USAID Conducts Business Environment Assessment in Rwanda
In February 2008, USAID sent a team of experts to conduct a Business Climate Legal and Institutional Reform (BizCLIR) Diagnostic in
Rwanda. Significant business environment reform is already underway in Rwanda, and the Diagnostic team was impressed with the public and private sector engagement in the reform efforts. In particular, considerable steps are being taken to pass a number of new commercial laws, although much remains to be done to ensure successful implementation of a modern commercial law system.
At the conclusion of the Diagnostic, a roundtable was held to present the initial findings of the Diagnostic and to allow public and private stakeholders an opportunity to comment on and discuss these initial findings. The Agenda for Action report was published in June 2008 covering all ten of the World Bank’s Doing Business areas. Three of these areas – Getting Credit, Employing Workers, and Protecting Investors – were emphasized in the report and during the roundtable discussions.
The report outlined over 130 recommendations to improve Rwanda's business environment and highlighted 26 as priority recommendations. These prioritized recommendations included establishing a pledge registry system and supporting public awareness and training on good business practices through existing institutions such as the Private Sector Federation (PSF) and the Center for Support to Small and Medium Enterprises in Rwanda (CAPMER).
Immediately following the BizCLIR Diagnostic, an expert made recommendations on the draft company law on behalf of USAID to allow opportunities for revisions to the draft law before it was considered for passage by Parliament.
To learn more about the Rwanda BizCLIR Diagnostic, or other countries' diagnostics, please visit the BizCLIR website at
http://www.bizclir.com/cs/countries/africa/rwanda.
Tanzania Begins to Build Secured Transactions Registry
The recent BizCLIR assessment of the Doing Business Environment in
Tanzania highlighted a number of issues negatively influencing the business environment. One specific example noted was the lack of access to credit for businesses and households, particularly in rural communities, which substantially hinders any lending or borrowing. In order to increase access to credit, the assessment noted that any reform should "establish a unified and streamlined system of secured transactions."
USAID (Washington), in conjunction with the mission in Tanzania, launched the Secured Transactions Reform Pilot Project under BizCLIR Technical Assistance to address this issue. The initial trip to Tanzania was very successful and the insights gleaned are guiding the implementation of both substantial legal reform and a modern registry system designed to work in conjunction to considerably increase access to credit in Tanzania. A Monitoring and Evaluation program is also currently being designed to make sure that the impact of this reform is captured and understood.
By improving the legal/regulatory framework for secured transactions, and drastically improving the level of information that creditors have available to assess risk, Secured Transactions reform enables bankers to "Say Yes" to potential borrowers more often. Instituting Secured Transactions Reform would allow individuals and SMEs (Small and Medium-sized Enterprises) to use collateral to secure loans and increase lender/borrower confidence in ways that simply would not be possible otherwise. The time and cost to address property disputes should be drastically reduced as well. Once implemented, Tanzania's secured transaction legal framework and pledge registry can serve as a model for the region and beyond.
