How easy is it to start a business in East Africa?
By Dominic Omondi
| July 21st 2021
It is the dream of many business people to take their business across the border, and thanks to the East African Community (EAC), a regional economic community consisting of five countries, movement of people and capital is not restricted. The countries include Kenya, Uganda, Tanzania, Rwanda and Burundi.
Ideally, you should be able to work or do business in any of these countries.
But which is the most lucrative hunting ground for a new business? There are no straightforward answers to this question.
Starting a successful business depends on a myriad of factors. However, the World Bank’s Ease of Doing Business Index together with other reports has tried to make it easier for you to make this decision.
Probably, you already know the answer. Rwanda is the easiest place to start a business in the region, ranking at position 35 in the World Bank’s Ease of Doing Business.
It takes less than a day to obtain an electronic signature from the Rwanda Development Board. The e-signature contains the user name and password which are used to log into the system for the registration process.
Once the account is set up, a registration number is generated to enable users to proceed to online registration. This registration number is also the tax identification number (TIN) and VAT number of the company.
Online registration which is free takes a day. The documents needed for submission are duly completed online application; proof of identity for each signatory of the memorandum of association form; and the name of the designated chairperson of the board of directors.
You should then obtain and install software for VAT invoices at no charge. This will take a day.
You will register employees at the Social Security Office online. The process takes less than a day and there is no charge.
The last step is to obtain a trading license (“patente”). Again, this takes a day. Corporates pay a fee. However, small and medium enterprises are exempt from fees for a period of two years.
Burundi is the second after Rwanda, having nearly the same process. However, unlike Rwanda which also ranks highly in the ease of doing business generally (position 38, highest in the region) Burundi ranks badly in the ease of doing business at 166.
Kenya is the third one on the ease of starting a business at position 129. On the ease of doing business, Kenya is at position 56.
In Kenya, the first step is to reserve a name using the e-Citizen portal. This might take an average of two days.
The next step is to apply for company registration, PIN, NSSF and NHIF through the online e-Citizen portal. This will take another 14 days.
After that, it will take you another two days to register for value-added tax (VAT) and with the Pay As You Earn (PAYE) Income Tax.
If you are in Nairobi City, you are expected to get a new unified business permit. This is can be applied online. The unified business permit has the single business permit, fire clearance certificate, advertising signage, health certificate and food hygiene into one permit. Each of these have different charges.
You will take another three days to register with the National Industrial Training Authority (NITA); two days to make a company seal; and a day register the workplace with the Directorate of Occupational Safety and Health Services at a cost of Sh5,000.
Tanzania is fourth at position 162 and Uganda fifth at position 169 in the ease of starting a business.
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