The African continent has averaged 5% economic growth over the last decade with some countries reaching 7% annual rates. Rising commodity prices have benefited this resource-rich region with commodities like oil, gold and precious metals among the top exports. Poverty rates are down, while secondary education enrollments rose from 59% to 77% in sub-Saharan Africa over the past decade.
Despite the strides Africa has made in recent years, problems are still rampant. The commodity export boom has aided a small pocket of politically connected individuals fueling vast income inequalities. Poverty is still widespread and political instability remains a problem in many parts.
Africa’s economic issues are reflected in Forbes’ ninth annual Best Countries for Business. The continent is high on potential, but it is home to 60% of the bottom 10 with excessive levels of corruption, red tape and taxes registering as major issues.
Guinea, formerly known as French Guinea, ranks last for the third straight year. The West African nation is at the center of the recent Ebola outbreak. The country has rich natural reserves in bauxite, diamonds, gold and iron ore, but has not capitalized on these resources due largely to corruption, poor infrastructure and political volatility. Despite the vast natural resources, Guinea had a trade deficit of 27% of GDP last year and GDP per capita was a scant $1,100. The $7 billion economy ranks among the bottom five for innovation, technology and corruption. Joining Guinea in the bottom 10 from Africa are Chad, Libya, Angola, Gambia and Algeria.
We determined the Best Countries for Business by rating 146 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape/bureaucracy, investor protection and stock market performance. Each category was equally weighted. The data came from published reports from the following organizations: Freedom House, Heritage Foundation, Property Rights Alliance, Transparency International, World Bank and World Economic Forum.
Venezuela is the largest economy in the bottom 10 with GDP of $368 million last year. The South American nation scores in the bottom five for taxes, corruption, monetary freedom and red tape. Former President Hugo Chavez’s move to increase nationalization of businesses in construction, finance, oil, steel and other industries detracted significantly from private investment. Oil became the country’s main currency representing roughly 95% of its exports.
Venezuela posted staggering inflation of 56% last year, the worst of any country we rated. Things have gotten worst this year with oil prices off 50% from their June peak and now below $60 a barrel. Currency controls have created a scarcity of basic goods. The International Monetary Fund expects the economy to shrink by nearly 3% this year with further declines in 2015.