Ease of doing business declines across East Africa

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A survey by the East African Business Council, the private sector arm of the East African Community, indicates that the overall ease of doing business in the region deteriorated with all eight indicators declining compared to 2023.

In details contained in the 2024 Ease of Doing Business in the East African Community (EAC) survey, the East African Business Council (EABC) noted that the ease of doing business in the region was rated moderate, with an average rank of 3.22, which was a decline of 0.13 points compared to the 2023 rank of 3.09.

The ease is measured on a scale of one to five, of which, one represents very easy, while five represents very hard.

“The survey revealed that the overall ease of doing business within the EAC was moderate. The enterprises’ perception of the ease of doing business in 2024 shows a decline in all eight indicators in comparison to 2023,” the survey, which targeted companies involved in trade in goods and services across the region, and received a total of 300 responses, of which 201 were valid for analysis, reads in part.

Out of the 201 responses, 113 were from companies engaged in trade in goods, representing 56 percent, while 88 or 44 percent were from businesses involved in trade in services.

All eight indicators registered a decline in comparison to 2023, with government operations declining by 0.19 to 3.60, while removal of trade restrictions declined by 0.18 to 3.55.

Regulations for starting and operating a business in the region declined by 0.17 to 2.83, trade finance by 0.14 to 3.60, trading across borders by 0.14 to 3.26, and making cross-border payments by 0.14 to 2.87.

Infrastructure development declined by 0.04 to 2.80, while ease of paying taxes declined by 0.02 to 3.23.

The individual score for the eight surveyed indicators is key in determining the average score for the ease of doing business across the eight East African member states, among which include Uganda, Kenya, Tanzania, Rwanda, Burundi, DR Congo, South Sudan, and Somalia.

The survey indicates that Kenya and Tanzania registered the highest number of respondents – each 50 companies – while Uganda and Burundi registered responses from 34 and 23 companies, respectively.

Rwanda registered responses from 19 companies, DR Congo (13 companies), and South Sudan (eight companies).

In terms of country ranking, Rwanda scored better than other East African partner states, posting a score of 2.83 – which is perceived as easy – followed by Burundi, whose 3.02 score makes it a moderately easy country in doing business.

Kenya scored 3.19, Uganda (3.27), South Sudan (3.28), DR Congo (3.39), and Tanzania (3.39), all of which were ranked as moderate.

The decline was mainly due to deteriorations in several sub-indicators, including access to information on business fees, levies, and charges for startups, affordability of interest rates, implementation of the EAC Common External Tariff, ease of receiving payments from government, securing government tenders and import and export procedures, among others.

Interviewed businesses indicated that making cross-border payments and regulations for starting and operating businesses were moderate, while it was hard to remove trade restrictions, and obtain trade finance, and government operations.

However, ease of paying taxes, in particular compliance with tax requirements, improved from moderate (3.08) to easy (2.82), while infrastructure development, in particular access to affordable voice and data calls, slightly improved from 2.61 in 2023 to 2.57.

Other improvements were registered in recognition of professional qualification across the region and the availability of foreign currencies, in particular US dollars.

The improvements, the survey noted, were driven by the automation of tax payment systems making it easier for businesses across the region to comply with tax requirements, the EAC One Network Area, and monetary measures taken by governments across the region to increase the supply of US dollars.

Positive progress

Companies across East Africa also reported positive progress in the business environment, characterised by continuous government reforms and commitment to enact business-friendly laws, favourable political and economic stability, enhanced government collaboration with the private sector in policy formulation and investments through public-private partnerships, increased investment in infrastructure, human capital and active participation in regional and continental integration.Continue Reading