Africa Economy: World Bank says Sub-Saharan Africa makes strides in business reforms

Countries in Sub-Saharan Africa have implemented a series of business regulatory reforms which are crucial in attracting investments, a report released by the World Bank on Wednesday reveals.

The report Doing Business 2016: Measuring Regulatory Quality and Efficiency says the economies continue to implement reforms to improve the business climate for domestic entrepreneurs, with members of the Organization for the Harmonization of Business Law in Africa (OHADA) particularly active during the past year.

"Despite great improvements, governments in Sub-Saharan Africa will need to continue working on closing the gap in many key areas that impact the ease of doing business, especially increasing access to reliable electricity and providing effective commercial dispute resolution - two areas where the region scores the lowest globally," said Rita Ramalho, Manager of the Doing Business project.

The report finds that a total of 69 reforms in 35 economies in Sub-Saharan Africa. Of these, 14 of OHADA's 17 member countries implemented 29 reforms.

The report says 37 of 47 economies in Sub-Saharan Africa (74 percent) implemented at least one reform making it easier to do business in the past year, 69 in total, up slightly from the annual average of 67 reforms over the past 5 years.

These reforms are designed to increase the ease of doing business in Africa. They have made it simpler to in dealing with construction permits, getting electricity, enforcing contracts, registering property and trading across borders.

It is hoped that these reforms will create incentives for small and medium-sized entrepreneurs to formalize their businesses, which will help the country to gain overall economic growth.

The World Bank says the reforms implemented in Sub-Saharan Africa accounted for about 30 percent of the 231 reforms implemented worldwide during the past year.

The region also boasted half of the world's top 10 improvers, countries that implemented at least three reforms and moved up on the global rankings scale, with Uganda, Kenya, Mauritania, Benin and Senegal.

Kenya, which moved up 21 positions to 108 this year from last year's 129, made business incorporation easier by simplifying pre-registration procedures, reducing the time to incorporate by four days.

The region stood out in implementing reforms under the Getting Credit indicator. Of the 32 reforms made globally, 14 were carried out in Sub-Saharan Africa, with Kenya and Uganda making significant progress.

On Getting Electricity, it takes an average of 130 days for an entrepreneur to get a new electricity connection and, once connected, customers experience frequent outages lasting almost 700 hours per year -making Sub-Saharan Africa the region with the highest duration of outages globally.

The region also ranks poorly in the areas of Trading Across Borders and Registering Property.

Mauritius ranks best in the region, with a global ranking of 32, performing particularly well in the areas of Paying Taxes and Enforcing Contracts.

In Mauritius, it takes only 152 hours for entrepreneurs to pay taxes, compared to 261 hours globally.

Rwanda has the next best ranking in the region, with a global ranking of 62. Rwanda also implemented the highest number of reforms in the region, with six reforms carried out in the past year.

The country ranks second in the world on the Getting Credit indicator and 12th in the world on the Registering Property indicator. Ten years ago, an entrepreneur in Rwanda took 370 days to transfer property. Now, it takes 32 days which is less than in Germany.

Botswana, with a global ranking of 72, South Africa (73), and Seychelles (95) are also among the better ranked economies in Sub-Saharan Africa.

However, Kenya and Uganda experienced significant increases in their rankings, with Kenya moving up to 108 this year, followed by Uganda, which has moved up to 122.

These improvements are primarily due to four reforms Kenya implemented in the areas of Starting a Business, Getting Electricity, Registering Property, and Getting Credit, while Uganda implemented reforms in the areas of Starting a Business, Getting Electricity and Getting Credit.

"Kenya launched government service centers offering company preregistration services in major towns, reducing the time required to start a business by 4 days. Ten years ago, starting a business in Kenya took 54 days. Now it takes just 26 days-less than the regional average," the World Bank said.

This year's report unveils a two-year effort to significantly expand the benchmarks used to measure the efficiency of business regulation, including the time and cost of complying with government regulations, to now include more measurements of the quality of regulation, to better reflect the reality of business operations on the ground.

The region's economies have room for improvement in the reliability of supply and transparency index of the getting electricity indicator and the quality of land administration index of the registering property indicator. Endit