World Bank: Record number of business reforms carried out in Africa

28 October 2016

Economies across sub-Saharan Africa have adopted a record number of reforms to upgrade their business environment over the past year, says the World Bank in its Doing Business 2017, the fourteenth edition of the report released on Tuesday.

“Although the region still has work to do to make itself more business-friendly, we see steady improvements within various economies in the region,” emphasises Rita Ramalho, manager of the Doing Business project.

Published yearly since 2002, the Doing Business report’s objective is to contribute to continuous improvement of the conditions under which business actors operate around the world, and especially in low-income countries. To this end, it measures business regulations and the way they are implemented in a total of 190 countries.

Last year saw 37 of sub-Saharan Africa’s 48 countries undertake a total of 80 reforms, which represents close to a third of all the reforms adopted globally. This constitutes a 14 percent increase from the previous year. The report also notes that sub-Saharan African economies are improving their Doing Business score at a pace that is three times that of high-income economies.

“To see a record number of reforms take place in Africa is very encouraging for local entrepreneurs and the global business community alike,” continued Ramalho.

The document, however, warns against excessive enthusiasm, as sub-Saharan Africa continues to be the region with the less business-enabling conditions. For instance, transferring property takes on average 2 months, while the time necessary to do so in OECD economies is only 22 days.

“Government policy plays a huge role in the daily operations of domestic small and medium-sized firms and onerous regulation can divert the energies of entrepreneurs away from developing their businesses or innovating,” underlined Augusto Lopez-Claros, director of the World Bank’s Global Indicators Group, which is in charge of preparing the report.

Best performers, areas of reform

This year again Mauritius – with a rank of 49 – is the best performer among sub-Saharan African economies, followed by Rwanda (56), Botswana (71), South Africa (74), and Kenya (92). For the first time, the 2017 Doing Business report covers Somalia, which occupies the very last place in the ease of doing business ranking.

Commenting on Kenya’s performance, which climbs 21 places and ranks among the top 10 improvers for the second consecutive year, Kenyan Cabinet Secretary for Ministry of Industry, Trade and Cooperatives Adan Mohamed indicated that Kenyan authorities intend to keep on improving the national business climate. “This is a marathon and we will not be complacent until we attain position 50 by 2020,” he said.

With 18 and 15 reforms respectively, the areas of Resolving Insolvency and Starting a Business are those where the progress recorded by economies of the region is the most significant. For instance, countries such as Nigeria, Rwanda, and South Africa have facilitated the process of starting a business through the introduction or improvement of web portals.

Another area which saw a significant number of reforms introduced by African governments is trade facilitation, with seven countries having adopted measures related to the Trading Across Borders dimension.

In particular, Ghana, Niger, and Rwanda removed their requirement for pre-shipment or pre-arrival inspection for imported products. Madagascar, Mauritania, and Togo undertook reforms aimed at facilitating cross-border trade by setting up or improving electronic customs systems, which reduce time for preparing and submitting documents both for imports and exports. Uganda put in place the Malaba One-Stop Border Post, also expected to reduce the time spent at customs.

This year’s Doing Business report also introduced some gender-related elements in the Starting a Business, Registering Property, and Enforcing Contracts areas. Regarding this gender dimension, the document indicates that 13 economies in the region impose additional obstacles to doing business for women entrepreneurs.

ICTSD reporting.

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