africa tops

Africa tops in business ease reforms

Not so long ago, doing business in Africa was regarded a tortuous process at best and downright impossible at worst. Everything, it seemed, conspired to stop you conducting your business with any measure of ease. No longer. The latest World Bank Doing Business report says that African countries are now among the world’s top reformers.
Sub-Saharan African countries are progressing in leaps and bounds in terms of ease of doing business, with the continent accounting for five of the top 10 most-improved regulatory environments for doing business worldwide. A number of African countries are implementing multiple reforms in the space of a year.
Nonetheless, entrepreneurs in Africa are still faced with some of the world’s most time-consuming and costly set-up procedures, calling for further well-designed regulatory attention and reform.
According to the World Bank Group report, Doing Business 2015, sub-Saharan Africa has implemented the highest number of business regulatory reforms in the world over the past year, with 74% of the region’s economies improving their business regulatory environment for local entrepreneurs.
The World Bank Group found that over the course of the past year, 35 of 47 economies in sub-Saharan Africa implemented at least one regulatory reform making it easier to do business. Indeed, over the year covered by the report, only 21 countries worldwide made three reforms or more over the year, with six of these located in sub-Saharan Africa.
Out of a global 230 regulatory reforms occurring over the space of the year, 75 of these were attributable to the sub-Saharan Africa region.
Of these reforms made in sub-Saharan Africa, the data shows reform focuses on two areas: 39 of the reforms aimed to reduce the complexity and cost of regulatory processes, and the remaining 36 focused on strengthening legal institutions.
This divide in focus echoes reforms worldwide, with 63% of global business-oriented reforms looking to reduce the time-consuming, complicated and costly nature of regulatory processes, while the rest of the reforms aimed at strengthening legal institutions.
“Among reforms to reduce the complexity of regulatory processes, those in the area of starting a business were the most common, followed by reforms in paying taxes. In 2013/14, as in earlier years, many of the reforms making it easier to start a business focused on introducing a one-stop shop or eliminating the minimum capital requirement,” says Frédéric Meunier, co-author of Doing Business 2015.
“Globally, the most common features of tax reforms in the past year were the introduction or enhancement of electronic systems and the simplification of taxes,” he says, adding that the Republic of Congo, Senegal and Zambia were among those African countries to merge or simplify certain taxes.
On a regional level, sub-Saharan Africa is showing the biggest reduction in the overall tax rate since 2004, although this total rate is still higher than in other regions. On average, the total tax rate dropped by 17% between 2004 and 2012, to 53.4% of commercial profit.
“Among reforms to strengthen legal institutions, the largest numbers were recorded in the areas of getting credit and protecting minority investors,” Meunier says.
Having measured the ease of doing business worldwide since 2005, the World Bank Group’s statistics show that all of the economies in the sub-Saharan Africa region have regularly conducted business-focused regulatory reforms across the indicators measured by Doing Business – namely, 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.