Reforms, business environment and economic performance of African countries

The Doing Business project, launched in 2002, is studying the situation of SMEs of countries and the regulations that apply to them during their life cycle. Doing Business is also currently one of the standard tools used to measure the impact of national regulations on business activity. The project uses information provided by governments, universities, specialists and evaluation panels. The fundamental objective is to gather the information needed to assess the regulation of business and improve it. This project provides information on almost every African country, of which some characteristics are described in the paragraphs below.

Institutional reform efforts

The report of 2009, for instance, covers ten types of indicators in 181 countries. In 2009 at least one African country (Mauritius) appears on the list of top 25 countries for ease of doing business. Four countries are among the top 10 reformers in the period 2007-2008 (Senegal, Burkina Faso, Botswana and Egypt). The reformers are also relevant in the formal sector through the creation of businesses and jobs, one of the best ways to reduce poverty. However, it is noted that certain countries like Rwanda have made great efforts in institutional reforms. In contrast we note that during the period some reforms have actually made business activities more difficult. The most striking case is the set of reforms in Zimbabwe in recent years. As noted in Table 14.1, the facilitation of business creation and cost reduction of import and export are the areas where most African countries have undertaken reforms. In contrast, fewer reforms were undertaken in the field of business closures. In sum, the implementation of reforms clearly shows the commitment of governments creating strong institutions and adopting sound policies, thus helping to attract investors.

But there is room to do more. African firms still face greater regulatory and administrative burdens, and less protection of property and investor rights, than firms in any other region. Many African countries are on the bottom of the list of rankings on the ease of doing business; thus, nine countries in recent years are among the last ten on the list: Niger, Eritrea, Chad, Sao Tome and Principe,

Source: Author’s computations based on the Doing Business data base (World Bank 2004 2005, 2006a, 2006b, 2008).

Burundi, Congo, Guinea-Bissau, Central African Republic and the Democratic Republic of Congo.