Uganda Investment Climate Improves - World Bank

Thursday, 3rd March, 2011

UGANDA has moved up seven places to the 122nd position out of 183 economies in the overall “Ease of doing business” rankings, a World Bank report shows.

The World Bank Doing Business survey started in 2002 looks at how business regulations affect domestic small-and-medium companies in the world.

Uganda recorded remarkable progress in the area of getting credit for business, moving to the 46th position from the 109th, an advancement of 63 positions.

“Uganda enhanced access to credit by establishing a new private credit bureau,” reads the report.

It hails the efficiency of the Ugandan court system that has greatly reduced the time it takes to file and serve a claim.

The country also scored highly in the area of closing business through insolvency proceedings.

It was ranked 56th in the category compared to South Africa at 74th, Kenya 85th, Tanzania 113th, Malawi 126th and Rwanda 183rd.

A robust bankruptcy system functions as a filter, ensuring the survival of economically efficient companies and re-allocating the resources of inefficient ones.

A slight improvement was recorded in paying taxes, moving the country from the 63rd to the 62nd position in that area. Similar improvements were registered in enforcing contracts, moving the country from the 116th to the 113th position.

The report indicates that starting a business, dealing with construction permits, registering property, protecting investors, trading across borders and closing a business are areas where the country needs to make improvements.

Ugandan entrepreneurs carry out 18 procedures in 25 days on average to officially launch a business compared to their sub-Saharan counterparts, which carryout 8.9 procedures in 45.2 days for the same purpose.

High income economies such as the UK have only 5.6 procedures and take 13.8 days on average to open a business, indicating that Uganda needs to hasten reform in this area.

The report indicates that 64% of the economies measured by the Doing Business project have made various business reforms this year.

The areas that have recorded highest reforms in the 183 economies surveyed are the easing of business start-up, lightening of the tax burden, simplifying import and export regulations and improving credit information systems.

Kenya, the second biggest economy in East Africa after Ethiopia, improved trade by implementing an electronic cargo tracking system and linking this system to the Kenya Revenue Authority’s electronic data inter-change system for customs clearance, the report indicates.

Similarly, Rwanda has enhanced its joint border management principles with Uganda and other neighbours, leading to an improvement in the trade logistics environment.

Overall, Uganda beat Tanzania, 128th, Sudan, 154th and Burundi 181st. However, the country still lags behind Rwanda 58th and Kenya 98th in the ease of doing business rankings.

Uganda is faulted for making it difficult to start a business by increasing trade licensing fees.

The report indicates that on average, an entrepreneur needs sh665,600 to obtain a trading licence, reserve a name at the office of the registrar and to obtain the five necessary incorporation forms and the three tax registration forms among other requirements.

Uganda’s per capita gross national income reduced by 6.6% to $460 in 2010, from $490.5 in 2008, the report shows.

By Samuel Sanya : The New Vision Newspaper