Sub-saharan Africa primed for business
NEW YORK — The World Bank Group has, in a new report, laid credence to the economic transformation underway in sub-saharan Africa saying that the region had the highest number of business regulatory reforms globally in 2013/2014 and 74 percent of the economies in the region improved their business regulatory environment for local entrepreneurs.
Released annually, the Doing Business report examines regulations that support businesses in the concerned economies including start-up and operations, taxes, trading across borders and resolving insolvency. Countries are ranked based on how they perform in a set of such criteria.
The report titled “Doing Business 2015: Going Beyond Efficiency,” which covers 189 countries, posits that Benin, Cote d’ivoire, Senegal, the Democratic Republic of Congo and Togo rank among the top 10 improvers globally as they had significantly boosted business regulation in the past year.
According to the report, all countries in the sub-saharan African region have promoted the environment for small and medium sized businesses since 2005 with Rwanda leading the way in this effort and Mauritius and Sierra Leone coming in second and third. Also, about 11 countries in the region have featured on the list of the 10 global top improvers with the likes of Cape Verde, Burundi, Cote d’ivoire and Rwanda appearing multiple times.
“Sub-saharan African economies have come a long way in reducing burdensome business regulations. Our data show that Sub-saharan Africa accounts for the largest number of regulatory reforms making it easier to do business in the past year, with 75 of the 230 documented worldwide. Yet despite broad regulatory reform agendas, challenges persist in the region, where busi- ness incorporation continues to be costlier and more complex on average than in any other region,” said Melissa Johns, Advisor, Global Indicators Group, Development Eco- nomics, World Bank Group.
The World Bank Group has made some notable improvements in this year’s report. For the 11 economies, the report, for the first time, col- lated data for a second city. For instance, data was acquired from Nigeria’s Kano city in addition to the commercial hub, Lagos. Also, overall ranking is now based on the “distance to frontier” score where each economy is ranked based on how close it is to global best practices in business regulation; therefore, a higher score suggests a more efficient business environment and stronger legal institutions.
Globally, Singapore tops the scale as easiest place to do business in the world. Other top economies with high business regulatory ranking includes Australia, Finland, Hong Kong, Denmark, New Zealand, China, the Republic of Korea, the United States and the United Kingdom.
While 80 percent of countries in the study improved their business regulations last year, only about one-third moved up in the rankings. However, the gap between the bestand worst-performing countries continues to narrow as countries improve their business climates, said Rita Ramalho, manager of the Doing Business Project.
“It’s easier to do business this year than it was last year, than it was two years ago or 10 years ago,” she said. “We see that the economies that score the lowest are reforming more intensely, so they are converging toward the economies that do the best.”
For example, in 2005 it took an average of 235 days to transfer property in the lowest-ranked countries and 42 days in the top-ranked countries — a difference of 193 days. The gap now has narrowed to 62 days (around 90 days for the lowest-ranked and less than 40 for the top-ranked).
The report measures the ease of doing business in 189 economies based on 11 business-related regulations, including business start-up, getting credit, getting electricity, and trading across borders. The report does not cover the full breadth of business concerns, such as security, macroeconomic stability, or corruption.
Rwanda is leading the way in small and medium sized businesses.