There is no doubt that Africa is blessed with natural resources and untapped wealth. The continent is fertile soil for investors and businesses to succeed. Africa is rapidly becoming a hub of growth, according to a recent report by the World Bank. However, when it comes to the ease of doing business, some African countries are doing better than others.
The ease of business is an index published by the World Bank. It is a term that ascertains that a particular region or continent is conducive for doing business. The aggregate score includes different parameters such as access to constant electricity, registering property, getting credit, and many more.
In an article by McKinsey & Company in 2010, it was predicted that North Africa and Sub-Saharan Africa are now in an economic renaissance after many years of unproductivity. However, there has been a massive growth for businesses in all industries in Africa—from FinTech to transportation. Although African countries aren’t yet among the top 10 on ease of doing business globally, it is worth celebrating the progress made so far. Here are ten African countries on the World Bank’s ease of doing business list in 2o21.
Factors The World Bank Considers To Rank Countries
There is a long list of parameters that the World Bank considers in ranking ease of doing business. This includes;
- Starting a business
- Dealing with construction permits
- Getting electricity
- Registering property
- Getting property
- Getting credit
- Protecting minority investors
- Paying taxes
Seychelles is located in Sub-Saharan Africa and has a Gross National Income (GNI) per capita of $15,600. Seychelles experienced an improvement in the ease of starting a business, dealing with construction permits, getting electricity, and registering a property in the recent ranking. The country ranked 100th and had a doing business score of 61.7 in the recent ranking. Apart from Seychelles’ mind-blowing tourism attractions, they have a diverse economy. Also, the government of Seychelles has spent time and resources on creating an effective communication system within the country. Consequently, this connects it with other countries in Africa and the rest of the world.
With a population of over 7 million people, Togo ranked 97th and had a doing business score of 62.3 in the latest ranking. Togo has made registering properties easier. Registering property experienced a 17% increase compared to the previous ranking. Other ranking parameters Togo improved on include resolving insolvency, getting electricity, dealing with construction permits, starting a business, and getting credit. Also, Togo created an online portal for business registration, lowered fees for construction permits, and streamlined the property registration process. All these steps placed it on number 9 on ease of doing business in Africa for the second year in a row.
Although, in the recent ranking, Botswana experienced a slight decrease in the registering property index, its improvement in getting electricity and resolving insolvency makes up for the loss. Thus, Botswana ranked 87th and had a doing business score of 66.2 in the latest ranking. Botswana has implemented reforms like establishing online tax payment systems, streamlining inspection systems in construction permits, and many more.
Zambia performed outstandingly on the recent ranking despite being a lower-middle-income category country. Zambia experienced significant improvement in index parameters like resolving insolvency, protecting minority investments, and getting electricity. Also, Zambia established reforms that enabled debtors to obtain post-commencement finance and increase shareholders’ rights and role in major corporate decisions for minority investors. The country with a population of over 17 million ranked 85th with a doing business score of 66.9 in the latest ranking.
#6: South Africa
South Africa ranked 84 with a doing business score of 67.0 in the recent ranking. The country made significant progress in enforcing contracts but did not do enough in protecting minority investors. The government of South Africa went a step further in improving the enforcing contract index by establishing a special court dedicated to hearing commercial cases.
The North African country with around 11 million people ranked 78th and had a doing business score of 68.7. Tunisia made a measurable amount of progress in indexes like starting a business, paying taxes, and registering properties. Some of the Tunisian government reforms include establishing a risk-based tax audit system, merging more services into a one-stop shop, reducing fees for starting a business, and creating a transparent property registration scheme that publishes tracking statistics for property transactions.
The Sub-Saharan African country ranked 56th and had a doing business score of 73.2. While the trading across index dropped by 0.7%, Kenya experienced a tremendous increase in other indexes like paying taxes, resolving insolvency, protecting minority investors, getting electricity, and many more. Overall, Kenya improved by over 2% compared to their previous score. The Kenyan government introduced online payment for taxes and also improved existing electricity infrastructures.
Morocco, located in North Africa Region with around 36 million people, ranked 53th and had a doing business score of 73.4. Furthermore, reforms like the improvement of its online platform for construction permits, expanding the use of pre-built transformer for improving the Getting Electricity index, and many more reforms placed Morocco within the top 3 in Africa.
Rwanda ranked 38th on the global list and had a doing business score of 76.5. Rwanda improved the previous reforms around registering properties. Also, it improved the ease of starting a business by replacing electronic billing machines with free software for value-added tax invoices. Furthermore, Rwanda keeps blazing economically and has carried out the most reforms since the inception of doing business 16 years ago.
Mauritius has been a good investment site for several investors over the years due to its political and social stability. Mauritius ranked 13th out of 190 countries globally and had an 81.5 doing business score on the latest ranking. Why is Mauritius an excellent place to invest? First and foremost, the country is peaceful and ranks the 23rd world’s most peaceful country worldwide. Also, Mauritius has one of the best democracies in Africa. The government has one of the fastest-growing economies in Africa and has a very generous tax regime. Lastly, Mauritius has a well-developed network of infrastructure and a bilingual workforce.
The more African governments strive to improve the ease of doing business, the more investors they will attract. Also, improving these indices will help budding entrepreneurs in Africa to successfully grow their businesses. Did any country on the list surprise you? Does the list represent the reality in your country? Feel free to share your views in the comment box below.
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