Ease of doing business improving, but more room for improvement

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AFRICAN countries made it easier for small and medium-scale enterprises (SMEs) to do business in 2017-18, according to a World Bank report, but several remain among the world’s worst performers.

The importance of improving African economies by making it easier to do business was reflected by a wave of reforms across the continent, according to the World Bank’s annual Doing Business report, but the large divide reflects the importance of political stability to the process.

Published late 2018, Doing Business 2019: Training for Reform covered the period from 2 June 2017 to 1 May 2018, revealing that the five best-performing African countries when it comes to ease of doing business rankings were Mauritius at 20, Rwanda at 29, Morocco at 60, Kenya at 61 and Tunisia at 80.

Those countries have been largely politically stable and the obvious benefits of that were reflected by the fact that seven of the 10 worst-performing countries overall are African, ranging from Republic of Congo at 180, through Central African Republic, Democratic Republic of Congo, South Sudan, Libya and Eritrea, down to Somalia at 190 – all countries which have suffered significant problems with governance and security in recent years.

North and South

Countries throughout the continent are clearly taking notice of the need to become more business-friendly and the pace of change was reflected in sub-Sarahan Africa, with the region setting a record for reforms for the third year in a row, with 107 measures introduced to improve the ease of doing business for SMEs, up from 83 in 2016-17.

Rwanda pursued the biggest programme of change, with seven reforms, including to payment services, property registration and insolvency law, areas in which the bank noted that the country already performed well. Mauritius and Kenya made five reforms apiece, there were multiple small and medium-sized enterprises (SME)-friendly measures in Nigeria, Ethiopia and South Africa, while Ivory Coast and Togo also took multiple positive steps.

Santiago Croci Downes, programme manager of the bank’s Doing Business Unit said: ‘The significant acceleration in the reform effort over the past year and spanning several years is a testament to the strong impetus for change in in the region. A more efficient business environment, in which private enterprise thrives, is a fundamental building block for job-creation and growth.’

The bank noted that economies throughout the Middle East-North Africa region had made 43 business reforms designed to improve the ease of doing business for SMEs, ‘a record number’ and an increase from 29 the previous year.

Djibouti was the biggest riser in the entire report, jumping 55 places from 154 to 99. In a statement, the bank noted that Djibouti’s reforms included ‘creating a one-stop shop to make business start-ups easier; making property transfer less costly by reducing the registration fees and digitising its land registry; and improving access to credit by broadening the scope of assets that can be used as collateral,’ as well as protecting minority investors and tackling insolvency and contract enforcement issues.

Egypt made its most reforms in a decade – five, including corporate transparency, credit access, tax reforms and better insolvency procedures, while Morocco and Tunisia made four reforms each.

Downes said: ‘The significant acceleration in the pace of reforms in the Middle East and North Africa is an encouraging demonstration of countries’ commitment to nurture entrepreneurship and enable private enterprise. Going forward, policy-makers should focus on adopting global best practices in areas where they are most needed.’

The region struggles when it comes to access to credit, but does well for electricity, registration of property and paying taxes, although all of these figures are skewed by including the Middle East.

 

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