Despite the economic growth seen by many African economies in recent years and the attention they have received by multinational corporations and investors, the continent is still home to some of the most difficult business environments in the world. In fact, according to the rankings of the World Bank and IFC’s 2014 global Doing Business report, 16 of the 20 most difficult countries in which to do business are in Africa.
However, Jacqueline Musiitwa, founder and managing partner of the Hoja Law Group, believes that many African governments are beginning to look for ways to make their countries more “agreeable” for business.
“I think increasingly, because of the World Bank’s Doing Business ranking, a lot of [governments] are seeing a correlation between increasing all of the aspects on those rankings and an increase in the amount of investment. I think Rwanda has definitely shown countries in Africa that if you do that, it is one way to increase your investment,” said Musiitwa, who has experience advising African governments and has served as an advisor to the Rwandan Minister of Justice concerning investment, trade and infrastructure.
The Doing Business rankings released last year revealed that Rwanda had shot up a whopping 22 places since the previous year, now 32nd. According to Musiitwa, there is a lot that other African governments can learn from this small East African country.
“I think, for a lot of policy work, it kind of starts with what governments are actually noticing other countries doing,” she told How we made it in Africa.
Making it easier to register a business
“I think Rwanda’s biggest claim to fame has been, at the outset, making it easier to register a business,” emphasised Musiitwa.
In the Doing Business report, Rwanda was ranked at an impressive ninth place in the ease of starting a business category, out of 189 global economies. Musiitwa explained that while registering a business might not seem like a complicated process, this is not always the case in many African economies.
Training and educating around new legislation
In terms of legislation, Musiitwa noted that Rwanda is also doing a good job at training lawyers and law enforcers about new regulations. For some African countries, new laws are often not enforced, either because no one is aware of them, or those who are supposed to enforce them have not been well trained on what needs to be done.
“So I think Rwanda has done a great job of not only legislating but also teaching anyone who has to deal with the law that the law has come into effect,” added Musiitwa.
Rwanda is in the process of switching from its 19th century civil law system (introduced by its Belgium colonisers) to a modern common law system which is believed to attract more investment.
“The mistake a lot of countries made in the very beginning – in the 50s and 60s and 70s after independence – was pretty much copying and pasting legal systems from the countries that they got their independence from. Now, years later, they are realising that these legal systems aren’t necessarily made for the 21st century in the Africa that we are in,” continued Musiitwa.
The result is that there is a lot of revision of past laws taking place, with many new laws being introduced in numerous African countries. For this reason, governments will need to properly educate law enforcers to ensure they are better prepared for incoming investment, both foreign and local.
“I think Rwanda has also made business easier by digitising everything and this way you are able to find Rwandan laws in English, French and Kinyarwanda online,” continued Musiitwa.
Another example would be the digital system used at Rwandan border posts. “[If] you go to a border post when you are trying to import or export goods, you are able to get all of those processes through a digital system which minimises any potential for corruption. So I think by modernising systems Rwanda has been able to set itself apart.”
Attracting investment from diaspora
Musiitwa noted that Rwanda, as well as countries such as Zambia and Ethiopia, are making it easier and more attractive for the diaspora to invest in their home countries, which benefits the growth of these economies.
Sticking to development goals
Both Rwanda and Ethiopia should also be applauded for sticking to their development vision, added Musiitwa. Examples include developing infrastructure to improve power supply and growing local industries to increase employment.
“A lot of countries have visions… But what I think differentiates Ethiopia and Rwanda is that they are sticking to their plans and people are seeing results. And the results are not only being noted by the local communities that are obviously happy with the increase and improvement in services, but also internationally they are getting a lot of attention.”