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Doing Business 2016: Which African country made life easier for everyone?

Almost 30% of the reforms captured in much-watched international business reforms study were in Sub-Saharan Africa.

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The World Bank’s Doing Business report is now in its 13th year, and has become one of the most watched on how the world’s economies have made it easier for businesses to start and operate.

The annual study looks at business reforms from regulation to governance, indicators it says while not as obvious as macroeconomic ones, “have huge long-run implications for an economy’s health, performance and growth.”

Regulation, the report says, “can lead to fairer outcomes by correcting for imbalances in power between different players.” 

“Without the rules that underpin their establishment, operation and dissolution, modern businesses cannot exist. And where markets left to themselves would produce poor outcomes, well-designed regulation can ensure outcomes that are socially optimal and likely to leave everyone better off.”

Doing Business 2016 captured data (pdf) on189 economies, and finds that 85 developing economies—the majority of which are in Africa, implemented 169 business reforms during the past year, compared with 154 reforms the previous year. 

High-income economies carried out an additional 62 reforms, bringing the total for the past year to 231 reforms in 122 economies around the world, the report notes. 

Most of these made it easier to start a business, with Mozambique for example cutting the time needed for an entrepreneur to get off the ground from 168 days in 2003 to 19 currently. 

Another popular reform category was in the area of credit, so often the lifeline for businesses—half of the 32 reforms were in sub-Saharan Africa, a trend replicated in most of its indicators, partly because African economies have the most ground to cover.

Uganda, Kenya, Mauritania, Senegal and Benin were identified as showing the most improvement.

The study highlights some notable reforms in countries, but it is not a comprehensive list. Often, the reporting on the ease of doing business focuses on the “most improved” countries and rankings - whichMail & Guardian Africa love. However today, we pick out what actually the African countries in the index did:

Indicator 1: Making it easier to start a business 

ANGOLA reduced the fees needed to register a company. 

KENYA launched government service centres offering company preregistration services in major towns. 

UGANDA introduced an online system for obtaining a trading license. 

Regular start performer RWANDA eliminated the need for new companies to open a bank account in order to register for Value Added Tax.

BENIN reduced the fees for filing documents with the one-stop shop.

SENEGAL reduced the minimum capital requirement to start a business. 

2:Making it easier to deal with construction permits 

ALGERIA eliminated the legal requirement to provide a certified copy of a property title when applying for a building permit. 

RWANDA adopted a new building code and new urban planning regulations in May 2015.

BENIN established a one-stop shop and reduced the number of signatories required for a building permit from five to two.

The DEMOCRATIC REPUBLIC OF CONGO halved the cost to obtain a building permit. 

3: Making it easier to get electricity 

The utility in KENYA reduced delays for new connections by enforcing service delivery timelines and hiring contractors for meter installation. 

In SENEGAL the utility reduced the security deposit by revising the calculation formula, helping the process of getting a new connection less time consuming.

 

UGANDA’S electricity utility reduced delays for new connections by deploying additional customer service engineers and reducing the time needed for the inspection and meter installation.

TOGO: Among other changes, electricity utility, Compagnie Energie Electrique du Togo (CEET) established a single window to process applications for commercial customers.

4: Making it easier to register property 

The REPUBLIC OF CONGO lowered the property transfer tax from 15% of the property value to 7%. Senegal reduced the property transfer tax from 10% of the property value to 5%.

MOROCCO established electronic communication links between different tax authorities.

SENEGAL, NIGERIA, CAPE VERDE, CHAD, CONGO REPUBLIC, IVORY COAST, GABON, GUINEA-BISSAU and MADAGASCAR all lowered property transfer tax fees in various ways.

KENYA made property transfers faster by improving electronic document management at the land registry and introducing a unified form for registration.

5: Making it easier to pay taxes  

TUNISIA reduced the corporate income tax rate from 30% to 25% for the same year.

THE GAMBIA improved its bookkeeping system for VAT accounts to better track the requisite input and output records for filing VAT returns. 

MOZAMBIQUE: reduced the effective financial burden of profit taxes on companies by introducing changes to tax depreciation rules or deductions.

6: Making it easier to trade across borders

 

MAURITANIA eliminated requirements for two import documents.

TUNISIA facilitated trade through the port of Rades by increasing the efficiency of its state-owned port handling company and by investing in port infrastructure. 

TANZANIA: improved soft infrastructure for trade by allowing electronic submission and processing of documents as well as by using online platforms.

7: Getting credit 

RWANDA’S credit bureau implemented a credit scoring service in May 2015.

KENYA expanded the number of borrowers listed by its credit reference bureau with information on their borrowing history from the past five years to 14.8% of the adult population. The sharing of positive credit information was also enacted by law. 

MADAGASCAR introduced a new law broadening the range of assets that can be used as collateral to secure a loan by including future assets.

COMOROS, LESOTHO, SEYCHELLES all established a new credit bureau or registry in 2014/15 while RWANDA, ZAMBIA and ZIMBABWE introduced credit scoring as a value added service to banks and other financial institutions.

8: Strengthening minority investor protections 

NIGERIA introduced new rules requiring that related-party transactions be subject to external review and to approval by disinterested shareholders.

MADAGASCAR amended its Law on Commercial Companies to require directors with a conflict of interest to fully disclose the nature of their interest to the board of directors.

9: Making it easier to enforce contracts 

Côte d’Ivoire, Latvia and Senegal introduced laws regulating voluntary mediation.

10: Making it easier to resolve insolvency 

IVORY COAST and SENEGAL increased the efficiency of their judiciary in 2014/15 by introducing consolidated laws on specific ADR (alternative dispute resolution) mechanisms.

11: Changing labor legislation  

MOROCCO implemented an unemployment insurance scheme.

Source: Mail and Guardian Africa

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