Global governments improve business climate through reforms

31st October 2018

By: Marleny Arnoldi

Deputy Editor Online

     

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The Word Bank Group’s ‘Doing Business 2019: Training for Reform’ report finds that governments around the world have set a new record in bureaucracy busting efforts for the domestic private sector, implementing 314 business reforms over the past year.

This number of reforms this year has surpassed the prior all-time high of 290 reforms measured two years ago.

The reforms, which were carried out in 128 economies, benefit small and medium enterprises, as well as entrepreneurs, enabling job creation and stimulating private investment.

“The private sector is key to creating sustainable economic growth and ending poverty around the world.

“Fair, efficient, and transparent rules, which ‘Doing Business’ promotes, are the bedrock of a vibrant economy and entrepreneurship environment. It is critical for governments to accelerate efforts to create the conditions for private enterprise to thrive and communities to prosper,” commented World Bank Group president Jim Yong Kim.

The report further found that reforms were taking place where they are most needed, with low-income and lower middle-income economies having carried out out 172 reforms.

In sub-Saharan Africa, a record number of 40 economies implemented 107 reforms, which is a new record number of reforms for a third consecutive year for the region.

The latest reforms were a significant increase over the 83 reforms that were implemented in the region the previous year. In addition, this year also saw the highest number of economies carrying out reforms, with 40 of the region’s 48 economies implementing at least one reform, compared with the previous high of 37 economies two years ago.

Two reforms in South Africa improved the monitoring and regulation of power outages and reduced the time needed to start a new business.

The sub-Saharan African region’s economies performed best in the areas of ‘Getting Credit’ and ‘Starting a Business’, with four economies – Kenya, Malawi, Rwanda and Zambia – ranked among the world’s top ten in the ‘Getting Credit’ ranking.

On average, it now takes 21 days and costs 39% of income per capita to start a new business in the region, compared with 61 days and 305% of income per capita in 2003, when the ‘Doing Business’ report was first published.

Additionally, the minimum capital requirement has been eliminated in a majority of economies and drastically reduced in others.

However, the region underperformed in the areas of ‘Getting Electricity’ and ‘Trading Across Borders’.

For example, it costs on average 3 456.5% of income per capita for a business to get connected to the electrical grid, compared with 1 229% globally; and it takes 98 hours to comply with documentation requirements to import, compared with 61 hours globally.

The Middle East and North Africa region, meanwhile, also scaled a new high with 43 reforms.

TOP TEN

The indicator ‘Starting a Business’ continued to see the most improvements, with 50 reforms this year. ‘Enforcing Contracts’ and ‘Getting Electricity’ saw milestone reforms, of 49 and 26, respectively.

In the World Bank Group’s yearly ease of doing business rankings, the top ten economies are New Zealand, Singapore and Denmark, which retain their first, second and third spots, respectively, for a second consecutive year, followed by Hong Kong Special Administrative Region, China; Republic of Korea; Georgia; Norway; the US; the UK and the Yugoslav Republic of Macedonia.

This year’s top ten improvers, based on reforms undertaken, are Afghanistan, Djibouti, China, Azerbaijan, India, Togo, Kenya, Côte d'Ivoire, Turkey and Rwanda.

With six reforms each, Djibouti and India are in the top ten for a second consecutive year. Afghanistan and Turkey, top improvers for the first time, implemented record single-year reforms, at five and seven, respectively.

“The diversity among the top improvers shows that economies of all sizes and income levels, and even those in conflict can advance the business climate for domestic small and medium enterprises.

“The ‘Doing Business’ report provides a road map that different governments can use to increase business confidence, innovation, and growth and reduce corruption,” said World Bank Group development economics senior director and acting chief economist Shanta Devarajan.

 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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