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Rwanda overtakes Kenya as business haven in E. Africa

Discussion in 'Kenyan News and Politics' started by cerezo, May 25, 2010.

  1. c

    cerezo Senior Member

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    World Bank says country is ahead of EAC members in efficient business registration.


    By JIM ONYANGO

    Tuesday, May 25 2010


    Rwanda has overtaken Kenya as the best destination for investment in East Africa, a new World Bank survey says.

    The study picks out a sluggish pace of business regulation and taxation reforms as the key factors that have helped to reduce Kenya's appeal.

    Kenya, the biggest economy in east Africa, has been ranked as the second best business destination in the five member East African Community and the 95th most attractive destination for capital out of 185 countries globally in a report that names Rwanda as the country that has made major strides in business registration.

    Uganda, Tanzania and Burundi follow Kenya in that order as the most rigid nations for starting businesses in the region.

    Little appeal to foreign direct investments may not necessarily cause potential investors to shun Kenya but has the ability to give new business people the reason to look to emerging markets such as Rwanda, Mauritius and Botswana, analysts have said.

    Kenya should push through legislative measures to create a conducive business environment for foreign capital, the experts have said.

    Kenya started instituting reforms in licensing but these have since slackened allowing Rwanda, Mauritius and Botswana to take over as the most reform minded nations across Africa, the report says.

    "Business regulatory reforms should continue throughout. It's not something you do in one year and the second year you stop" said Sylvia Solf, the World Bank's programme manager for Doing Business, Financial and Private Sector Development.

    The Doing Business survey indicates that starting a business in Rwanda takes just two procedures while entrepreneurs must go through 11 to 18 steps in Kenya and other EAC member states because of a decentralised process.

    "In Kenya, entrepreneurs interact with numerous agencies including the registrar of companies, revenue authority, and Ministry of Trade, Ministry of Labour, social security fund, health authority and town planning departments as well as commercial banks."

    In Rwanda, "the entire company registration is conducted at a one-stop shop established at its commercial department," says the Bank.

    Analysts are urging Kenya to put reform agenda back on track.

    "Rwanda and Mauritius are fairly small economies compared to Kenya which still has a huge potential…we should use such World Bank reports to correct where we have failed to enable us climb the ladder quickly," said Mr Sammy Onyango, the managing partner at consultancy firm Deloitte.

    The search for a new constitution to dismantle bureaucracy, relax taxation regimes and create political stability are key to reaching a conducive environment to attract new investors, add analysts.

    Countries were judged under 11 indicators including business application, tax registration, access to credit, investor protection, and procedures for closing business.

    The World Bank says the poor show by Kenya, Uganda, Tanzania and Burundi has worked to drag down East Africa's ranking to 116 out of 183 economies.

    "If each East African country were to adopt the region's best practice for each of the Doing Business indicators, east Africa would rank 12th" says the World Bank.

    The survey comes at a time when the EAC legislative arm is set to begin its sittings in Nairobi on Tuesday where Tanzania's President Jakaya Kikwete is expected to address.

    The low ranking of the EAC market goes against the region's efforts to consolidate efforts and attract foreign investment into a bloc of about 126 million people.

    "We take the report seriously. There is no point to be defensive. Its true that some of the EAC countries have not done well in the 11 business indicators of the Doing Business survey" said Mr Juma Mwapachu, the secretary general of the East African Community.

    "A number of reforms have been initiated by the EAC and within two years we hope to achieve the 12th position."

    Five business associations representing the member states met in Nairobi last week in a kick-off conference aimed at reviewing the challenges that have constrained the region from attracting business.

    Domesticate reforms

    The region opens up into a Common Market on July 1 to allow for the free movement of labour, capital and goods across the borders but business associations are seeing many rough edges that must be made smooth.

    Lack of harmonised tax regimes and goods standards, weak dispute resolution system, and slow implementation of decisions of the EAC secretariat are some of the weaknesses of and threats to the market, which they say will slow the pace of integration.

    Kenya's EAC Affairs permanent secretary David Nalo says reforms started in East African Community aimed at reaching micro-economic convergence among the five member states would lead to better ratings once national governments domesticate those reforms.

    "All the five member states have committed to reading the budget on the same day as will be witnessed on June 10; you will also witness harmonised taxes across the region. We are at a stage where we do not want to look at individual nations but at East Africa as a trading bloc" said Mr Nalo.
     
  2. Ab-Titchaz

    Ab-Titchaz Content Manager Staff Member

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    This is a challenging piece of information to our Kenyan brothers and sisters.
     
  3. Ab-Titchaz

    Ab-Titchaz Content Manager Staff Member

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    Meanwhile....

    Watch out Kenya, Tanzania is catching up

    Linus Gitahi

    Posted Wednesday, May 26 2010 at 07:07

    As Kenya dithers on which way to go on governance with the constitution, how to implement Vision 2030 and how the various pillars of development can be kick started, its neighbour to the south is making steady progress.

    As the chart below shows, Tanzania is exporting to Kenya almost as much as it is importing. For a long time the gap was so huge that many Kenyans wondered whether anything good can ever come from down south.


    [​IMG]

    The sad thing, most of it is food related exports to Kenya! This is set to get worse with the possible export of natural gas from Tanzania to Kenya.

    Statistics on GDP growth show that if Tanzania maintains its growth at 6% and Kenya continues to average 4%. This trend sees Tanzania becoming the biggest economy in East Africa in two years. Awesome!
    (With Uganda's recent oil discovery and possible exports to Kenya, it's only a matter of time before that economy too overtakes Kenya, but let's keep that for another day).

    What should Kenya be doing?

    First is to examine its traditional source of competitive advantage. I am persuaded that it was based on Nairobi and Kenya in general being made the manufacturing hub for the region since independence.
    Almost all key British and American multinationals set up here for serving the east African market. These include Cadbury's, Nestle, Reckitts, Unilever, Wrigleys, Johnson Wax, GSK, and many more.

    However, with the opening up of alternative markets, all these companies have relocated all or most of their manufacturing elsewhere, particularly Egypt and South Africa, and in a few cases India. They export their products directly to Tanzania and Uganda from those factories.

    This therefore calls on Kenya to re-evaluate its source of competitive advantage viz a viz its neighbours. Let me suggest a few:
    1. Stop importing food. Instead, invest enough in terms of irrigation and encouraging farming in the semi arid areas by diverting waters (which at the moment is freely flowing into the Indian Ocean). This should be stuff for the current budget and not some future time "when funds become available".
    2. Support homegrown SMEs in a real and practical way. Explore differentiated tax regimes driven by a transparent criteria, particularly the export orientated ones, to fill the void that is being rapidly created by exiting multinationals.
    3. Energy and infrastructure… These two components, besides the raw materials, have the greatest impact on a company's cost of goods in Kenya. The cost of energy per unit is about US13 cents in Kenya compared to say US3 cents in Egypt. Truth be said, Kenya is investing greatly on infrastructure but we have a long way to go to reducing the cost of energy in a sustainable way.
    4. Creating Political/economic certainty. The uncertainty about the constitution will set Kenya back if not resolved soon. Kenya must not come out as a nation that is not sure, that is not certain about what ought to be. It's important that this issue is settled once and for all.
    5. Finally, Kenyans must generally start driving things Kenyan. From genuine attractions for tourists that are Kenyan to selling mukimo and ugali at the Hilton to promoting Kiswahili as a language, Basically, promoting national psyche and pride. This will, among other things in the fullness of time, significantly improve the remittances from the Diaspora. No country ever developed by turning the other cheek or basically imitating others on core culture issues such as food, clothing, language etc. At a minimum, Kenya needs to excel in one to drive its image and distinction as a nation
    However, with the opening up of alternative markets, all these companies have relocated all or most of their manufacturing elsewhere, particularly Egypt and South Africa, and in a few cases India. They export their products directly to Tanzania and Uganda from those factories

    Daily Nation:
     
  4. Mwana wa Mungu

    Mwana wa Mungu JF-Expert Member

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    good for Rwanda. hope our Tz learns something out of that. as for kenya, their medicine yet to come... they will be chasing our tails in the near future.
     
  5. Smatta

    Smatta JF-Expert Member

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    It aint bad for a change, you've been chasing our tail ever since (and we are the 13th poorest nation in the world :) despite the fact that you are endowed with lots of minerals which can make an average Congo civilian blush... You shouldn't compare yourself with Kenya, aim higher you have the potential.
     
  6. K

    Kilembwe JF-Expert Member

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    Thank you smatta I think this is a genuine advice, TZ let us not start opening champaign for the statistics provided, that will only come true if we have the determination of making it true, otherwise it will remain a good day dream, TZ let us pull our pants a little bit harder! What does it Rwanda have, we dont have so that we can turn our economic dream into reality?
     
  7. Mwana wa Mungu

    Mwana wa Mungu JF-Expert Member

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    its just a matter of time brother smatter!, just recently we signed a contract with orphis and a UK company for oil and gas in mtwara for $7 billion, go to michuzi you will see the thing, you remember the russian deal $6 billion, there are many other things we are coming up....Tanzania is not a 13th poorest country in the world, it is not even within the 40 poorest countries to tell you. i have the data i will give you if you want. kenya is going down everyday and we wish you good journey to the tail!

    http://www.energy-pedia.com/article.aspx?articleid=140467

    hope this helps you. http://issamichuzi.blogspot.com/2010/05/mkataba-wa-utafutaji-mafuta-watiwa.html
     
  8. Ab-Titchaz

    Ab-Titchaz Content Manager Staff Member

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    Thank you for the advice, Bw. Smatta..at least for once u didn't come out spitting fire.
     
  9. Zogwale

    Zogwale JF-Expert Member

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    Kama wame-overtake Kenyans then Tanzania imepitwa kwa the supersonic speed! Kweli huu wimbo wa East Africa Federation/Community utatumaliza, tutajeuka soko vilivyo!!! Yaani uchanganye bidhaa fake toka Asian Countries, halafu tena za Wakenya na za Rwanda, then we are kwishnei!
     
  10. c

    cerezo Senior Member

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    Mwana wa Mungu,

    This information should inspire us to aim higher. Like one said, What does Rwanda have, that we don't have? With all our natural resources, we can become a tiger nation if we sincerely have the political will.
     
  11. Mwana wa Mungu

    Mwana wa Mungu JF-Expert Member

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    hamna lolote hata hivyo, hawa wamagaribi wakitaka kumexploit mtu, huwa wanamsifia kwanza, akiingia laini tu, wanakula kichwa. tz ilishawai kuwa inasifiwa hivyohivyo, walipoona kuwa hakieleweki, wakahamia Rwanda. wanawatia moyo tu.
     
  12. Smatta

    Smatta JF-Expert Member

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    te he he he he... Mwana wa Mungu wacha kunifurahisha, kuna uwezekano kuwa you are very naive ama uko hapa kwa comic releif, either way you are one funny dude, fanya research kaka ndio ujue East Africa tuko ranked wapi kwa umaskini duniani.
     
  13. K

    Kilembwe JF-Expert Member

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  14. K

    Kilembwe JF-Expert Member

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    Oooh sorry TZ rank 18th out of 80 poorest countries worldwide!
     
  15. Z

    Zhule JF-Expert Member

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    You talk sense sir. The news paper put it right that it is because the USA and British companies which were sourcing in Kenya and selling to Tanzania are now doing it directly from else where (egypt, SA or India) and not Tanzanias effort has resulted something tangible. The paper also put it right that it is only a matter of kenyan increasing food production. If that happens Tanzania will just go back to where it belongs "lagging behind kenya".
     
  16. ADUI

    ADUI Member

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    Kweli nimeamini, usimuamshe aliyelala...
     
  17. Mwana wa Mungu

    Mwana wa Mungu JF-Expert Member

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    akiamka utalala wewe, na ndo inayoenda kutokea
     
  18. K

    Koba JF-Expert Member

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    sometimes a fool doesnt know hes the fool....get real!
     
  19. M

    Mokoyo JF-Expert Member

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    Natamani na sisi kama nchi tungejifunza kwa hawa majirani zetu! Tukijipanga sisi ni zaidi

    Ila baadhi ya viongozi hapo kwetu ni matajiri kuliko nchi. Can you imagine?
     
  20. Nyaralego

    Nyaralego JF-Expert Member

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    One of the things bringing Kenya down is beaurocracy and corruption with impunity. Maybe a lesson can be learnt by the Kenyan policy makers and beaurocrasts.
     
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