improve. One of the areas that Rwanda can definitely do better is in the areas of protecting minority shareholders which is mainly about regulations in large firms.

Areas like insolvency could also be improved and on construction permitting.

A general observation reviewing your report is the role of ICT in improving the business environment across countries, have you found it to be true?

A general trend we have observed is embracing technology mainly ICT systems to make it easier for the government and the citizens. It is easier for the person to go and access the system without having to leave home or their office. It is also easier for the government as the data is already in a database and the different agencies of the government to communicate.

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