News / Africa

World Bank Praises Burundi’s Regulatory Reforms

The government of Burundi President Pierre Nkurunziza is introducing regulatory reforms to help attract investment. (AP Photo/Jason DeCrow)The government of Burundi President Pierre Nkurunziza is introducing regulatory reforms to help attract investment. (AP Photo/Jason DeCrow)
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The government of Burundi President Pierre Nkurunziza is introducing regulatory reforms to help attract investment. (AP Photo/Jason DeCrow)
The government of Burundi President Pierre Nkurunziza is introducing regulatory reforms to help attract investment. (AP Photo/Jason DeCrow)
William Eagle
The World Bank says Burundi has made strides in reducing regulation and improving its business climate. The East African country ranks fifth among economies that improved the most in the bank’s annual study of economic reforms,  called Doing Business 2013. The first four top improvers are Poland, Sri Lanka, Ukraine and Uzbekistan.

The survey evaluates governments according to their ability to ease stumbling blocks in creating and operating businesses.  Among the hurdles are dealing with construction permits, registering property, getting credit, protecting investors, paying taxes and facilitating cross-border trade.

Of the 185 countries surveyed Burundi ranks159th, 13 places higher than last year.  In last place is Central African Republic.

The report shows progress in three categories: starting a business, dealing with construction permits and registering property.

One Stop Shop

It shows that in Burundi, it used to take about eight days to begin a business, compared to an average of 34 days for the rest of the countries in sub-Saharan Africa.

That compares to 32 days for Kenya, 58 for the Democratic Republic of the Congo, 26 for Tanzania and three for Rwanda.

But Rachidi Radji, the World Bank’s country manager for Burundi, said it takes even less time today.

"One concrete, well-known and appreciated thing around here is what they call a One Stop Shop," he says.  "What that means is that today, you can actually open a business in 24 hours, compared to 25-40 days as in the past. "

Thanks to the One Stop Shop, Burundi has eliminated requirements to have company documents notarized, to have information on new companies published in a journal and to register new companies with the Ministry of Trade and Industry.

Only four steps are required to register a business, half the number needed on average by the rest of sub-Saharan Africa.  

They include submitting all documents; obtaining a registration certificate; and registering the company with the Department of Work Inspection in the Ministry of Labor, and the National Institute for Social Security. It also includes making a company seal needed by some banks to issue loans. 

"In the past," says Radji, "it was a nightmare. People said it was too complicated [to start a new business]. If you are a foreign company, you needed a local guide to help you get [through the process, to tell you] which minister you had to go to and so on. Today, you have a unique place where people just get together, the rules of the game are clear. In the past, [registration] cost you roughly 200 dollars. Today the cost average is 45 dollars."

The Doing Business report also cites advances in addressing another issue that can stifle investment:  the time needed to issue construction permits. The report measures the days and procedures required by a company to build a warehouse, connect it to basic utilities and register the property.

To solve the problem, Burundi has made it easier to get a permit by eliminating a clearance from the Ministry of Health and reducing the cost of a required geotechnical study. And it has cut the number of procedures for obtaining a permit from 24 to 21and the number of days needed from 137 to 99.

The government has also made it easier to register property, which is needed as collateral for loans. Investors now need only 64 days to register, compared to 94 previously.  The World Bank says it’s now easier to transfer property because of a new time limit on processing transfer requests.

As a result of the reforms, the report finds that it’s easier to register property in Burundi than in neighboring Central African Republic, Tanzania and Kenya. But it finds that registration is not as fast as in Rwanda and the Democratic Republic of Congo.

World Bank partnership

The World Bank is helping the reform effort with the Burundi Investment Climate Program, which works with the government to meet the needs of the business community and simplify taxes for small and medium enterprises. It’s also helping harmonize Burundi’s trade rules and regulations with those of the East African Community, which includes Rwanda, Uganda, Kenya and Tanzania.

"Burundi is a very small country," says Radji.  "The only way for it to develop will be to be connected internationally starting with the East African Community, which is a quite sizeable market. Beyond that, it can benefit by joining other bilateral trade arrangements. But for the time being, the emphasis has first of all been on laying the foundation (for growth and investment), taking on regional and then more broadly international opportunities. "

Not all reviews of Burundi’s reform efforts are positive.

Allegations of corruption

Transparency International’s Corruption Perception Index rated it near the bottom of 174 countries in terms of corruption. http://cpi.transparency.org/cpi2012/in_detail/

It placed Burundi ahead of Chad, Sudan and Somali, but behind Zimbabwe, DRC, Kenya, Rwanda and Uganda.

The State Department’s Investment Climate Statement for 2012 says the president of Burundi has taken the lead in fighting corruption as part of his strategy for good governance. He established three units: a special Anticorruption Brigade, an Anticorruption Court and a Court of Auditors.

Burundi is also a signatory to the UN Anti-Corruption Convention and the OECD Convention on Combating Bribery and is part of the East African Anti-Corruption Authority.

But the State Department says an under sourced civil service and police force means laws and regulations prohibiting corrupt practices are rarely enforced.

It says it’s too early to tell how successful the government’s anti-corruption program will be. 

However, it says no foreign firms have lodged complaints against the Burundian government under any of these agreements. And no major U.S. firms have cited corruption as an obstacle to direct investment.

Rashidi of the World Bank says his organization’s programs are focusing on corruption and good governance.

He compares economic reform, which include the fight against corruption, to a marathon. Despite any setbacks, he said the runner must keep going and going.

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