Africa’s smaller economies are leading business reforms on the continent

Kigalis’ central business district. File.

Africa’s biggest economies are not undertaking major reforms to ease doing business fast enough.

The latest World Bank Doing Business report shows Nigeria and South Africa—the continent’s largest economies—have made meager progress over the past year. South Africa remains ranked 82nd out of 190 ranked countries while Nigeria fell one place to 146th, a reversal of fortunes after it recorded a 24-place rise in the rankings last year. As it typically does, the report measures the ease of doing business along ten various parameters including paying taxes, starting a business, enforcing contracts, registering property and getting credit.

In contrast however, smaller economies on the continent are recording big reform wins. Mauritius is a particular success story, rising five places to 20th—the only African country to make the top 20. Mauritius’ rise in the ranking is linked to consistent reforms over the years: since 2005, the time needed to register property has dropped more than 12-fold while time needed for business incorporation has also dropped nearly 10 times.

Mauritius is ranked in the top twenty alongside countries from North America, East Asia and Pacific, Europe and the Middle East. That diversity of countries – in location and income levels, the World Bank says, offers evidence that economic reforms are not out of reach for any country “as long as it has few bureaucratic hurdles and strong laws and regulation.” Notably, Rwanda has also risen 11 places to 29th and is the only low-income economy ranked among the top 30 globally, recording improvements on all but one of the ten Doing Business indicators.

Sub-Saharan Africa is the most represented region among the top ten improvers in the Doing Business report with four countries: Kenya, Côte d’Ivoire, Rwanda and Djibouti. Much of the improvement is attributed to “digitization” with all four nations making improvements to simplify the process of filing taxes and accessing tax-related paperwork. Togo, Rwanda and Kenya have also implemented digital solutions to ease property registration.

Going forward, business reforms have to be pervasive across the continent to achieve more uniform improvement as sub Saharan African economies currently score “significantly lower” on average in all areas than most high-income economies. Indeed, a recent World Economic Forum report shows African economies are among the least competitive globally.

Quartz