Burundi is often the neglected little brother of East Africa, but a new report says that it is making major strides in improving its business climate and attracting foreign investment as it works toward integrating fully in the EAC and catching up with its neighbours.
The Doing Business in the East African Community 2012 report by the World Bank and the International Finance Corporation indicates that Burundi — the only EAC economy that has not recorded any business start-up reforms since 2005 — is among the top ten most improved economies to conduct business worldwide in 2010-2011.
In May 2011, Burundi adopted a new company law that makes it faster and cheaper to incorporate a company by eliminating some requirements. The law also requires greater corporate disclosure to the board of directors and in the annual report and made it easier to sue directors in cases of prejudicial transactions between parties.
Burundi also eased the administrative burden of paying taxes for firms by reducing the required frequency for social security contributions from monthly to quarterly.
“As a result of these reforms, Burundi moved up eight places in the ease of doing business ranking,” says the report.
Burundi’s economic growth is expected to accelerate to 4.8 per cent in and 6 per cent by 2014 as the country diversifies its agricultural production and boosts investment in tourism and power production, its government indicated in a February letter to the International Monetary Fund (IMF).
Foreign direct investment (FDI) into Burundi grew four per cent to $104 million in 2011, due to improved reforms on investment procedures, according to the Burundi Investment Agency.
Much of the investment went into tourism, agro-businesses and the processing industry.
The country collected $100 million last year in FDI, a staggering fivefold increase from the $20 million in FDI attracted in 2009 FDI.
The report also indicates that Tanzania’s government made it easier for its traders to import and export cargo — traders in Tanzania deal with fewer documentation requirements and can complete both export and import procedures quicker and at a lower cost than the rest of the EAC members.
To compare, exporting a container from Uganda (37 days, on average) takes twice as long as in Tanzania (18 days, on average), and importing to Burundi entails an additional 30 days when compared to Tanzania.
But these reforms do not necessarily mean that it is now easier for the other East African communities to do business with Tanzania, or with each other. Though it is much easier to start a business in East Africa today, than a decade ago, local entrepreneurs still find it difficult to operate in individual member countries.
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