Five SADC countries are ranked in this year’s Doing Business index. The index, released in May, is a ranking system created by the World Bank Group to indicate the regularity environment of businesses. A higher ranking, which is indicated by a lower numerical value, specifies a stronger protection of property rights, and vice versa.
The World Bank has annually been measuring the quality of worldwide business environments, for the past 15 years, with its Doing Business ranking system. Over 190 economies have been scrutinised on criteria including electrification and ease of business creation, the tax burden and the protection of property rights.
Doing Business measures regulations of the labour market (which has not been included in this year’s ranking) and for 11 areas in the life cycle of a business. Ten of these areas have been included in this year’s ranking on the “ease of doing business”. They are:
- Starting a business.
- Obtaining a building permit.
- Connecting to electricity.
- Transferring ownership.
- Getting credits.
- Protecting minority investors.
- Payment of taxes.
- Cross-border trading.
- Enforcing contracts.
- Resolving insolvency.
Following this criteria here are the top 10 African economies, as ranked in the 2019 Doing Business report.
The World Bank has revealed that Mauritius is positioned in 20th place worldwide, and in 1st place in Africa with a score of 79.58. The country is ranked 20 places higher this year, from its position in the 2018 Doing Business report.
With a score of 79.58 points (out of a total of 100), Mauritius has improved its ranking in eight of the 10 previously mentioned business lifestyle areas.
The ranks occupied by Mauritius under these various indicators are:
- Start-up (21st).
- Obtaining a building permit (15th).
- Connection to electricity (34th).
- Registering property (35th)
- Access to credits (60th).
- Protection of minority investors (15th).
- Payment of taxes (6th).
- Cross-border trade (69th).
- Execution of contracts (27th).
- Resolving of insolvency (35th).
The World Bank revealed that Mauritius has also implemented four reforms:
- Outsourcing of sewerage design and connection.
- Facilitation of cross-border trade.
- Simplification of ownership transfers – with a reduction of transfer costs.
- The introduction of a recourse mechanism for the publication of service standards.
Rwanda emerged in the top 30 countries of the World Bank’s Doing Business report for the first time with a score of 77.88. Globally, Rwanda is 29st on the “ease of doing business” ranking, compared to the 41th position in last year’s report. In addition, the country has made 52 reforms over the last decade, bringing significant improvements to the environments of business and investment. Notable reforms include that of improving the building permit process by increasing quality control during construction, with the introduction of risk-based inspections.
Rwanda has made the task of registering goods easier by using online services that facilitate the registration of property transfers. The country has an effective land registry that takes seven days to transfer the property, and it costs 0.1% of the property value. On this indicator, Rwanda is now ranked 2nd in the world.
Rwanda has also strengthened the protection of minority investors by facilitating the prosecution of directors. This has clarified ownership and control structures, and demanded greater corporate transparency. Tax policy reforms have also facilitated the payment of taxes by establishing an online system for filing and paying taxes.
Additionally, the report also states that Rwanda has facilitated the execution of contracts. This has been achieved by making judgments in commercial cases, rendered at all levels, accessible to the general public through publication on the judicial website.
The ranks occupied by Rwanda under these various indicators are as follows:
- Start-up (51st).
- Obtaining a building permit (106th).
- Connection to electricity (68th).
- Registering property (2th)
- Access to credits (3rd).
- Protection of minority investors (14th).
- Payment of taxes (35th).
- Cross-border trade (88th).
- Execution of contracts (78th).
- Resolving of insolvency (58th)
This report ranks Morocco in 60th position worldwide, with a score of 71.02 points. Therefore, Morocco confirms its position as a leader in North Africa, ahead of: Tunisia (80th), Egypt (120th), and Algeria (157th).
The kingdom has also managed to climb to the top rank among the Middle East and North African (MENA) countries – behind the United Arab Emirates (11st) and Bahrain (62th), and, for the first time, ahead of the Sultanate of Oman (78th according to the same report). On the African continent, Morocco maintained its 3rd position with a score of 71.02 out of 100.
The ranks occupied by Morocco under these various indicators are:
- Start-up (34th).
- Obtaining a building permit (18th).
- Connection to electricity (59th).
- Registering property (68th)
- Access to credits (112th).
- Protection of minority investors (64th).
- Payment of taxes (25th).
- Cross-border trade (62nd).
- Execution of contracts (68th).
- Resolving of insolvency (71st)
“Morocco has also maintained its position in the second-best category of countries in terms of ‘ease of doing business’ in the world”, says the department of the Head of Government. They explained that the World Bank has created five categories of countries of which the first includes mainly the Organisation for Economic Co-operation and Development (OECD), countries.
On the basis of the filed reforms, presented by Morocco in July 2017 to the World Bank, it was observed that only two reforms were counted. Regarding the business start-up indicator, the World Bank took into account the reduction of company creation time in Morocco. This followed the abolition of affixing physical stamps with the use of the Integrated Taxation System. As for indication of the payment of taxes, the Doing Business 2018 report welcomes the facilitation of payment procedures through simplifying and generalizing all payment procedures.
Kenya came in 4th position among African countries in Doing Business report 2019 by coming in at the 61st position globally with a score of 70.31 points compared to the 2018 report when it was ranked 80th.
“The improvements are driven by the government and the private sector in the business environment. Last year, Kenya delivered the highest number of business-related reforms on the African continent,” said Adnan Mohammed, secretary of the industrialisation cabinet.
In fact, Kenya has gained 53 positions over the last three years. The country’s position in the 2010 Doing Business report remains its best performance in the last 15 years. To put into perspective, Kenya was ranked 113th in 2016.
Because the Kenyan government, in addition to the private sector, wants to be in the top 50 countries by the year 2020, Kenya is working hard to facilitate the process of creating and doing business in different economic sectors. The 2019 report states that Kenya has improved the reliability of electricity by investing in its distribution lines and transformers. Additionally, they have also created a power station that restores power when necessary. This improvement has also helped to give easier access to credit information, through the positive involvement of banking institutions.
The ranks occupied by Kenya under these various indicators are:
- Start-up (126th).
- Obtaining a building permit (128th).
- Connection to electricity (75th).
- Registering property (68th)
- Access to credits (122th).
- Protection of minority investors (11th).
- Payment of taxes (91th).
- Cross-border trade (112nd).
- Execution of contracts (88th).
- Resolving of insolvency (57th)
Moreover, Kenyan authorities have made the process of paying taxes easier by creating an online service, iTAX. This provides people with the opportunity to fill in and pay corporate income taxes online. Instead of moving from one place to another to collect different documents, the country has also started a company that offers a “single window”. This decreases the amount of time that it takes to collect necessary documents.
Tunisia, is now ranked at 80th position globally with a score of 66.11 points in Doing Business report 2019, and has risen 8 places from its spot at 88 in the 2018 report. Following behind Morocco, the cradle of the Arab Spring is the 2nd country in Doing Business in North Africa.
According to the Doing Business study, the score achieved by Tunisia is the result of several factors. Some areas that have been evaluated include:
- obtainment of a building permit
- creation of businesses
- connection to the electricity grid
- registration of property
The report also states that setting up a business in Tunisia requires an average of eleven days and nine administrative procedures. Because of these conditions, Tunisia is ranked 90th out of 190, with a score of 63. Additionally, businesses would have to go through eighteen administrative procedures, which would require an average of 96 days. This puts Tunisia dealing with construction permits in with a score of 77.
The Doing Business study highlights the taxation problem in Tunisia with a score of 133. In fact, an average of nine tax payments must be made annually, representing 64.1% of the company’s profit. In addition, Tunisia’s export and import activities are ranked at the 101th position with a score of 70.50 / 100. Between documents and procedures, approximately 107 hours are needed for an import operation.
With a score of 66.03, the 2019 report ranks South Africa 82nd globally. This country has always been the most powerful country in Africa in terms of touristic attraction, as millions of tourists visit South Africa each year to enjoy its beauty. The government is working hard to reach the same status in attracting foreign investors by providing them with various facilities to do business in. This area is now evolving rapidly, and it offers real business opportunities to investors from all nationalities.
The government offers a full-range of investment incentives for domestic and foreign investors. These incentives are managed by the Department of Trade and Industry (DTI) and various other agencies. They can be sorted into the following 10 categories:
- Development finance.
- Measures to promote employment.
- Export facilitation.
- Human resources.
- Skill development.
- Investment aid.
- Supplementary funding grants.
- Sectoral measures.
- Tourism development.
- Measures for small, medium, and micro-enterprises.
In the area of protecting minority investors, the report states that South Africa is ranked 24th worldwide.
The ranks occupied by South Africa under these various indicators are:
- Start-up (134th).
- Obtaining a building permit (96th).
- Connection to electricity (109th).
- Registering property (106th)
- Access to credits (73th).
- Protection of minority investors (23rd).
- Payment of taxes (46th).
- Cross-border trade (143nd).
- Execution of contracts (115th).
- Resolving of insolvency (66th)
While it was marked as the 71st country in the global World Bank’s 2017 report, Botswana lowered its status in the 2018 report. It is now ranked at 86th globally and 7th in Africa with a score of 65.40.
Economists explain that this drop was caused by the lack of interest to invest in the diamond industry. Investors assume that Botswana does not need international investments. The results show a noticeable decline in the rates of investments from 2015 to 2016 (25% to 30%).
The ranks occupied by Botswana under these various indicators are:
- Start-up (157th).
- Obtaining a building permit (31st).
- Connection to electricity (133rd).
- Registering property (80th)
- Access to credits (85th).
- Protection of minority investors (83rd).
- Payment of taxes (51th).
- Cross-border trade (55th).
- Execution of contracts (134th).
- Resolving of insolvency (81st)
Generally, Botswana’s mining sector attracts the majority of its foreign direct investments. However, investments in the service sector (insurance and banking) are expanding rapidly. Foreign Direct Investment (FDI) comes mainly from the Southern African Customs Union and the European Free Trade Association, as well as from Canada and Zimbabwe.
According to the Doing Business report of 2019, Zambia has dropped from the 85th position 2018 to the 87th position 2019 globally with a score of 65.08. Zambia is also among one of the world’s top 10 economies with the most notable improvements.
The report indicates that Zambia has implemented three regulatory reforms as well: Firstly, the government empowered access to credit by launching the new Movable Property Tax Act. Secondly, the country established a new unified collateral registry. And lastly, the country implemented a reform that reduces the tax rate of transferring property.
As a result of implementing a web-customs data management platform, aimed at facilitating importing and exporting activities, the country has also been recognised for improving its cross-border trading.
The ranks occupied by Zambia under these various indicators are as follows:
- Start-up (102th).
- Obtaining a building permit (70th).
- Connection to electricity (128th).
- Registering property (150th)
- Access to credits (3rd).
- Protection of minority investors (110th).
- Payment of taxes (17th).
- Cross-border trade (153rd).
- Execution of contracts (130th).
- Resolving of insolvency (99th)
Seychelles scored 62.41 in the 2019 Doing Business report, which placed the country in the 96th position globally. With a population of 95,660 inhabitants in 2019, the country came in 96th in the 2010 report. By removing administrative barriers and offering a variety of economic incentives, the government has worked hard to create a strong environment for investment. The private sector is playing an important role in the economic dynamism that the country is experiencing.
The government is also supporting the efforts made by the Seychelles Investment Bureau and the Financial Services Authority. These two institutions are dedicated to empowering foreign investments in the country.
Tourism, agriculture, financial services, energy, fisheries, and telecommunication are some of the country’s dynamic sectors that meet the expectations of investors. According to the 2019 Doing Business report, Seychelles is ranked:
- Start-up (145th).
- Obtaining a building permit (118th).
- Connection to electricity (118th).
- Registering property (62th)
- Access to credits (134th).
- Protection of minority investors (110th).
- Payment of taxes (31th).
- Cross-border trade (95th).
- Execution of contracts (129th).
- Resolving of insolvency (73rd)
With a score of 62.02, Djibouti is ranked in the 99th position worldwide and 10th in Africa. Government officials are making efforts to improve the foreign investment rates in the country, mainly in the tertiary and mining sectors. Djoubuti has risen from the 154th position 2018 to the 99th position 2019. This is quite a recommendable increase compared to last year.
The country is among the 10 economies that improved the most across three or more areas measured by Doing Business. Over the past year, the country saw six reforms in the areas measured by the report – Starting a Business, Registering Property, Protecting Minority investors, Getting Credit, Enforcing Contracts and Resolving Insolvency.
The 2019 Doing Business report reveals that Djibouti is;
- Start-up (96th).
- Obtaining a building permit (101th).
- Connection to electricity (119th).
- Registering property (110th)
- Access to credits (161th).
- Protection of minority investors (2nd).
- Payment of taxes (108th).
- Cross-border trade (145nd).
- Execution of contracts (140th).
- Resolving of insolvency (48th)
”The Government of Djibouti has engaged into an ambitious reforms programme to enable its youth and women to become drivers of changes and create wealth. These targeted interventions in the business environment aim to nurture a new dynamic to shift the mindset from the public sector to private initiative, create employment instead of looking for one,” said Ilyas Moussa Dawaleh, Djibouti’s Minister of Economy and Finance in-charge of Industry.
According to this report, it is thus clear why these 10 African countries have been ranked at the top of the “ease of doing business” category. - www.africa.com