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Forty African states have seen improvement in their ease of doing business ranking in the World Bank’s 2017 report

Forty African states have seen improvement in their ease of doing business ranking in the World Bank’s 2017 report

“The opportunity to find a job or develop one’s business idea is crucial for most people’s personal satisfaction. It creates a sense of belonging and purpose and can provide an income that delivers financial stability. It can raise people out of poverty or prevent them from falling into it,” says the Doing Business 2017 report published by the World Bank.

But the role played by governments is critical to establishing well-regulated and functioning markets. “If the land registry is not required to provide reliable information on who owns what, for example, the efficacy of the property market is undermined making it difficult for entrepreneurs to acquire property, put their ideas to practice and create new jobs. Without well-regulated credit information sharing systems it is difficult for credit markets to thrive and be more inclusive. A properly functioning tax system is also key.”

Doing Business

Doing Business 2017: Equal Opportunity for All, a World Bank Group flagship publication, is the 14th in a series of annual reports measuring the regulations that enhance business activity and those that constrain it. Doing Business presents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies—from Afghanistan to Zimbabwe—and over time. Doing Business measures aspects of regulation that enable or prevent private sector businesses from starting, operating and expanding. These regulations are measured using 11 indicator sets: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labour market regulation.

The report identifies Mauritius, Rwanda and Morocco as the easiest places in Africa to do business, a reflection of their success in implementing reforms.

Doing Business 2017? expands the paying taxes indicators to cover post filing processes—tax audits, tax refunds and tax appeals—and presents analysis of pilot data on selling to the government which measures public procurement regulations. This year’s report expands further by adding post filing processes to the paying taxes indicators, including a gender component in three of the indicators and developing a new pilot indicator set on selling to the government. Also for the first time Doing Business collects data on Somalia, bringing the total number of economies covered to 190.

Doing Business in Africa

According to the report, almost three-quarters of African countries saw an improvement in their business environments in 2016, with sub-Saharan African economies improving their overall scores at a rate of three times greater than high income OECD economies. Although coming from a lower base, the number of sub-Saharan countries that are engaged in one or more business regulatory reforms since 2005 has more than doubled to a total of 37 economies in this year’s report.

The report identifies Mauritius, Rwanda and Morocco as the easiest places in Africa to do business, a reflection of their success in implementing reforms. Despite falling seven places from 42nd globally in 2016, Mauritius retained its place as ‘best in Africa’ for the 10th year in a row since entering the report in 2006.

Since 2005, Rwanda, which ranked 56th globally and second in Africa, has implemented 47 reforms across all indicators, in line with the government’s Vision 2020 development strategy designed to transform Rwanda by raising income per capita to $1240 by 2020.

Morocco, which ranks third in Africa and 68th globally, improved its protection of minority investors by requiring greater corporate transparency and clarifying ownership and control structures.

Tanzania (+3.89), Kenya (+3.72) and Malawi (+3.28) were deemed the most improved in Africa and have increased their ease of doing business score from 2016 and moved up the global rank, placing 132nd, 92nd and 133rd respectively.

Although it placed second in the most improved for ease of doing business, Kenya has also improved across more areas measured by Doing Business than any other African country.  The country updated its insolvency framework and introduced a geographic information system on power availability.

Despite the reforms implemented, on average Africa continues to include economies with the least business-friendly regulations. Seven of the bottom 10 economies globally included in the report are in sub-Saharan Africa, and Somalia (190th), Eritrea (189th) and Libya (188th) ranked the lowest. According to the report, neither Libya or Somalia have implemented one reform included in any indicator since 2005.

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