Doing Business Reformers’ Club: Ghana, Kenya, Mauritius, Burkina Faso, and Mozambique Win Africa’s Top Awards for Making Business Easier
IFC and the World Bank awarded the top Doing Business Reformers’ Club honors in Sub-Saharan Africa to five countries that implemented three or more reforms in the past year, making it easier for entrepreneurs and businesses to operate and contribute to economic development.
The top awards went to, in order, Ghana, Kenya, Mozambique, Burkina Faso, and Mauritius. The awards were accepted by officials from these countries at a ceremony hosted by the government of Burkina Faso and cosponsored by Jeune Afrique and The Africa Report. Nine countries that implemented two reforms received honorable mention: Lesotho, Madagascar, Mali, Mauritania, Niger, Nigeria, Rwanda, South Africa, and Uganda.
“Simpler, more efficient business regulation is making Africa’s economies more attractive for entrepreneurs and large companies seeking to invest,” said World Bank-IFC Vice President and IFC Chief Economist Michael Klein. “Business-friendly regulation leads to more registered businesses and start-ups, which in turn produce jobs and contribute to economic growth, improving the lives of people in Africa.”
“There is a huge amount of entrepreneurial energy in Africa that can be unleashed to create opportunity and meet urgent development needs,” said IFC Sub-Saharan Africa Director Thierry Tanoh. Improving the business climate in Africa is a top strategic priority for IFC, which provides advisory services for reform in over 20 African countries. “The Doing Business Reformers’ Club Awards recognize and encourage the region’s top reformers, and that draws attention to positive trends that support more private investment throughout Africa,” Tanoh added.
The awards are based on Doing Business 2008 – the fifth in an annual series of reports issued by IFC and the World Bank. In 2006/07, some 24 African countries implemented a total of 49 reforms. In the regional rankings on the pace of reform, however, Africa fell from third place to fifth, overtaken by South Asia and by the Middle East and North Africa.
Top Reformers in Africa, 2007 (in order)
Ghana, a global top 10 reformer for the second year running, continues to increase the efficiency of its public services. It cut bottlenecks in property registration, reducing delays from six months to one. Greater efficiency at the company registry and the environment agency cut the time for business start-up to 42 days. Changes in the port authority’s operations sped up imports, while new civil procedure rules and mandatory arbitration and mediation reduced the time needed to enforce contracts.
Kenya, the region’s other global top 10 reformer, launched an ambitious licensing reform program. So far the program has eliminated 110 business licenses and simplified eight others. The changes have streamlined business start-up and cut the time and cost of getting building permits. The program will eventually eliminate or simplify more than 900 more of the country’s 1,300 licenses. Property registration is also faster, thanks to the introduction of competition among land valuers. And the country’s private credit bureau now collects a wider range of data, improving credit history information for lenders
Mozambique replaced legislation dating from 1888 with a new commercial code that introduces stricter corporate governance rules and strengthens the rights of minority shareholders. The new code also modernizes the business registration process, cutting provisional registration and making notaries optional. Start-up time for new firms fell by almost three months. Specialized judges for commercial cases should improve court efficiency.
Burkina Faso introduced specialized commercial chambers in the general courts and lowered the cost of enforcing a judgment by cutting the related registration tax from 4 to 2 percent of the judgment amount. The cost of property registration was reduced to 12.2 percent of the property value. And a one-stop shop for company registration cut the time for business start-up to 18 days.
Mauritius, already the region’s most business-friendly country, made it even easier to do business, in part by simplifying taxes. A three-year program is harmonizing the tax system and ultimately will create a single corporate tax rate with few tax credits or tax holidays. Other reforms reduced the property registration fee to 5 percent of the property value and simplified construction permitting. A central database now links the company registry with tax, social security, and local authorities—shortening business start-up to just one week. A new risk management system accelerated customs clearance for low-risk importers. And a new law will help creditors recover their debt faster in bankruptcy cases.
Countries Receiving Honorable Mention
Lesotho adopted a new law allowing married women to transfer land without their husbands’ signature. It also made paying taxes easier by decreasing the total tax rate by 5.8 percent and the time needed to comply with taxes by 222 hours (more than nine days).
Madagascar cut business start-up to just seven days by eliminating five procedures and streamlining operations at its one-stop shop. The port authority introduced an electronic data interchange system and privatized port and terminal handling, injecting much-needed capital and operational expertise. These changes, along with simpler requirements for documentation, helped speed exports.
Mali and Niger sped up property registration by decentralizing and reorganizing their registries. Niger also cut the registration tax to 5 percent of the property value, greatly reducing the total cost. Both countries reformed business start-up, with Niger reducing the cost to 175 percent of income per capita and Mali introducing a single company identification number. Mali has cut the time for start-up to 26 days.
Mauritania cut the cost of starting a business to 56 percent of income per capita—among the lowest in Africa. It also set up specialized commercial courts.
Nigeria computerized its company registry, speeding up company name searches and increasing efficiency. Entrepreneurs can now start operating a new business within 34 days. And the planning authority now issues construction permits in 30 days.
Rwanda reduced the cost of importing and exporting by liberalizing the warehouse services sector. Competition has cut costs by 40 percent, and new customs declaration points have accelerated trade. Decentralization has sped the issuance of building permits. The privatization of Electrogaz, the water and electricity company, has also reduced delays in getting utility connections.
South Africa facilitated access to credit by making lenders responsible for checking for over-indebtedness and giving them the right to access and challenge credit records. It also eased the tax burden by eliminating taxes and lowering rates.
Uganda was the only African country to make positive reforms to its labor law. This makes working hours more flexible, provides clarity on overtime, and requires that the employer notify the labor union’s representative and the commissioner in specific dismissal cases. Uganda also made trading across borders easier by reducing time spent for export by 5 days, and for import by 7 days.
Doing Business 2008 ranks 178 economies on the ease of doing business based on 10 indicators of business regulation. The top-ranked countries in Sub-Saharan Africa are Mauritius (27), South Africa (35), Namibia (43), Botswana (51), and Kenya (72). 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. Since 2003, Doing Business has inspired or informed more than 113 reforms worldwide.
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