Washington, DC — There’s good news for African business in a new report: four of the 10 countries in the world which have shown the most improvement in implementing business reforms are from the continent.
Senegal, Burkina Faso, Botswana and Egypt are among the countries which have jumped the highest number of places in the rankings of business reformers in the last year, according to Doing Business 2009, a World Bank/International Finance Corporation (IFC) report released today.
And sub-Saharan Africa is the second-best reforming world region in facilitating the conduct of business.
The report offers an annual assessment of how easy it is to conduct business by surveying 10 key indicators that correspond to the various stages of the life of a business: starting it up, dealing with construction permits, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing it down.
Report data shows that 28 sub-Saharan countries enacted 58 positive reforms in 2008. The numbers go even higher when North African countries, grouped in the report with the Middle East, are included.
Mauritius is Africa’s top business reformer. It ranks at 24th place out of 181 countries on the global index, well ahead of most European Union countries, including G8 members such as France, Germany, and Italy.
This is the first time a country south of the Sahara has appeared in the top 25 countries. Economic powerhouse South Africa comes in second, at 32nd place.
This year’s findings are “good news for Africa,” Sabine Hertveldt, senior private sector development specialist at the IFC in Washington and co-author of the report, told AllAfrica in an interview.
“Analysis shows that in countries that do well on these rankings there is also much more welfare and economic growth,” she said.
The survey relies on published laws and voluntary submissions by lawyers, businesspeople and government employees involved in regulatory processes affecting the private sector.
“The idea behind… [the survey] is to show how complex business regulations can be a burden for economic growth,” Hertveldt said. Governments around the world pay attention to the rankings, she added, because investors look at them before deciding to get involved in an economy. “No country would like to be ranked in the bottom third of the global list.”
Nevertheless, 16 countries – including Algeria, Comoros, the Democratic Republic of Congo, Ethiopia, Guinea Bissau, Sudan and Uganda – implemented no major reforms. Eight countries took a step backwards by making things more difficult in at least one area. They included Benin, Gambia, Cape Verde, Gabon, Equatorial Guinea and Zimbabwe.
English-speaking African countries fared better than their French- and Portuguese-speaking counterparts. For example, of the 10 top-ranked countries on the continent, only Tunisia does not have English as an official language. And only three of the bottom 10 African countries – Eritrea, Guinea Bissau, and Sao Tomé y Principe – do not have French as an official language.
On the global index, nearly half of the 34 worst performers are members of the Organization for Harmonization of Business Law in Africa (OHADA), a 16-nation bloc that gathers former French colonies plus Guinea Bissau and Equatorial Guinea under a uniform business code. While other countries can easily amend their business laws to adapt to a changing environment, changes within OHADA must be agreed upon by all member states, which vary greatly in size, economic specialization and per-capita income.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
Hertveldt noted: “[These] countries have based their laws on French laws, and France has since updated its laws, but sometimes certain countries are still stuck with these laws from the past.” In contrast, she said, “countries at the top of the rankings have the ability to change their laws quickly.”
The report highlights improvements made in countries that have recently emerged from conflict: Liberia, Rwanda and Sierra Leone have improved their rankings, taking advantage of the peace dividend to generate notable economic momentum.
Hertveldt said improvements in rankings attracted investors. “IFC has done simulations of what [investors] would have earned if they had invested in the smaller countries that are improving the most, [and found that] they would have earned 30 percent more than they earn now by just going to big countries,” she said.
No information was available for Libya, Somalia and Western Sahara.
