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African countries moving to ease the burden on entrepreneurs

21st November 2014

By: Sashnee Moodley

Senior Deputy Editor Polity and Multimedia

  

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The World Bank released its ‘Doing Business 2015: Going Beyond Efficiency’ report last month and ranked South Africa 43 out of 189 global economies for its ease of doing business, with Singapore topping the rankings.

The report states that South Africa makes enforcing contracts easier by amending the monetary jurisdiction of its lower courts and introducing voluntary mediation.

However, it notes that South Africa has made access to credit information more difficult by implementing regulations requiring credit bureaus to remove negative credit information from their databases, such as adverse information on consumer behaviour or enforcement action accumulated on a customer’s record, before April1, 2014.

The report also revealed that sub-Saharan Africa implemented the most business regulatory reforms globally in 2013/14, with 74% of the region’s economies improving their busi- ness regulatory environment for local entre- preneurs.
Some of the top ten improvements were made by Benin, the Democratic Republic of Congo, Côte d’Ivoire, Senegal and Togo. Among the 189 economies reviewed, these countries improved business regulation the most in the past year.

Further, since 2005, all countries in the region, excluding South Sudan, have been improving their business regulatory environment for small and medium-sized businesses, with Rwanda implementing the most reforms, followed by Mauritius and Sierra Leone.

Rwanda, ranked 46 in the report, ensured that dealing with construction permits were made easier by eliminating the fee for obtaining a freehold title and streamlining the processes for obtaining an occupancy permit.

Priority Rules

Further, the country improved access to credit by establishing clear priority rules outside bankruptcy for secured creditors during reorganisation procedures.

However, the report states that Rwanda made starting a business more difficult by requiring companies to buy an electronic billing machine from a certified supplier, but it has made the start-up process easier by launching free mandatory online registration.

Mauritius, ranked 28, reduced its trading licence fees and made enforcing contracts easier by introducing an electronic filing system for court users.

Electricity Despite Sierra Leone’s ranking of 140, the country has improved access to electricity by removing the requirement for customers to submit an application letter enquiring about a new electricity connection before submitting an application.

It has also fast-tracked its property registration processes and improved its credit information system by beginning to distribute positive and negative data and increasing the system’s coverage rate.

However, the country has made paying taxes more complicated for companies through the introduction of a capital gains tax.

According to World Bank Group development economics, global indicators group adviser Melissa Johns, sub-Saharan Africa economies have improved in cutting down on the number of difficult business regulations.

“Our data shows that sub-Saharan Africa accounts for the largest number of regulatory reforms, making it easier to do business in the past year. “Yet, despite broad regulatory reform agendas, challenges persist in the region, where business incorporation continues to be costlier and more complex on average than in any other region,” she says in a media release.

According to the report, the top ten economies are Singapore, New Zealand, Hong Kong and China, Denmark, the Republic of Korea, Norway, the US, the UK, Finland and Australia.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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