Doing business in Africa: World Bank forecast in 2020

Economies of the region enacted 73 reforms in the 12 months leading to May 1, down from a record high of 108, and the number of countries implementing at least one reform fell to 31 from 40. The regional average ease of doing business score was 51.8 on a scale of 0 to 100, below the OECD high-income average of 78.4 and the global average of 63.0. See below the rankings for African countries in 2020.

Togo is on the list of top improvers for the second year in a row thanks to reforms lowering fees for construction permits and streamlining property registration procedures, among other measures. Nigeria conducted reforms impacting six indicators, including making the enforcement of contracts easier, which placed the 200-million-person economy among the world’s top improvers, the study showed.

Kenya also carried out six reforms, including improving the reliability of its electricity supply and introducing an online system for social security contributions, positioning it third highest in the regional rankings, behind Mauritius and Rwanda. With four reforms implemented this year, Mauritius remains the easiest place to do business in the region, ranking 13th  globally. Among other reforms, the country made resolving insolvency easier and improved contract enforcement.

Elsewhere, Cabo Verde and Eswatini each carried out four reforms, a record for both. Zimbabwe improved in five areas measured by Doing Business while the Democratic Republic of Congo, Gabon and Rwanda advanced in three. Due to active reform efforts, Niger’s and Senegal’s scores improved significantly. 

The region’s economies performed best in the areas of starting a business and getting credit, with three economies – Kenya, Rwanda and Zambia – ranking among the world’s top 10 in the latter category. On average, it now takes around 20 days and costs 33.5 per cent of income per capita to start a new business in the region, substantially faster and less expensive than the 62 days and 305 per cent of income per capita it took in 2003.

“With reforms led by the Organization for the Harmonization of Business Law in Africa last year and the Central African Economic and Monetary Community this year, economies in Africa have demonstrated how regional cooperation can help to effectively improve the business climate,” said Santiago Croci Downes, program manager of the Doing Business unit.

Despite advancements, the pace of reforms across the region has slowed overall, and there is scope to improve performance, reform impact, and implementation. Only two sub-Saharan African economies rank in the top 50 on the ease of doing business rankings while most of the bottom 20 economies in the global rankings are from the region. South Africa implemented a single reform this year and four in the past five years. Liberia has implemented only three reforms in the past five years, while Burundi, the Central African Republic and Namibia have implemented only four.

Compared to other parts of the world, sub-Saharan Africa still underperforms in several areas. In getting electricity, for example, businesses must pay more than 3,100 per cent percent of income per capita to connect to the grid, compared to just over 400 per cent in the Middle East and North Africa or 272 per cent in Europe and Central Asia. When it comes to trading across borders and paying taxes, businesses spend about 96 hours to comply with documentary requirements to import, versus 3.4 hours in OECD high-income economies, and small and medium-size businesses in their second year of operation need to pay taxes more than 36 times a year, compared to an average of 23 times globally. 

Doing Business 2020 Rankings in Africa

The regional average ease of doing business score was 51.8 on a scale of 0 to 100.

The OECD high-income average and global average was 78.4 and 63 respectively.

Source: World Bank