…Namibia and counterparts face monstrous doing business hurdles
By Hilary Mare
AT the end of October 2016 the World Bank released its latest Doing Business Report. The report presents a review of aspects of regulation which enable or hamper businesses from starting, operating and expanding in 190 countries.
This is done by using 11 specified indicators: Starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and labour market regulations.
Essentially, the countries identified as being the easiest to do business with are New Zealand, Singapore and Denmark, while the countries posing the most challenges for businesses are Libya, Eritrea and Somalia. In the ease of doing business rankings the African countries which ranked the highest include Mauritius (ranked 49 out of 190), Rwanda (ranked 56), Morocco (ranked 68), Botswana (ranked 71) and South Africa (ranked 74).
According to the report countries in Sub-Saharan Africa (SSA) are, on average, the economies with the least business-friendly regulations. The majority of African countries are ranked in the bottom half of the ease of doing business rankings and Namibia is no exception.
Namibia dropped seven places in the Doing Business 2017 report to 108 from 101 in 2016.
According to the Report, Namibia was ranked 164 out of a total of 189 countries in the Ease of Starting a Business category in 2016 has dropped to 170 for 2017.
Other highlights of the report noted the ranking for Namibia to be; trading across borders (159), getting credit (rank) 175, dealing with construction permits (66), protecting minority investors (179), getting electricity (rank) 149, paying taxes (119), enforcing contracts (188), registering property (143), getting electricity (rank) 149 and resolving insolvency (164).
However notably in Sub- Saharan Africa, the report said economies stepped up the pace of reform activity, with 37 economies undertaking a total of 80 business reforms in the past year, an increase of 14 percent from the previous year.
“For the second consecutive year, Kenya was among the world’s top 10 improvers, while seven economies implemented four or more reforms each in the past year. However, 13 economies in the region stipulate additional hurdles for women entrepreneurs,” the report said.
Globally, it said a record 137 economies around the world adopted key reforms that make it easier to start and operate small and medium-sized businesses, says Doing Business 2017: Equal Opportunity for All, the World Bank Group’s annual report on the ease of doing business.
“The new report finds that developing countries carried out more than 75 percent of the 283 reforms in the past year, with Sub-Saharan Africa accounting for over one-quarter of all reforms,” the report said.
Analysing the SSA-specific data of the report shows that the majority of SSA countries have lost positions in the overall doing business rankings. Of the 47 SSA countries included in the report 23 countries moved down the overall rankings; thus doing business in the majority of SSA countries has become more challenging.
The countries where doing business has become more difficult include Mauritius (slipped seven positions although still the top ranked SSA country) and Zimbabwe, Zambia, Sudan, Namibia, Cape Verde and Burkina Faso (each losing four positions in the overall rankings). Six of the SSA countries remained in the same position (Togo, DRC, Seychelles, Liberia, Ethiopia and Eritrea). The remaining 18 countries have all showed improvement in rankings. The countries which have showed the most improvement in rankings are Kenya (climbing 21 positions), Tanzania and Lesotho (improving by 12 positions each) and Niger and Malawi improving by eight positions each.
“The data specific to the ease of trading across borders shows that the majority of the SSA countries have showed no change in ranking over the last year. Sixteen of the countries have lost positions, thus trading across borders has become more problematic. The main area where difficulty has been experienced pertains to the cost and time associated with border procedures and documentation requirements for imports.
“Trading across borders with Zimbabwe has become the most problematic over the year (Zimbabwe lost 45 positions in the ranking). This is mainly due to an increase in the time required for imports to comply with border measures and the associated costs. Over the last year the time it takes for importers to comply with border measures increased from 60 hours to 228 hours, while the associated cost increased from US$ 212 to US$ 562,” Willemien Viljoen, a researcher at Tralac said in the past week.
Eleven SSA countries actually made it easier for businesses to trade across borders. The countries with the most significant improvement are Rwanda (ranked 44 positions higher), Niger (ranked 16 positions higher) and Ghana (improving 13 positions). Rwanda and Niger both showed dramatic reductions in the time and costs associated with border compliance for imports, while Ghana’s improvement in rankings is attributed to a significant reduction in the hours required to comply with import documentation (from 282 hours spent on import documentation to 76 hours).
The data shows a worrisome trend regarding domestic regulations in SSA countries. Doing business in the majority of SSA countries is becoming increasingly more difficult and problematic. For all but one of the measures used for the analyses the majority of SSA countries performed worse than the previous year. In terms of regulations pertaining to obtaining credit 79 percent of the SSA countries performed worse; also regulations pertaining to paying taxes (74 percent of all SSA countries), construction permits (70 percent of all SSA countries) and starting a business (64 percent of all SSA countries) are becoming increasingly problematic in the region. The only measure in which there was an overall improvement (although by a narrow margin) pertains to regulations relating to getting electricity.
If domestic regulations in SSA countries are becoming more problematic for local and foreign businesses to conduct business and trade in the region it does not bode well for investment, economic growth, employment, trade and competitiveness in the region.
Confidente. Lifting the Lid. Copyright © 2015