Thursday, 16 July 2015

Rwandan competitiveness recognised in global business indices; Burundi and DRC lag behind

Rwanda has performed solidly on two recent indices measuring the business environment of countries around the world.  In the Foreign Policy magazine's "Baseline Profitability Index", the country was placed eighth globally out of 110 countries, in an index aiming to measure the ability to get profits from foreign investment in a country.  It comprises of three parts: generation of profits, erosion of profits, and repatriation of returns.  There is more discussion here.  The DRC was third from last, due to low scores on generation and erosion of profits.  As I mentioned in my last post, the security situation in the east of the country presents a severe challenge for running a profitable business there.  Burundi was not assessed.

The second index is the "Global Competitiveness Index" from the World Economic Forum, aiming to measure the productivity of a country.  Rwanda was in 62nd place out of 144 countries.  Arguably, the overall moderate placing is misleading, since for low income countries like Rwanda, the index consists of components like health and macroeconomic environment, while for richer countries the index consists of components like financial market development and innovation.  The indices for countries with very different incomes per person are therefore only partially comparable.  If we only look at the 37 low income countries with similar index components, Rwanda is top.  Burundi is in 32nd position.

It is worth treating any indices with a great deal of caution, and using them as rough guides, on average.  As well as the issues of index construction and comparison, the original data sources may not be honest or accurate, and the collectors may be biased or influence the outcomes in some way.

Thanks to the Rwandan New Times for pointing out these reports.

No comments: