It is common sense, isn’t it? People are more likely to do something they find easy. The ease of doing business results in increased local and foreign participation in an economy. The ease of doing business in a country is measured by assessing the business ecosystem. This business ecosystem is constituted by regulations, policies and infrastructure put in place to propel business activity.
The Ease of Doing Business Index (as contained in the Doing Business Report 2020) was published last October by the World Bank. A big chunk of high-performing countries were remarkably not African. Africa’s sub-Saharan region performed poorly, with an average score of 51.8. Countries in North Africa were also unimpressive. The continent’s economic leaders, South Africa, ranked 87th. In summary, only 10 of Africa’s 54 countries made it to the top 100.
The Index also came with some positive points. Mauritius, the continent’s leader, ranked as 13th globally. Rwanda was second place within the continent but finished as 38th globally. Rwanda was recognized by the World Bank Group for “carrying out the most reforms in the continent in the last 16 years.” Also, Togo and Nigeria were recognized for remarkable improvement.
Frankly, the marked advancement of these countries, as laudable as it is, does not tint Africa’s underlying struggle with business ease. Associated challenges include power supply, digitization and economic instability. These stiffen businesses from the point of establishment. Africa needs to carry out reforms in its business climate. A more conducive environment must be created for the inception and operation of businesses. To achieve this, more attention must be paid to the process of business start, access to electricity and digitization of business operation.
First, there must be digitization of processes. African countries need to incorporate more tech products in the structures for business establishment and ownership. South Africa and Côte d’Ivoire already introduced e-payment processes and online registration. In Kenya, it is now possible to register intellectual property online – a development that increased registration by 100 percent.
Political and economic stability is also key. Businesses do not exist in isolation, they are usually influenced by their environment. For businesses to thrive, countries must enact policies and regulations to ensure it. Also, a lot depends on the security of life and property. Therefore, the rule of law and an efficient judicial system are cornerstones.
Africa must pay attention to foreign investment. The process of obtaining requisite permits must be simplified and short-term so that foreign participation is encouraged. Finally, African governments must fulfill their democratic responsibility of providing infrastructure. Electricity, road network and internet broadband are great places to start.
The 2021 Doing Business Report is ordinarily due for October. In August however, the World Bank announced that it would be pausing the publication of the report. Apparently, the data of 4 nations were manipulated in 2018 and 2020. The World Bank is now conducting a review and assessment of data changes for reports of the last five years.
Well, whenever it returns, Africa should be set to climb those rankings!