Hilary Joffe
11 September 2008
Johannesburg — SA's efforts to make it easier for businesses to start up and to pay tax have lifted its ranking from 35 to 32 on the World Bank's annual Doing Business index.
But SA, which was at 28 three years ago before it fell behind economies faster to reform, has still not regained its place among the top 30. The only African country in that list is Mauritius, which this year jumped from 29 to 24 of the 181 countries the study measured.
The index tracks how business friendly the regulatory environment is in each country, especially for small and medium-sized businesses. It is based on 10 indicators covering the time and cost of starting and operating a business, trading across borders, paying taxes and closing a business.
Singapore topped the rankings again this year, followed by New Zealand. The Democratic Republic of Congo was, once again, at the bottom. Even Zimbabwe was higher than the Congo, though it slid from 154 to 158 as it implemented legislative changes that made it even more difficult to do business.
The World Bank and its sister company, the International Finance Corporation (IFC), have found that some of the highest returns on investment come from countries that are reforming rapidly.
"We find that the most profitable locations in which to invest are countries that are reforming their climates," the IFC's David Bridgman said.
Though most African countries still had low rankings, Africa had a record year for regulatory reform, with 28 countries implementing 58 reforms.
Senegal, Burkino Faso and Botswana were among the world's top 10 reformers.
Bridgman said this was good news for South African companies inves ting aggressively in the rest of Africa. "There will be some very profitable investments in a few years' time."
Botswana is the third-highest ranked African country, at 38, after it strengthened the rights of minority shareholders and changed regulations on business start-ups and trade.
SA's jump up the rankings was thanks to Companies Act amendments that made it easier to register a new business, as well as the removal of the regional services council levies and the reduction in the rate of secondary tax on companies.
SA is ranked second in the world on ease of getting credit. It ranks well on protecting investors and paying taxes, but is very low down in the rankings for ease of employing workers and trading across borders.
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