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The East African : Jan 19th 2015
The EastAfrican BUSINESS JANUARY 17-23,2015 committee with a mandate to report directly to the President. When the index for 2015 was published in October 2014, Rwanda was ranked 46th in the world. Melissa Johns, Advisor Global Indicators Group, Development Economics, the World Bank Group, said this about the ranking: “Rwanda has been an example for emerging economies in sub-Saharan Africa and worldwide. The country has successfully implemented a strategy to improve the business environment for local entrepreneurs that has brought tangible results.” Francis Gatare, CEO of Rwan- benefits of job protection. In 2008, because of the controversies the Ease of Doing Business Report had generated, the Bank asked the Independent Evaluation Group (IEG) to carry out a review of the Report. The IEG’s published its find- ings concluded that the indicators did not have clear association with macro-economic outcomes, that there were important methodological issues to address, that some key indicators needed reform and that the project could only have limited usefulness in guiding business climate reforms in countries. Getting the project right therefore has important implications for economic development strategies for developing countries in very important critical areas. In October 2012, the President of the World Bank Group appointed an independent panel of experts to review a broad range of issues surrounding the Doing Business report. The panel was chaired by Trevor Manuel, a former Minister of Finance and Economic Planning of South Africa and current Minister in the President’s Office. They submitted a draft report in June 2013. The re- port noted that the project is relevant to only a sub-section of the business community, its methodology is flawed, its usefulness in policy formulation limited and in light of this its use of an overall ranking, its communication strategy and even the title of the report needs rethinking. The panel also suggested moving the project to the Research Department of the Bank to better align it to the Bank’s development mandate. The panel published its final evaluation in June 2014 ahead of the October 2014 annual meetings of the IMF and World Bank. Just before the publication of the final report by the panel, CAFOD, a leading member of the Global Call for Action against Poverty, updated its critique of the Doing Business Report. The Report purports to help small domestic businesses. The 2013 World Development Report highlighted the prevalence of self-employment and micro-enterprises in providing a living in developing countries. These small businesses pro- vide up to 90 per cent of jobs and up to 50 per cent of GDP across developing countries. Three major constraints frequently cited Left, traders carry out their business in a Kigali market. Above, a road under construction. In 2013, the Doing Business project selected Rwanda as a case study, examining the regulatory and business legislation environment Picture: File by small businesses in developing countries are corruption, access to credit and property rights. The Doing Business Report does not tackle corruption; access to credit is addressed but inadequately; property rights is addressed but inappropriately, as it promotes formal titling and ease of title transfer, despite increasing recognition that these can, in some circumstances, undermine community rights and access, which are important for the poor’s livelihoods. As has happened in many African countries, land reforms have facilitated land grabs. The DB indicators do not rep- Rwanda has consistently implemented bold reforms to improve the ease of doing business.” Francis Gatare, CEO, RDB resent or serve well the needs of poor micro and small-scale entrepreneurs. The model on which the DB is based is a medium-sized formal business operating in an urban setting. What are the prospects for meaningful reform? The findings of the IEG and the Panel of Experts were wellreceived by Washington. US interests believe that the DB promotes an American model of development and former IFC staff who built their reputations and careers on what has turned out to be a flawed project are opposed to changes and they have powerful allies, including Paul Wolfowitz, former president of the World Bank Group. The Bank has made only minor changes and continues to use flawed and controversial indica- until it’s hosted locally — ≥epo≥t New legislation intended to cur- tail hate speech has also been seen as a factor that makes content providers to go for hosts abroad, so that they can enjoy privacy. “The potential for government in- terventions, such as blocking websites or shutting down operations, were factored in by the Rwandan content producers interviewed,” said the report. Industry experts want the gov- ernment to regulate data and hosting costs. Habineza Musa, one of the pro- prietors of Khenz, an electronic ticketing service whose website is hosted locally, said Rwanda’s hosting companies have limited cloud services, which discourages some content providers. “Its only MTN Rwanda which has cloud services,” he said. The report provides several ex- amples of the positive impact on usage when Google and Akamai made content available locally. For instance, Akamai recently turned on a cluster in Rwanda that increased throughput significantly, and within two months usage increased by 80 per cent. The report recommends several steps to bolster the local hosting environment in Rwanda, in order for local content providers to get the benefits of local hosting. While local content hosting is a key element for creating a vibrant local Internet economy, the report notes that the focus for policymakers, companies, and content entrepreneurs, should be on creating a positive enabling environment that will incentivise local hosting and service development and thereby offer content providers a local choice, rather than imposing measures that artificially require local hosting. Rwandan Internet Service Pro- viders (ISP’s) can purchase international transit for USD 125 per Mbps per month, while this is significantly lower than what was paid in Rwanda before, it is also still significantly higher than the prices paid by ISPs in developed countries. tors as the basis of its rankings. The DB project started with the desire to collect information about the regulatory environment in an easy way by surveying law firms. Doing Business, in other words, did not emerge from an analysis of what investment climate reforms matter most for poverty eradication or small businesses, with indicators based on evidence. It is, therefore, not designed to present governments with a comprehensive blueprint of reforms or even an idea of the most important reforms. Nor does it pretend to take account of the local context, which is important in determining what kinds of reforms are appropriate. Civil society campaigners, NGOs and other stakeholders have argued strongly for an open, transparent process to guide the reform of the DB report to make it work for small businesses and development. Will the World Bank leader- ship put vested interests aside and agree to an open and transparent process? The case of Rwanda In 2013, the Doing Business project selected Rwanda together with Colombia and Latvia to be case studies for that year. The objective of the studies was to examine the regulatory and business legislation environment in those countries. For Rwanda, this culminated in the formation of a regulatory reform da Development Board, sang a similar tune: “Rwanda has consistently implemented bold reforms to improve the ease of doing business. We have achieved this through constant dialogue with the private sector to determine their perspectives and needs.” Contrast this euphoria of World Bank and government officials with the plight of fruit and vegetable vendors around Kimironko Market on November 21 and 22, 2014. On the two days, about 30 women had gathered around the market like they have always done for the past 10 years between 5am and 7.30am, to buy fresh fruits and vegetables from wholesalers. But the Gasabo district authorities had decided to stop them, so they deployed askaris to clos the entrances to the market and chased away the vendors known locally as marato. Those who had come early and had already got their merchandise had to run away leaving their purchases at the mercy of the askaris. The merchandise confiscated from the women was loaded on pick-ups by the askaris and taken way. It was a pitiful sight. Here are poor women trying to earn an honest living being mistreated by agents of the local authorities whose policies earned a high ranking from the DB project. Will there be a time when the radar of the World Bank will capture the plight of these women and the intellectuals at the Bank design an appropriate Ease of Doing Business Index to help the poor souls and their children earn a decent living without molestation? 41 INTERNET COSTS The out of bundle rate for MTN is Rwf53 per Mb for pre-paid customers and Rwf 18,000 for post-paid customers. 250MB costs Rwf3,000, 500MB Rwf5,000, 1GB Rwf8,000 and 5GB Rwf15,000. For Tigo, 1.2GB goes for Rwf800 Rwf for a day’s package and the monthly 30GB is Rwf21,000. For airtel, the weekly 1.5GB costs Rwf2,000 while the monthly 5GB goes for Rwf10,000.
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