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Africa’s Ten Most Business Friendly Countries in 2007

Last Updated: 6/12/2008 7:30:52 PM

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The World Bank annually ranks about 173 countries in the world on the ease of doing business in those countries, ClickAfrique looks at the African continent’s top performers.....

Small to medium sized businesses (SMEs) form the backbone of most vibrant economies
Small to medium sized businesses (SMEs) form the backbone of most vibrant economies

Business is the backbone of any economy; more especially the importance of small to medium size enterprises (SMEs) can not be understated. The World Bank annually ranks economies around in the world on their ease of doing business, and measures business regulation and the protection of property rights and their effect on businesses, especially the SMEs.

The rankings are based on the following criteria:

a) Starting a Business: This involves the length of time, the number of procedures and the cost as a percentage of gross national income (GNI) per capita faced by entrepreneurs looking to get going.

b) Dealing With a License: This involves the procedures, time and cost of obtaining the necessary permits and licenses.

c) Employing Workers: This involves the hiring and firing of employers.

d) Registering Property: This is the ease of obtaining the rights to a property.

e) Getting Credit: This measures credit information sharing and the legal rights of borrowers and lenders.

f) Protecting Investors: This looks at the transparency of business transactions, liability for self dealing, and the ease of shareholders to sue officers and directors for misconduct.

g) Paying Taxes: This measures what a medium sized company come through to pay taxes.

h) Trading Across Borders: This looks at the costs and procedures involved in importing and exporting a standardized shipment of goods.

i) Enforcing Contracts: Measures the ease or difficulty of enforcing commercial contracts.

j) Closing a Business Looks at the time and cost to settle bankruptcies.

ClickAfrique lists the ten most business friendly countries in Africa below:

1. Mauritius

Global Rank: 27
While hiring workers in Mauritius is easy, firing them still presents employers with some rigid procedures. It also performs worst than the average in terms of the cost for registration of properties rights on the continent. It is however just as good as many of the OECD countries when it comes to protecting investors and paying taxes. It also fares better when it comes to trading across its borders. Moreover it has improved greatly in reducing the number of says to open a business to 7 days from 46 days two years ago and reducing the average annual income to open a business from 8% to 5.3%.

2. South Africa

Global Rank: 35
While South Africa improved its global ranking on being a business friendly nation, it has lost its top spot to Mauritius which made far more changes in its legislature in promoting local business. Corporate tax in South Africa still remain higher than the average found in sub-Saharan Africa, and employers still face difficulties when it comes to hiring and firing of employees.

3. Namibia

Global Rank: 43
Namibia lost some ground in 2007 despite lowering the cost of trading across Namibia’s borders. Namibia performs just as well as advanced economies when it comes to protection of investors, employment of workers and the registration of property, even better in the dealing of permits and licenses needed to run a business. However the cost and time it takes to start a business still remain higher than the average found in Africa.

4. Botswana

Global Rank: 51
Botswana strength lies in the registration of property, getting credit and paying taxes, which Botswana ranks such as well if not better than advanced economies. It is also much cheaper to start a business most places on the continent but takes twice as long.

5. Kenya

Global Rank: 72
In 2007, Kenya launched an ambitious licensing reform program which has so far eliminated 110 business licenses and simplified eight others. The changes have streamlined business start-up and cut both the time and cost of getting building permits. The program will eventually eliminate or simplify at least 900 more of the country’s 1,300 licenses. Property registration is also faster now, thanks to the introduction of competition among land valuers. And the country’s private credit bureau now collects a wider range of data.

6. Ghana

Global Rank: 87
Ghana has worked hard to increase the efficiency of its public services. It has cut bottlenecks in property registration, reducing delays from six months to one. Greater efficiency at the company registry and the environment agency cut the time for business start-up to 42 days. Changes in the port authority’s operations sped up imports. New civil procedure rules and mandatory arbitration and mediation reduced the time it takes to enforce contracts.

7. Tunisia

Global Rank: 88
Tunisia has made significant progress in improving trading across its borders and some progress in reducing bottlenecks when it comes to closing down businesses. Tunisia fares better than the average African country when it comes to starting a business; however the cost of applying for licenses reminds one of the highest in the world.

8. Seychelles

Global Rank: 90
Businesses in Seychelles face more difficulties than the average country in Africa when it comes to getting credit and closing down operations (has no recorded practice of businesses closing down). They also face higher costs when it comes to importing and exporting of goods. It however does fare better when it comes to registering properties and protecting investors.

9. Swaziland

Global Rank: 95
Swaziland has one of the worst records in the world when it comes to protecting investors. It also fares badly when it comes to enforcing contracts, trading across borders and starting up a business. However it fares just as good as advanced economies when it comes to dealing with licenses and getting credit.

10. Ethiopia

Global Rank: 102
Ethiopia performs average across the board in most of the criteria for doing business in the country with major issues being the registration of property and trading across borders. It has however made some strides when it comes to paying taxes and performs just as well as advanced economies in this criterion.


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