Ease of Doing Business in EAC

    The World Bank Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level.

    The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. EAC Partner States undertook various reforms inspired by Doing Business Reports of the World Bank Group since 2002.

    Topic Doing Business 2018 / 2019 Indicator
    Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company
    Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and permits safety mechanisms in the construction permitting system
    Getting electricity Procedures, time and cost to get connected to the electrical grid, the reliability of the electricity supply and the transparency of tariffs
    Registering property Procedures, time and cost to transfer a property and the quality of the land administration system
    Getting credit Movable collateral laws and credit information systems
    Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance
    Paying taxes Payments, time and total tax rate for a firm to comply with all tax regulations as well as post-filing processes
    Trading across borders Time and cost to export the product of comparative advantage and import auto parts
    Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes
    Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency

    On the ease of Doing Business (DB), the Doing Business Report 2020 ranked Burundi 166th (with a DB score of 46.8%) in 2019 from 168th in 2018, Kenya 56th (with a DB score of 73.2%) in 2019 from 61st in 2018, Rwanda 38th (with a DB score of 76.5%) in 2019 from 29th in 2018, South Sudan 185th (with a DB score of 34.6%) which maintained the same ranking as in 2018, Tanzania 141st (with a DB score of 54.5%) in 2019 from 144th in 2018 and Uganda 116th (with a DB score of 60.0%) in 2019 from 127th in 2018 out of 190 economies and selected cities at the subnational and regional level. Burundi, Kenya, Tanzania and Uganda improved in rakings whereas Rwanda fell in ranking but still remained the best ranked country in EAC in 2020 and one of the only two countries in Africa among the top 50 in the world. Below we compare the EAC average with the averages of Southern African Development Community (SADC) and Middle East and North Africa (MENA) for 2018. By the time of compilation of this guide in June 2020, only the regional profile for Middle East and North Africa for 2019 (Doing Business 2020 Report) had been published and those for SADC and EAC were not yet published. The EAC region is an attractive investment destination due to the several key business reforms it has undertaken as demonstrated by the rankings below.

    1. The Business Environment. For investors, knowing where economies stand in the aggregate ranking on the ease of doing business is useful. Also useful is to know how an economy ranks compared with other economies in the region and compared with the regional average. Another perspective is provided by the regional average rankings on the topics included in the ease of doing business ranking and the ease of doing business score. The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to100, where 0 represents the lowest and100 represents the best performance. The ease of doing business ranking ranges from 1 to 190.
    How EAC economy ranks on ease of doing business
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 119 121 112
    Ease of Doing Business Score (%) 56.94 57.25 58.30
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of doing business, EAC average rank is better than that of SADC whereas the average scores for the three regions (EAC, SADC and MENA) are in the range of 56.94-58.30. Thus, EAC is an attractive investment destination.

    1. Starting a Business. This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small to medium sized limited liability company to start up and formally operate in economy’s largest business city.
    How EAC economy ranks on ease of starting a business
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 116 133 113
    Starting a Business Score (%) 79.82 78.58 82.00
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of starting a business, EAC average rank is better than that of SADC whereas the average scores for the three regions (EAC, SADC and MENA) are in the range of 79.82-82.00. Thus, EAC is an attractive investment destination.

    1. Dealing with Construction Permits. This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements.
    How EAC economy ranks on the ease of dealing with construction permits
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 143 109 98
    Dealing with Construction Permits Score (%) 59.07 63.89 59.17
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group


    On the ease of dealing with construction permits, SADC and MENA have a better average rank than EAC whereas the average scores for the three regions (EAC, SADC and MENA) are in the range of 59.07-63.89. Thus, EAC is still an attractive investment destination.

    1. Getting Electricity. This topic tracks the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. In addition to assessing efficiency of connection process, Reliability of supply and transparency of tariff index measures reliability of power supply and transparency of tariffs and the price of electricity.
    How EAC economy ranks on the ease of getting electricity
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 129 130 94
    Getting Electricity Score (%) 48.45 57.62 69.45
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of getting electricity, EAC average rank is better than that of SADC whereas the average scores for the three regions (EAC, SADC and MENA) are in the range of 48.45-69.45. Thus, EAC is an attractive investment destination.

    1. Registering Property. This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights.
    How EAC economy ranks on of registering property
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 112 118 90
    Registering Property Score 59.02 56.22 62.11
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of registering property, EAC average rank is better than that of SADC whereas the average scores for the three regions (EAC, SADC and MENA) are in the range of 56.22-62.11. Thus, EAC is an attractive investment destination when it comes to registering and owning property.

    1. Getting Credit. This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending.
    How EAC economy ranks on the ease of getting credit
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 83 93 126
    Getting Credit Score 55.00 51.88 36.00
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of getting credit, EAC average rank is better than that of SADC and MENA. Thus, EAC is a very attractive investment destination when it comes to investors ease in accessing credit.

    1. Protecting Minority Investors. This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. While the indicator does not measure, all aspects related to the protection of minority investors, a higher ranking does indicate that an economy’s regulations offer stronger investor protections against self-dealing in the areas measured.
    How EAC economy ranks on the ease of protecting minority investors
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 96 104 101
    Protecting Minority Investors Score (%) 53.33 51.36 51.83
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of protecting minority investors, EAC average rank is better than that of SADC and MENA. Thus, EAC is a very attractive investment destination when it comes to minority investors seeking for investment opportunities.

    1. Paying Taxes. This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as measures the administrative burden in paying taxes and contributions.
    How EAC economy ranks on the ease of paying taxes
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 97 97 83
    Paying Taxes Score 69.75 69.10 74.52
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of paying taxes, EAC and SADC have the same average rank. MENA has better simplified processes for paying taxes than EAC region.

    1. Trading across Borders. Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures, the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods.
    How EAC economy ranks on the ease of trading across borders
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 142 119 121
    Trading Across Borders Score 50.59 61.46 60.17
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of trading across borders, SADC and MENA have a better average rank than EAC whereas the average scores for the three regions (EAC, SADC and MENA) are in the range of 59.59-61.46. EAC still needs to have more reforms in this area, however despite this, EAC intra-trade volumes are still high.

    1. Enforcing Contracts. The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system.
    How EAC economy ranks on the ease of enforcing contracts
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 91 131 105
    Enforcing Contracts Score 57.01 47.59 55.04
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of enforcing contracts, EAC average rank is better than that of SADC and MENA. Thus, EAC is a very attractive investment destination when it comes to enforcing business contracts.

    1. Resolving Insolvency. Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit.
    How EAC economy ranks on the ease of resolving insolvency
    Regional (Avg) EAC (Avg) SADC (Avg) MENA (Avg)
    Rank 110 117 121
    Resolving Insolvency Score 37.36 34.85 32.69
    Source: Doing Business Report 2019, Regional Profile of EAC, SADC and MENA, World Bank Group

    On the ease of resolving insolvency, EAC average rank is better than that of SADC and MENA. Thus, EAC is a very attractive investment destination when it comes to handling insolvency matters.