Document: Cutting the cost of red tape for business growth in Rwanda

Description

This study draws on SBP’s comprehensive regulatory review methodology, which encompasses the assessment of regulatory costs, and the identification of key administrative blockages and delays that contribute to these costs. The study was designed to:

  • identify regulations and regulatory areas that Rwanda’s formal sector firms find troublesome
  • highlight key administrative and procedural problem areas contributing to the regulatory burden, as experienced by businesses
  • create a credible baseline of quantified regulatory compliance costs for firms of different sizes and in different sectors, and
  • encourage public debate and provide sound evidence to inform policy decisions about regulatory reform.
It is important to note that this study is based on a survey of businesses. The results reflect the experiences, cost estimates and perceptions of the business people interviewed. Validation interviews were undertaken with a number of government officials in the data analysis stage, but the primary voice throughout the survey is that of businesses of all sizes, operating in Rwanda. Compliance cost studies go well beyond those surveys that report only on perceptions. In SBP’s studies, businesses are asked to estimate the real costs of complying with regulations in terms of time, internal resources, and fees to external agencies and consultants, based on their experience over a defined period – usually the past 12 months. This highlights those regulations that businesses identify as particularly costly or troublesome to comply with; and it also establishes a baseline, against which changes can be measured over time. The methodology therefore provides a well-informed, evidence-based estimate of how much it costs in cash and resources (including staff time) for firms to comply with regulations. It is also important to understand the extent to which the administration of regulatory provisions can raise compliance costs unnecessarily, or create negative experiences for business people. By analysing the types of regulations identified by businesses as particularly troublesome and costly at some level of detail, it is possible to identify administrative bottlenecks, delays, and other sources of frustration, as a basis for practical changes to ease the burden of compliance. The survey surfaced a range of issues at the forefront of business peoples’ minds when asked to identify the most significant factors that contribute to their compliance costs. The findings do not constitute procedural audits as such, but will certainly help government departments and agencies to focus on priority areas for closer investigation and reform.

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