WB ease of doing business 2020: Headwinds in many African economies

25Jan 2020
The Guardian Reporter
The Guardian
WB ease of doing business 2020: Headwinds in many African economies

World Bank Group’s Ease of Doing Business 2020 report indicates that many African economies are still facing headwinds with only Nigeria and Togo having shown a significant improvement in the ease of doing business, thus sustaining the pace of reforms.

Doing Business 2020 measures regulations across 190 economies in 12 business regulatory areas to assess the business environment in each economy. Ten of these indicators were used to estimate ease of doing business score over the 12 months from April 2018 ending April 30, 2019.

The top 10 improvers are Saudi Arabia, Jordan, Bahrain, Tajikistan, Pakistan, Kuwait, China, India including Nigeria and Togo in sub-Saharan Africa. These economies implemented a total of 59 regulatory reforms in 2018/19 - accounting for one-fifth of all the reforms recorded worldwide.

With efforts primarily focused on the areas of starting a business, dealing with construction permits, getting electricity and trading across borders, Togo represents a bright spot and ranks 97th worldwide with a 7.0 change, and Nigeria ranks 131st position with a 3.4 change in Doing Business score.

Most of these reforms addressed aspects of starting a business, dealing with construction permits, getting electricity, and paying taxes; the least reformed area was resolving insolvency. The most common reform features included advancing the functionality of credit bureaus and registries, developing or enhancing online platforms to comply with regulatory requirements, improving the reliability of power supply, reducing certain taxes, strengthening minority investor protections, streamlining property registration processes and automating international trade logistics. Low-income countries accounted for 11 percent of all the regulatory changes, with Togo implementing the highest number of reforms.

Sub-Saharan Africa remains one of the weak-performing regions on the ease of doing business with an average score of 51.8, well below the OECD high-income economy average of 78.4 and the global average of 63.0, compared to the previous year, Sub-Saharan African economies raised their average eased of doing business score by just 1 percent point in Doing Business 2020, whereas economies in the Middle East and North Africa region raised their average score by 1.9.

Globally reforms in the areas dealing with construction permits and getting electricity have risen sharply in recent years, peaking in 2018/19 at 37 and 34, respectively. Twenty-one of the 37 economies reforming aspects of dealing with construction permits simplified the permitting processes by streamlining interactions with agencies for preapprovals and inspections.

In the area of getting electricity, Ghana and Nigeria reduced electricity connection times, the report claims. It says sixteen economies made substantial investments in modernizing electric infrastructure through the installation of substations and remote-control systems; others improved distribution network maintenance. Mainly owing to targeted improvements in electricity supply, the average global duration of power cuts fell by 8.3 percent between 2017 and 2018. Although blackouts remain relatively frequent in Sub-Saharan Africa, utilities in this region made substantial progress in providing a better power supply to their customers.

Not all regulatory changes make it easier for entrepreneurs to do business, the report said. Some changes are a conscious trade-off. Political changes also play a role; this is according to the report. In Sudan, the new majority in the National Assembly did not endorse temporary amendments to the Compliance Act. As a result, a lapse in the provisions adversely affected Sudan’s performance on the indicators for getting credit, protecting minority investors, and resolving insolvency.

According to the ease of doing business ranking, Rwanda is on the 38th place, Belgium 46th Morocco 53rd, Kenya 56th, Tunisia 78th, South Africa 84th, Zambia 85th, and Botswana was ranked 87th in the whole world. Doing Business 2020 is the 17th in a series of annual studies investigating the regulations that enhance business activity and those that constrain it and has motivated governments worldwide to undertake business reforms with the goal of bolstering sustainable economic growth. The study looks at rules affecting business from inception through operation to wind-down: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, and resolving insolvency.


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