BY Patson Chapeyama
Ease of doing business in Africa is one of key areas of focus for regional socio-economic transformation. Africa has still many other barriers for ease of doing business which are at its climax such as corruption, Government economic policies, regional conflicts, terrorism amongst others. However, the continent has reported some positive developments which are worth considering. In this article I will expound, on the subject of the ease of doing business and drill down on various improvements and some statistics across the region.
Ease of Doing business index was launched 14 years ago by the World Bank. The index ranks economies against frontier scores for the ten topics which I will cover in the following paragraphs. This measure shows how close each economy is to global best practices in business regulation. A higher score indicates a more efficient business environment and stronger legal institutions. The nations rankings are based on the following indicators.
Starting a business – This implies the procedures, time, cost and minimum capital required to launch a new business.
Access to Electricity- The procedures, time and cost required for a business to obtain a permanent electricity connection.
Access to Construction Permits – This indicates the time, procedure and cost to build a structure.
Registering property- The time and cost to register a commercial real estate.
Getting credit- This shows the strength of legal rights index, depth of credit information index.
Investors protection – Indices on the extend of extend of director liability and easy of shareholding suits
Tax payments- This indicates number of taxes paid, hours per year spent preparing tax returns and total tax payable as of profit.
Trading across boarders- Number of documents, cost and time necessary to export and import.
Enforcing contracts- This indicates the time procedures and cost to enforce a business contract.
Resolving insolvency- The time, cost and recovery rate under bankruptcy proceeding.
Sub- Saharan African Countries are continuing to implement policies and reforms to improve the business environment. According to Ease of Doing report 2016, the reforms implemented in Sub- Saharan Africa accounted for about 30 percent of the 231 reforms implemented globally. The region also boasted half of the world’s top 10 improvers. The region stood out in implementing reforms under Getting credit indicator . Out of 32 reforms made globally, 14 were carried out in Sub-Saharan Africa, with Kenya and Uganda making astounding progress.
Despite this remarkable improvements, governments in Sub – Saharan Africa will need to continue working on closing the gap in many key areas that impact the ease of doing business for example increasing access to reliable electricity and providing effective commercial dispute resolutions which are the regional lowest scores. Getting access to electricity in Sub Saharan Africa, takes an average of 130 days for a business person. After connection the outage lasting 700 hours per year, making the region the highest duration of electricity outage globally.
According to 2016 rankings, Mauritius led the pack of economies for ease of doing business. It is ranked top in terms of getting electricity, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. It is on number 32 globally. It only takes 152 hours for a business person to pay taxes compared to 261 hours globally.
Rwanda is ranked second best in the region , with a global ranking of 62. Rwanda implemented the highest number of reforms in the region, with six reforms carried out in the past two years. It is on number 12 for registering Property indicator . A decade ago in Rwanda, an entrepreneur used to take 370 days to transfer property. Now it takes 32 days which is less than in Germany. Other progress which was made in Rwanda one of the best in the region is making it easier to start a business by eliminating the need for new companies to open a bank account in order to register for value added tax.
Kenya launched government service centres offering company preregistration service in major towns, reducing the time required to start a business. In the past years, starting a business in Kenya took 54 days. Now it just takes 26 days less than region average. In Senegal the electricity utility improved the regulation of the connection process and lowered the cost by reducing the security deposit. Botswana, with global ranking of 72, South Africa 73, and Seychelles 95 are also among the better ranked economies in Sub- Saharan Africa. Those with least rankings are Eritrea, South Sudan and Central African republic.
Patson Chapeyama is a cutting edge writer and Business start-up consultant. He is the author of bestselling success books and columnist in local and international news platforms such as Newsday (Zimbabwe) and Making Finance for Africa (African Development Bank Ivory Coast) . He is also an editor for a number of local magazines and books. He has been involved in several local and International business startup projects. Can be reached on, +263733551626/ firstname.lastname@example.org.