'Easier to do business in Africa' -WB
Forty-five regulatory reforms in 30 economies in the region reduced the time, cost, and hassle for businesses to comply with legal and administrative requirements. Two-thirds of African countries made at least one reform.
Doing Business 2007: How to Reform finds that two African countries—Ghana and Tanzania—made the list of top 10 reformers on the ease of doing business across 175 economies. Ghana ranked ninth and Tanzania tenth. The top 10 reformers eere, in order, Georgia, Romania, Mexico, China, Peru, France, Croatia, Guatemala, Ghana, and Tanzania. Reformers simplified business regulations, strengthened property rights, eased tax burdens, increased access to credit, and reduced the cost of exporting and importing.
Doing Business 2007 also ranked 175 economies on the ease of doing business—covering 20 more economies than last year’s report. The top-ranked countries in Africa were South Africa (29), Mauritius (32), and Namibia (42). Guinea-Bissau (173) and the Democratic Republic of the Congo (175) rank lowest in the region. The DRC also ranks lowest in the world.
The top 30 economies on the ease of doing business were, in order, Singapore, New Zealand, the United States, Canada, Hong Kong (China), the United Kingdom, Denmark, Australia, Norway, Ireland, Japan, Iceland, Sweden, Finland, Switzerland, Lithuania, Estonia, Thailand, Puerto Rico, Belgium, Germany, the Netherlands, Korea, Latvia, Malaysia, Israel, St. Lucia, Chile, South Africa, and Austria.
The rankings track indicators of the time and cost to meet government requirements in business start-up, operation, trade, taxation, and closure. They do not track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions, or crime rates.
Ghana, the top reformer in Africa, reformed trade, tax, and property administration. It introduced a single-window clearance process at customs where traders could now file all paperwork—for all agencies—at one place.
Clearance time dropped from seven days to three days for imports and from four days to two days for exports. Ghana also reduced the corporate tax rate and reconstruction levy for businesses, cutting the overall tax burden from 35.6 percent to 32.3 percent of profits. And it decreased the stamp duty on property transfers from 2 percent to 0.5 percent of the property value.
Other notable reforms in the region:
More reforms were underway in Africa, and these would show up in next year’s rankings. Several countries were becoming more ambitious. Mauritius, for example, currently ranked 32 on ease of doing business, has set a goal of reaching the top 10 by 2009.
“Such progress is sorely needed. African countries would greatly benefit from new enterprises and jobs, which can come with more business-friendly regulations,” said Michael Klein, World Bank-IFC vice-president for finance and private sector development and IFC chief economist. “Big improvements are possible. If an African country adopts the region’s best practices in the 10 areas covered by Doing Business, it would rank eleventh globally.”
The report finds that particular remaining obstacles in the region were complicated and costly business start-up procedures and lengthy import and export procedures. For example, in Guinea-Bissau, starting a business takes 233 days and costs double what the average worker earns in a year. In Burundi, it takes 80 days to export goods from the country, at a cost of $3 625 a container load.
Doing Business allows policymakers to compare regulatory performance with other countries, learn from best practices globally, and prioritise reforms. “The annual Doing Business updates have already had an impact. The analysis has inspired and informed at least 48 reforms around the world. The lesson—what gets measured gets done,” said Caralee McLiesh, an author of the report.
Globally, the most popular reform in 2005–2006 was easing the regulations of business start-up. Forty-three countries simplified procedures, reducing costs and delays. The second most popular reform—implemented in 31 countries—was reducing tax rates and the administrative hassle of paying taxes.
Whatever reformers do, they should always ask the question, who will benefit the most. If reforms were seen to benefit only foreign investors, or large investors, or bureaucrats-turned-investors, they reduce the legitimacy of the government, said the report.
“Reforms should ease the burden on all
businesses: small and large, domestic
and foreign, rural and urban. This way there is no need to guess where the next boom in jobs will come from.
Any business will have the opportunity to thrive,” said Simeon Djankov, an author of the report. -BiA Online
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