July 2010

The countries of East Africa are joined in more ways than simply the airline carriers that connect them, or the shores of the various lakes in the region. There are commonalities of culture, language and aspects of history that link the people and the region together. Yet it goes beyond this too. The fences have been torn down, the “borders have been scrapped” and opportunities have been created for the regional investor – large or small to make use of. This month (July 2010) the EAC region celebrates a new beginning, a new historical event, with the birth of the common market. To many organisations operating in the region, the opening of the borders has been a day of build up and anticipation to take advantage of with new opportunities brought about as a result. Some critics argue that it will take a while yet for the benefits to really show and others feel that the efforts are small by comparison to what could have been done. There is another group who hold a far more positive outlook, and here there are expectations that businesses and individuals from other countries with a passion for seeking out opportunities may now look to Uganda as a place of interest to manufacture goods or to set up businesses and import goods that are regionally manufactured dispensing of the previously onerous duties and tariffs. The air is again alive with the scent of competition and entrepreneurship, and this is not even including the imminent changes in Uganda as a result of the oil.

As if by co-incidence, but probably well executed in anticipation of new investors looking at opportunities in Uganda and other countries in East Africa, The World Bank Doing Business Team in May 2010 released a report on Doing Business in East Africa………..,<link>

The Doing Business report, published annually by the World Bank rates 183 countries on the ease of doing business and examines aspects of the regulatory and legislative frameworks in place in the countries researched with a view to establishing an index that all countries can be measured by to determine one common way of measuring the ease of doing business. Aspects such as time taken to register a company, or transfer a property into your name are considered. So too are items such as liquidating a company to recover debt. Closer to Compuscan’s core business the ‘Doing Business Report’ has a specific section that has become more commonly known as “Getting Credit” and here credit bureaus within a market are closely examined. The extent of data sharing in vertical markets (like Uganda’s case where only Bank of Uganda regulated institutions share data) is examined against other countries where full inclusive data sharing across vertical markets happens. This typically occurs in more advanced credit economies. The legislative environment (Regulations in the case of Uganda) and the borrower’s rights to ensure that they can view and challenge their data are also closely examined in the Doing Business Index.

In the report published In May the World Bank have used the currently available Doing Business indicators and have ranked the EAC countries (making up the region) and the results of the overall EAC Doing Business indicators are shown here.

Note : The information in the above table (and the EAC Doing Business report) is derived from the research conducted during 2008 and 2009 for the preparation and publication of the “Doing Business Report 2010”, published in 2009. Many aspects of change and reform have occurred in Uganda’s credit environment that are expected to influence the Getting Credit component of the Doing Business Index let alone other reforms that may have been made.

Compuscan have been working closely with the World Bank Doing Business research team to ensure that up to date information is made available to the research department that puts these reports and findings together. Compuscan has been hard at work to ensure that the “Getting Credit” section is properly updated to hopefully result in a fair reflection of all the efforts of all the hard work everyone has done to date to make Uganda’s credit bureau the world class system that it has become. The next “Doing Business Report” is slated to be published in September 2010 and we will be looking at the “Getting Credit Section” very closely to see how all the stake holder’s respective efforts have contributed to Uganda’s overall competitive position.

So the country benefits, and Uganda is put on the map with the World Bank as having done something, but why the interest from Compuscan?

An improvement in the doing Business Index means an improvement in the way that certain investors consider opportunities in an economy.

More investors                                   =                      More economic activity

More economic activity                     =                      More banking products

More banking products                    =                      More personal / business loans

More personal / business loans    =                      More repayment information

More repayment information           =                      More information at Compuscan

More information at Compuscan   =                      Better quality loans in Uganda

For an economy to grow through access to finance (being one area), and to support the type of competitive environment that both exists and that has the potential to grow rapidly, lenders need good quality accurate information. In growth periods and foreseen growth periods Compuscan actively continues to report on good quality debt performance and continually aims to ensure that the lender is able to lend with increasing levels of confidence.