Sub-Saharan Africa: Worst Place to do Business

Source: Africa has worst business climate but changing rapidly: World Bank

Sub-Saharan Africa was rated as one the worst regions in the world to conduct business according to The Doing Business Report 2007 by the World Bank and the International Finance Corporation. These organizations surveyed the business climate in 175 countries finding that Africa ranked third, only behind Eastern Europe and Central Asia and the OECD high-income countries.

However, the report noted that impressive advances had been made in the region in 2006. At least two-thirds of the countries in this region made at least one reform. For example both Tanzania and Ghana have introduced new investor protection laws and have significantly lowered property, income, and corporate taxes. And Rwanda went from having a single notary to service the entire country to now having 44, with plans to increase this number to 400.

But before the region’s ranking can advance many more reforms will have to be realized. In South Africa there remain tough labor laws, expensive and extensive procedures for registering property, and intricate import-export procedures. In Kenya there remains an extensive list of permits that are needed to conduct basic activities, such as renting a bicycle or buying onion seeds. These types of impediments to conducting business make companies averse to expanding their businesses to the region.

Questions:

1. What types of changes will need to be made in the region in order to attract business.

2. Is it realistic to think that such changes can be achieved in a region that is part of the poorest continent?