A new World Bank report says Africa is creating a much friendlier business climate by reforming cumbersome rules and regulations. In fact, Ghana and Tanzania have made the World Bank list of top ten reformers.
The report is entitled “Doing Business 2007: How to Reform.” It says sub-Saharan Africa is now among the top three reforming regions.
Caralee McLiesh is a program manager for the World Bank.
“Sub-Saharan Africa for the first time is starting to pick up the pace of reform. In the four years that we’ve been conducting the project, sub-Saharan Africa has had the least reforms out of any continent, any region. This year it’s ranked third in terms of regions. So, two-thirds of sub-Saharan African countries made at least one improvement to the indicators that we measure. And that’s behind only the OECD and Eastern European countries. It’s ahead of all other regions – Middle East, Latin America, East Asia, South Asia. Africa has more reforms than ever,” she says.
The OECD is the Organization for Economic Cooperation and Development, a group of 30 developed countries, including the G8 nations.
McLiesh explains why African nations are making the changes.
“Simply by publishing a lot of these indicators, politicians’ attention has become much more focused on the problems that businesses face in dealing with government regulations. So, last year for the first time we published an aggregate ranking of the ease of doing business, comparing 175 economies, and the response was really overwhelming. We had some governments complaining, saying no, your data can’t really be that bad. We had many more governments start to ask us: what do we need to do to improve?”
And donor countries keep a close eye on which countries improve their business climate.
McLiesh says, “We’ve also seen that many donors are picking up these types of indicators and using them as either conditionalities or as triggers for allocating aid. And that of course provides even more incentive for further reforms. It’s been a driving force behind a lot of the change we’ve seen in Africa.”
For example, Ghana is the top reformer in Africa, according to the World Bank report. It’s made changes in trade, tax and property administration and has greatly eased the load of paperwork that often accompanies starting a business. Ghana also reduced the corporate tax rate.
Also, Tanzania reduced the cost of registering a new business by 40 percent and introduced a new electronic customs clearance system.
Many other African countries also made the World Bank list for launching business reform programs.