Cinderella Story in EAC

The recent 2010 Doing Business in East African Communities report was not very optimistic when looking at the East African Community; many countries rankings, which range from 1 to 183 based on the ease of doing business in the respective economies, dropped from 2009 to 2010. Kenya, the primary economic power in the region moved down nine rankings, from 84 in 2009 to 95 in 2010. Other notable downfalls include Uganda and Tanzania, each respectively falling in rankings from 2009 to 2010.

Although the majority of the EAC declined in rankings, Rwanda emerges as the Cinderella story. Rwanda, often thought as a state full of corruption and danger, has proven the critics wrong. Not only did Rwanda’s ranking improve from 143 in 2009 to 67 in 2010, but it has also showed significant improvement in the Transparency International’s Corruption Perception Index 2009. Other countries in the Region have not seen these same gains in both corruption and rankings.

Rwanda’s gains are most likely from its economic reforms since 2004, leading the EAC with 19. The main goal of these reforms is to make business easier in its country. Doing Business has recorded a total of 46 reforms since 2004, and Kenya is second to Rwanda in reforms with 12.

Rwanda’s reforms include measures to facilitate trade across boarders and property registration. Throughout the EAC there is the notion that regional integration will lower the cost of doing business, and according the The East African, in 2009 EAC Secretary General Juma Mwapachu stated that it was “unnecessarily high,” and it reduced the international competitiveness of the EAC. Another issue facing the EAC was noted by President Jakaya M. Kikwete of Tanzania, stating, “we produce what we don’t consume and we consume what we don’t produce.”

The EAC has many problems that it will have to overcome to increase the ease of doing business within the region. Rwanda has emerged as a Cinderella story, possibly paving the path for other states in the EAC and for its future. Reforms must continue in the years to come, in addition to improving infrastructure, the workforce, and public institutions.