Are you planning to start doing business in Africa or make an investment on the continent in 2016? Then this post is for you. Are you worried about the challenges you may face on the ground? Then this post is most definitely one to pay close attention to, as it introduces the markets with the greatest ease for doing business.
I was excited to look at the latest release by the World Bank of its annual ‘Doing business report’ a few days ago where it ranks countries by various parameters for ease of doing business, including how long it takes to start a company, how difficult it is to trade across borders, raise finance, get connected to the power grid and other key indicators for entrepreneurs and companies.
And before we dive into the top 10, let’s look at some insights:
(CNN) Although few African countries are globally competitive, several have been striving to lower the regulatory barriers for entrepreneurs. “What we do see is that there’s a lot of reform happening in Africa,” says Rita Ramalho, manager of the Doing Business project. “We definitely do see that there is more awareness for these issues. I think before Doing Business started 13 years ago there were very few high-level politicians who would know how many days it took to start a business in their country, now they do know how many days it takes. Definitely it does bring that reality to them, so they connect better to what obstacles the average entrepreneur faces in their country.” The World Bank publishes a parallel ranking of the countries that have pushed through the most business-friendly reforms. Of the top-10, five African countries — Kenya, Mauritania, Senegal, Benin, Uganda, and Rwanda are on the list.
Access to energy — a perennial problem across Africa — is one of the main concerns for entrepreneurs, but not the only one. The ease and reliability of registering property is also a real challenge, particularly where land registries are paper-based. Being able to get the title deeds to property reduces entrepreneurs’ risks and gives them the collateral that most banks demand before lending to small businesses.
The ‘Doing Business’ ranking is not a reflection of the actual economic opportunity in the countries listed. Nigeria, the continent’s largest economy, does not make the top-10 in Africa, languishing at 169 out of 189 in the world, below such frontier markets as Guinea, Myanmar and Iraq.
Kenya, East Africa’s largest economy, would be 11th on the list. With economic growth in Africa now slowing, in the face of falling prices for oil and minerals, there is more impetus for reforms that help entrepreneurs, Ramalho says. “A lot of these reforms are not very costly, and oftentimes they may imply savings in the long run.”
Right, so here are Africa’s top ten markets for ease of doing business in 2016! What’s new? I have summed some of it up for you:
Still on number 1 for Africa is Mauritius taking position 32 in the global market ranking (worst ranking is 189). Mauritius made incredible reforms and positive changes in rankings in ‘dealing with construction permit’ moving up by an entire 39 ranks globally.
Rwanda remains as number 2 for ease of doing business in Africa (62nd in world). Of those countries among Africa’s top 10 Rwanda has pushed through the most business reforms again this year, which is a good sign that it continues to work hard to remain competitive. It has this year made the most significant improvements for ‘protecting minority investors’ and for ‘resolving insolvency’. Rwanda ranges 2nd best in the world for ease of getting credit and remains top in Africa for ease of starting and registering a business. Unfortunately, ‘trading across borders’ has become significantly more difficult.
Botswana is now the third best country in Africa for ease of doing business still remaining on world rank 72, but winning seat number 3 in Africa due to the decline in ranking by South Africa. Botswana has achieved great improvements in ‘electricity supply‘.
#4 South Africa
South Africa has lost its third place to Botswana and is now number 4 in Africa’s ranking for the year 2016 (world rank 73 down from 69). It has dropped in rankings this year in all parameters, which means that it need to step up its game in the years to come to remain competitive at the top. Unfortunately, South Africa has still a very low world ranking in ‘getting electricity’ (rank 168 out of 189) which remains a serious challenge to companies operating there.
Tunisia remains in place five for Africa (world ranking now 74). Tunisia has made small reforms in ‘getting credit’ and has made ‘trading across borders’ significantly easier.
Morocco is becoming more competitive. Still on place 6 in Africa it has now moved up to 75 globally meaning that the race is on with Tunisia in regards to the best business regulations in North Africa. Morocco has implemented business reforms along a range of parameters, in particular in ‘registering property‘ and ‘starting a business‘.
The Seychelles moved up from place 8 to rank 7 in Africa having also made great improvements in global rankings (now on place 95). Significant reforms have been achieved in ‘getting credit‘.
Zambia has lost its 7th place to the Seychelles moving it into number 8 for this year (world ranking 97). Zambia has implemented reforms in ‘getting credit’ and ‘paying taxes’, which has seen significant improvement in the global ranking. However unfortunately, Zambia has made starting a business and trading across borders more difficult.
Namibia remains on number 9 in Africa. It has seen slight improvements in getting credit, but ‘dealing with construction permit‘ has become more difficult. It is also worth mentioning that although Namibia ranks among the top ten for ease of doing business in Africa, the parameter ‘starting a business’ (registering) has always been very low and has evened worsened this year reaching a global rank of only 165 out of 189 economies. This means that the first steps of getting started are difficult requiring about 66 days and 10 different procedures to register.
Number 10 is Swaziland (with global ranking of 105), which made ‘paying tax’ easier.
Overall we can witness that African governments across the continent are pro-actively working on reforms and an improved business and investment climate in their respective countries. And despite the many challenges lying ahead, this is indeed a good sign.
Being aware101 Ways To Make Money In Africa about regulatory environments in Africa’s various markets is an important step on your road to business success in Africa. But I realize that there is much more you may be asking yourself: Which of the industries that are of interest to me are growing fast and where do I best tap into them? Which rare niches that are less competitive could I explore? What actionable steps do I need to take? How did others in Africa manage to get started from scratch and grow their business to be hugely successful? If these are questions that cross your mind then check out my book. It is all neatly packaged for you in one spot, so you don’t have to browse for weeks or months to find answers. Read it – and I promise you will know more than most people and feel equipped . More info here.
I would love to hear your comments and questions!
Author: Dr. Harnet Bokrezion is the Founder of africajumpstart.com and co-author of the book ‘101 Ways to Make Money in Africa’. She coaches individuals and consults existing companies assisting them to make smart and strategic business decisions in Africa’s new emerging markets faster and more confidently. Dr. Harnet also regularly writes for the renowned DHL powered publication howwemadeitinafrica.com. Get in touch to inquire how she can be of assistance to your own Africa business endeavors: firstname.lastname@example.org