A new report by the World Bank and the International Finance Corporation (IFC) has found that doing business in Africa has become easier thanks to an increase in the pace of reform to encourage business, jobs, and growth and for the first time Africa has made it into the top three among reforming regions.
The report ranked 175 economies on the ease of doing business and the top-ranked countries in Africa were found to be South Africa (29), Mauritius (32), and Namibia (42). Guinea-Bissau (173) and the Democratic Republic of Congo (DRC) (175) ranked lowest in the region. The DRC also ranked lowest in the world.
The World Bank and IFC said forty-five regulatory reforms in 30 economies in the region reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements. Two-thirds of African countries made at least one reform, the researchers said.
Ghana and Tanzania made the list of top 10 reformers on the ease of doing business across 175 economies. Ghana ranked ninth and Tanzania tenth.
The top 30 economies ranked on the ease of doing business were — in order — Singapore, New Zealand, the United States, Canada, Hong Kong (China), the United Kingdom, Denmark, Australia, Norway, Ireland, Japan, Iceland, Sweden, Finland, Switzerland, Lithuania, Estonia, Thailand, Puerto Rico, Belgium, Germany, The Netherlands, South Korea, Latvia, Malaysia, Israel, St. Lucia, Chile, South Africa, and Austria.
The top 10 reformers were — in order — Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana, and Tanzania. Reformers were those countries which had simplified business regulations, strengthened property rights, eased tax burdens, increased access to credit, and reduced the cost of exporting and importing.
An area pinpointed in South Africa, Botswana, the Central African Republic, Côte d’Ivoire, Mauritania, Seychelles and Swaziland were that they had strengthened property rights by making it easier to transfer titles on real estate.
“More reforms are under way in Africa, and these will show up in next year’s rankings. Several countries are becoming more ambitious. Mauritius, for example, currently ranked 32 on ease of doing business, has set a goal of reaching the top 10 by 2009,” the World Bank and IFC said.
“Such progress is sorely needed. African countries would greatly benefit from new enterprises and jobs, which can come with more business-friendly regulations,” said Michael Klein, World Bank-IFC vice-president for finance and private sector development and IFC chief economist.
“Big improvements are possible,” he said.
The report also found that particular remaining obstacles in the region were complicated and costly business start-up procedures and lengthy import and export procedures.
“For example, in Guinea-Bissau, starting a business takes 233 days and costs double what the average worker earns in a year. In Burundi, it takes 80 days to export goods from the country, at a cost of $3 625 a container load,” the report said.
A survey by South Africa’s Bureau for Economic Research, meanwhile, has found that regulatory constraints, state leadership and capacity, infrastructure deficiencies and costs, and labour skills were key issues hampering business activity, and by extension, economic growth in South Africa.
“It can only be concluded that the government is on the right track by addressing these constraint areas in terms of its ASGISA [Accelerated and Shared Growth Initiative of SA] strategy. However, what our overall survey results suggest, is that great urgency is required, particularly regarding the ‘government’s interface with business’,” the BER said. ‒ I-Net Bridge