This mid-term survey on the ease of doing business in the East African Community (EAC) for 2024 received a total of 300 responses, of which 201 were valid for analysis. The survey targeted companies involved in trade in goods and services across the EAC region. Out of the 201 responses, 113 were from companies engaged in trade in goods (56%), and 88 were from those involved in trade in services (44%).
Based on the responses from trade in goods and trade in services, the overall ease of doing business in the EAC was rated as Moderate, with an average rank of 3.22. This indicates a deterioration of 0.13 points compared to the 2023 rank of 3.09. Download Ease of Doing Business in EAC Report 2024
The enterprises’ perception of the ease of doing business in 2024 shows a decline in all eight (8) indicators in comparison to 2023. The decline was as follows: Government Operations1 by 0.19, Removal of Trade Restrictions2 by 0.18, Regulations for Starting and Operating a Business3 by 0.17, Trade Finance4 by 0.14, Trading Across Borders5 by 0.14, Making Cross border payments6 by 0.14, Infrastructure Development7 by 0.04 and Ease of Paying Taxes8 by 0.02. The perceived decline in the ease of doing business across all the proposed indicators can be attributed to the emerging and ongoing issues that have had a significant impact on the ease of doing business in EAC. Notably, destructions caused by heavy rains in some of the Partner States (El Niño), global shocks caused by shortage of the dollar as the common currency of exchange; the ongoing Ukraine conflict; and the Red Sea attacks and the discontent with the budget / tax measures in Kenya and Tanzania.
In comparison to 2023, the following sub-indicators showed highest decline: Accessing information on business fees, levies, and charges for startups3, Affordability of interest rates4, Implementation of the EAC Common External Tariff (CET)5, Ease Receiving payments from the Government1, Securing public/government tender1, Import and export procedures5, Resolution of Non-Tariff Barriers (NTBs)2 and Application of harmonised EAC quality standards5.
The ranking of the eight indicators was as follows: Ease of Government Operations (Rank 3.60), Trade Finance (Rank 3.60), Removal of Trade Restrictions (Rank 3.55), Trading Across Borders (Rank 3.26), Ease of Paying Taxes (Rank 3.23), Making Cross-Border Payments (Rank 2.87), Regulations for Starting and Operating a Business (Rank 2.83), and Infrastructure Development (Rank 2.80). From the companies’ rankings, Making Cross Border Payments and Regulations for Starting and Operating Businesses were Moderate, while it was Hard to Remove Trade Restrictions, obtain Trade Finance, and Government Operations. In comparison to 2023, the improvements of perceptions on ease of doing business in 2024 included Ease of Paying Taxes in particular Compliance with Tax Requirements improved by 0.26 points from 3.08 in 2023 to 2.82 in 2024, Infrastructure Development in particular Access to Affordable Voice and Data Calls slightly improved by 0.04 points from 2.61 in 2023 to 2.57 in 2024, Recognition of Professional Qualification across the region slightly improved by 0.05 points from 3.23 in 2023 to 3.18 in 2024, and Availability of Foreign Currencies (USD) improved by 0.02 points from 3.46 in 2023 to 3.44 in 2024. The improvements are likely driven by the automation of tax payment systems making it easier for businesses across the region to comply with tax requirements, Tanzania piloting the EAC One Network Area (ONA) for voice calls at the end of 2023 and monetary measure taken by the Kenyan Government to increase supply of the dollar thus, appreciation of Kenyan Shilling against the dollar in 2024.
Companies also reported positive progress in the business environment in the region, characterized by continuous government reforms and commitment to enacting business-friendly laws, favourable political and economic stability in the region, enhanced government collaboration with the private sector in policy formulation and investments through Public-Private Partnerships (PPPs), increased investment in infrastructure and human capital, active government participation in regional and continental integration processes.
Companies also reported high costs and limited availability of trade finance particularly foreign currency for trading and affordable interest rates for loans, difficulties in government operations including securing government tenders and obtaining tax refunds, persistent trade restrictions including non-tariff barriers and administrative bans, limited access to infrastructure development particularly in transport and communication networks as the main constraints to the ease of doing business in the EAC.
The key recommendations to improve the ease of doing business in the region, include Public-Private Dialogue with the Government to fast-track payments to companies for goods and services procured, enhancing access to information on business fees, levies, and charges for startups, and the full implementation of the Common External Tariff. Improving the affordability of interest rates for loans, eliminating Non-Tariff Barriers and trade restrictions, harmonizing and adopting product standards, and enhancing border efficiency to facilitate trade processes. Additional recommendations include expediting the implementation of EAC commitments such as the Single Customs Territory (SCT) and Common Market commitments, investing in infrastructure, particularly transport and communications networks, addressing language barriers by translating official documents into French, and establishing sector-specific Public-Private Dialogues (PPDs) to tackle trade and investment constraints more effectively.