WORLD BANK RANKS RWANDA MOST IMPROVED FOR BUSINESS

UNCLAS KIGALI 000552


DEPT PASS TO OPIC JDIDIUK, SJOHNSON

E.O. 12958: N/A
TAGS: ECON EINV ETRD EAID RW
SUBJECT: WORLD BANK RANKS RWANDA MOST IMPROVED FOR BUSINESS

REF: KIGALI 496


1. (U) SUMMARY: World Bank "Ease of Doing Business" 2010
indicators--released September 8, 2009--recognize Rwanda as
the world's top reformer in implementing business regulation
reforms. Rwanda introduced reforms in seven out of ten
categories, improving its overall ranking from 143 to 67 out
of 183 economies included in the study. In sub-Saharan
Africa, Rwanda trails only Mauritius, South Africa, Botswana
and Namibia and has catapulted past neighboring East African
countries of Kenya, Uganda, Tanzania and Burundi. END
SUMMARY.


2. (U) The World Bank Doing Business project provides
objective measures of business regulations and their
enforcement across 183 economies world-wide. It is based on
the premise that a good business environment requires good
business regulations, and enforcement of those regulations.
First initiated in 2003, the study looks at ten indicators of
good business regulation and compares countries' performance
against each other and prior years.


3. (U) Based on these ten indicators, Rwanda over the last
year has emerged as the world's top reformer with significant
reforms in seven of ten categories and overall rank
improvement from 143 in the 2009 report to 67 in the 2010
study. The Bank noted that this is the first time a
sub-Saharan African country had led its "most improved" list.
Rwanda is now in the top five countries in Sub-Saharan
Africa for business regulatory environment after Mauritius,
South Africa, Botswana and Namibia. In East Africa, Rwanda
leads Kenya (95),Uganda (112),Tanzania (131) and Burundi
(176).


4. (U) The most dramatic regulatory improvements were in the
categories of "Starting a Business" ( 76),"Protecting
Investors" ( 144),"Employing Workers" ( 83) and "Getting
Credit" ( 86). In contrast "Dealing with Construction
Permits" and "Closing a Business" showed no improvement while
"Trading Across Borders", "Enforcing Contracts" and
"Registering Property" improved only slightly. "Paying
Taxes" deteriorated marginally. The World Bank report does
not address key areas of the business climate--such as
corruption--where Rwanda would likely score well. Similarly,
the report does not evaluate the quality of infrastructure
and availability of skilled labor, where Rwanda might score
lower.


5. (U) Some of the indicators are largely outside the
Government of Rwanda's (GOR) control. For example, the
indicators for "Trading Across Borders" show that Rwanda
ranks 170th out of 183 countries primarily due to the high
cost of transport. The cost of exporting from Rwanda as
measured by US$ per container is $3,275 for Rwanda compared
to an average of $1,942 for the rest of sub-Saharan Africa
and $1,090 for OECD countries.


6. (U) COMMENT: Rwanda's dramatic improvement in its
business regulatory environment, as demonstrated by their
catapult jump in the World Bank report, is a significant
accomplishment. Since the World Bank first published the
report in 2003, the GOR has consistently focused on improving
the business environment as a critical component to
attracting needed foreign capital. In 2008, the Rwanda
Development Board was established to streamline the
investment process, minimize trade barriers and market Rwanda
Qinvestment process, minimize trade barriers and market Rwanda
as a "business friendly" environment. Significant new
business friendly legislation was also signed into law.
These improvements have contributed to improving the business
climate and are already bearing fruit by attracting new
American investment (reftel). END COMMENT.


SYMINGTON