Sub-Saharan Africa economies continue to implement reforms to improve the business climate for domestic entrepreneurs, with members of the Organization for the Harmonization of Business Law in Africa (OHADA) particularly active during the past year, says the World Bank Group’s annual ease of doing business measurement.
“Doing Business 2016: Measuring Regulatory Quality and Efficiency” records a total of 69 reforms in 35 economies in Sub-Saharan Africa. Of these, 14 of OHADA’s 17 member countries implemented 29 reforms.
The reforms implemented in sub-Saharan Africa accounted for about 30% of the 231 reforms implemented worldwide during the past year. The region also boasted half of the world’s top 10 improvers, i.e. countries that implemented at least three reforms and moved up on the global rankings scale, with Uganda, Kenya, Mauritania, Benin and Senegal.
The region stood out in implementing reforms under the Getting Credit indicator. Of the 32 reforms made globally, 14 were carried out in sub-Saharan Africa, with Kenya and Uganda making significant progress.
“Despite great improvements, governments in sub-Saharan Africa will need to continue working on closing the gap in many key areas that impact the ease of doing business, especially increasing access to reliable electricity and providing effective commercial dispute resolution – two areas where the region scores the lowest globally,” says Rita Ramalho, manager of the Doing Business project.
On Getting Electricity, it takes an average of 130 days for an entrepreneur to get a new electricity connection and, once connected, customers experience frequent outages lasting almost 700 hours per year – making sub-Saharan Africa the region with the highest duration of outages globally.
The region also ranks poorly in the areas of Trading Across Borders and Registering Property.
Mauritius ranks best in the region, with a global ranking of 32, performing particularly well in the areas of Paying Taxes and Enforcing Contracts. In Mauritius, it takes only 152 hours for entrepreneurs to pay taxes, compared to 261 hours globally.
Rwanda has the next best ranking in the region, with a global ranking of 62. Rwanda also implemented the highest number of reforms in the region, with six reforms carried out in the past year. The country ranks second in the world on the Getting Credit indicator and 12th in the world on the Registering Property indicator. Ten years ago, an entrepreneur in Rwanda took 370 days to transfer property. Now, it takes 32 days which is less than in Germany.
Botswana, with a global ranking of 72, South Africa (73), and Seychelles (95) are also among the better-ranked economies in Sub-Saharan Africa.
However, Kenya and Uganda experienced significant increases in their rankings, with Kenya moving up to 108 this year, followed by Uganda, which has moved up to 122. These improvements are primarily due to four reforms Kenya implemented in the areas of Starting a Business, Getting Electricity, Registering Property, and Getting Credit, while Uganda implemented reforms in the areas of Starting a Business, Getting Electricity and Getting Credit.
This year’s report unveils a two-year effort to significantly expand the benchmarks used to measure the efficiency of business regulation, including the time and cost of complying with government regulations, to now include more measurements of the quality of regulation, to better reflect the reality of business operations on the ground.
On the five indicators that saw changes in this report – Dealing with Construction Permits, Getting Electricity, Enforcing Contracts, Registering Property and Trading Across Borders – Sub-Saharan Africa obtained lower scores than the global average. The region’s economies have room for improvement in the reliability of supply and transparency index of the getting electricity indicator and the quality of land administration index of the registering property indicator. For instance, Uganda does not have an electronic database to check for encumbrances or a geographic information system. Also, the cadastre and land registry do not have complete coverage of the country’s privately owned land.