Building capacity to help Africa trade better

African economies adopt record number of reforms, says Doing Business 2017 report


African economies adopt record number of reforms, says Doing Business 2017 report

African economies adopt record number of reforms, says Doing Business 2017 report
Photo credit: World Bank

Sub-Saharan Africa economies carried out a record number of reforms in the past year to improve the business climate for local entrepreneurs, says the World Bank Group’s annual ease of doing business report.

Doing Business 2017: Equal Opportunity for All, released today, finds that 37 of the region’s 48 economies adopted 80 reforms in the past year, an increase of 14 percent from the previous year. More than half of the past year’s reforms were implemented by the 17 members of the Organization for the Harmonization of Business Law in Africa (OHADA).

The region’s economies reformed most in the areas of Resolving Insolvency (with 18 reforms) and Starting a Business (15). Nigeria, Rwanda and South Africa, for example, made starting a business easier by introducing or improving online portals. Furthermore, as a part of the OHADA reform agenda, Cameroon, among other things, introduced a new conciliation procedure for companies in financial difficulties. This now makes resolving insolvency easier by allowing additional outlets to settle debts.

Seven economies implemented reforms related to Trading Across Borders. For example, Niger made trading across borders easier by removing the mandatory pre-shipment inspection for imported products. Also, Mauritania made trading across borders easier by upgrading to the ASYCUDA World electronic data interchange system, which reduced the time for preparation and submission of customs declarations for both exports and imports. For example, it now only takes 51 hours in Nouakchott, Mauritania to comply with documentary procedures for exports, compared with 59 hours previously.

As governments continue to take up the reform agenda, Doing Business data shows continued successes on the ground. For example, it now takes an average of 27 days to start a business in Sub-Saharan Africa, compared with 37 days five years ago.

“Although the region still has work to do to make itself more business-friendly, we see steady improvements within various economies in the region,” said Rita Ramalho, Manager of the Doing Business project. “To see a record number of reforms take place in Africa is very encouraging for local entrepreneurs and the global business community alike.”

Mauritius once again ranks best in the region, with an overall Doing Business global ranking of 49. Mauritius performs best in the areas of Protecting Minority Investors and Dealing with Construction Permits, with a rank of 32 and 33 respectively, on those indicators. For example, it takes 156 days to complete the construction permitting processes for simple buildings, compared to 183 days in France and 222 days in Austria.

Ranks of some other economies in the region are Rwanda (56), Botswana (71) and South Africa (74). This year’s report also covers Somalia for the first time, bringing the total number of economies covered globally to 190. Somalia is ranked 190.

For the second consecutive year, Kenya places among the global top 10 improvers. Ranked 92, Kenya implemented reforms in five Doing Business areas. For example, in the area of Resolving Insolvency, the economy introduced a reorganization procedure and introduced regulations for insolvency practitioners. Starting a Business was made easier by removing the stamp duty fees required for the nominal capital, memorandum and articles of association and eliminating requirements to sign the compliance declaration before a commissioner of oaths.

Kenya also streamlined the process of Getting Electricity by introducing a geographic information system which eliminates the need for a site visit, thereby reducing the time and interactions needed to obtain an electricity connection. This reform reduced the time for grid connection by almost two weeks.

This year’s Doing Business report includes, for the first time, a gender dimension in three indicators: Starting a Business, Registering Property and Enforcing Contracts. In Sub-Saharan Africa, 13 economies require additional legal hurdles for women entrepreneurs. For example, six economies (including Cameroon, Benin and Guinea-Bissau) require additional steps for women to formally register a business compared to men.

The Paying Taxes indicator has been expanded to cover post-filing processes, such as tax audits and VAT refund. The report finds that the region has room for improvement in these new areas. In most economies in Sub-Saharan Africa – where it is likely for an audit to take place – taxpayers are exposed to a field audit whereby the auditor visits the taxpayers. This is the case in Botswana, The Gambia, Malawi, Niger, Zambia and Zimbabwe.

Record Number of Economies Carried Out Business Reforms in Past Year

A record 137 economies around the world have adopted key reforms that make it easier to start and operate small and medium-sized businesses, says Doing Business 2017, the World Bank Group’s annual report on the ease of doing business. The new report finds that developing countries carried out more than 75 percent of the 283 reforms in the past year, with Sub-Saharan Africa accounting for over one-quarter of all reforms.

In its global country rankings of business efficiency, Doing Business 2017 awarded its coveted top spot to New Zealand, Singapore ranks second, followed by Denmark; Hong Kong SAR, China; Republic of Korea; Norway; United Kingdom; United States; Sweden; and Former Yugoslav Republic of Macedonia.

The world’s top 10 improvers, based on reforms undertaken, are Brunei Darussalam; Kazakhstan; Kenya; Belarus; Indonesia; Serbia; Georgia; Pakistan; United Arab Emirates (UAE); and Bahrain.

The report cites research that demonstrates that better performance in Doing Business is, on average, associated with lower levels of income inequality, thereby reducing poverty and boosting shared prosperity.

“Simple rules that are easy to follow are a sign that a government treats its citizens with respect. They yield direct economic benefits – more entrepreneurship; more market opportunities for women; more adherence to the rule of law,” said Paul Romer, World Bank Chief Economist and Senior Vice President. “But we should also remember that being treated with respect is something that people value for its own sake and that a government that fails to treat its citizens this way will lose its ability to lead.”

Doing Business data points to continued successes in the ease of doing business worldwide, as governments increasingly take up key business reforms. Starting a new business now takes an average of 21 days worldwide, compared with 46 days 10 years ago. Paying taxes in the Philippines involved 48 payments 10 years ago, compared to 28 now and in Rwanda, the time to register a property transfer has dropped from 370 days a decade ago to 12 days now.

This year’s Doing Business adds gender measures to three indicators – Starting a Business, Registering Property and Enforcing Contracts – finding disparities in 38 economies. Of these, 23 economies impose more steps for married women than men to start a business. Sixteen limit women’s ability to own, use and transfer property. Doing Business finds that, in these economies, fewer women work in the private sector both as employers and employees.

The report also features expansions to the Paying Taxes indicator, to cover post-filing processes, such as tax refunds, tax audits and administrative tax appeals, to better understand the overall tax environment. Since 2004, when Doing Business started, a total of 443 reforms have been recorded under the Paying Taxes indicator, the second highest number of reforms, with 46 reforms implemented in the past year.

However, easing the requirements for Starting a Business is, by far, the most common area for reform, with almost 600 reforms recorded since 2004. Of these, 49 reforms were introduced during the past year.

“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. This is why we collect the Doing Business data, to encourage regulation that is designed to be smart, efficient, accessible, and simple,” said Augusto Lopez-Claros, Director of the World Bank’s Global Indicators Group, which produces the report.

This year’s Doing Business report includes a pilot indicator on public procurement regulations. The report studies procurement in 78 economies across five main areas: accessibility and transparency, bid security, payment delays, incentives for small and medium enterprises and complaints mechanisms. Public procurement represents, on average, 10 to 25 percent of an economy’s GDP, making the procurement market a unique pool of business opportunities for the private sector.

By region, East Asia and the Pacific is home to two of the world’s top 10 ranked economies, Singapore and Hong Kong SAR, China, and two of the top 10 improvers, Brunei Darussalam and Indonesia. The pace of reforms picked up significantly in the past year, with the region’s economies implementing a total of 45 reforms to improve the ease of doing business.

The Europe and Central Asia region was also a major reformer during the past year, with Belarus, Georgia, Kazakhstan and Serbia amongst the world’s top 10 improvers. Europe and Central Asia has consistently been the region with the highest average number of reforms per economy and is now close to having the same good practices in place as the OECD high-income economies.

Business reform activity accelerated in Latin America and the Caribbean with over two-thirds of the region’s economies implementing a total of 32 reforms in the past year, compared with 24 reforms the previous year. The bulk of the reforms were aimed at improving tax payment systems, facilitating cross-border trade and starting a new business, with Brazil implementing the most reforms in the past year.

The Middle East and North Africa region saw the most reforms implemented in the past year since 2009, with 35 reforms in 15 of the region’s 20 economies. Among the reformers, the UAE and Bahrain were among the world’s top 10 improvers. However, the region features the greatest gender disparities, with 70 percent of the economies creating barriers for women entrepreneurs.

In South Asia, five of the region’s eight economies implemented a total of 11 reforms in the past year, compared with nine the previous year. Pakistan, which was among the world’s top 10 improvers, implemented several reforms this past year, as did India and Sri Lanka. The bulk of the business reform activity in the region was aimed at facilitating cross-border trade. However, Afghanistan and Pakistan, stipulate additional hurdles for women entrepreneurs.

Sub-Saharan Africa economies stepped up the pace of reform activity, with 37 economies undertaking a total of 80 business reforms in the past year, an increase of 14 percent from the previous year. For the second consecutive year, Kenya was among the world’s top 10 improvers, while seven economies implemented four or more reforms each in the past year. However, 13 economies in the region stipulate additional hurdles for women entrepreneurs.

“The overarching goal of Doing Business is to enable entrepreneurship, for women and men, particularly in low and middle income countries. That governments around the world are taking up the challenge of improving the business climate, to enable job creation, is worth celebrating and we look forward to continue recording the successes we have seen this past year in the years to come,” said Rita Ramalho, Manager of the Doing Business project.

» Download: Doing Business 2017: Equal Opportunity for All (PDF, 9.46 MB)


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