Session 2 ppt 1 edbi j mathekga last

INVESTMENT CLIMATE AFRICA

Reform trends on the ease of Doing Business in Sub-Saharan Africa

Cemile Hacibeyoglu

Trade and Competitiveness PracticeThe World Bank Group

Maputo, June 30, 2014

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Doing Business indicators:

Focus on regulations relevant to the life cycle of a small to medium-sized domestic business.

Are built on standardized case scenarios.

Are measured for the most populous city in each country.

Are focused on the formal sector.

DOES NOT measure all aspects of the business environment such as macroeconomic stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment or financial markets.

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What does Doing Business measure?

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3

Doing Business measures 11 areas of business regulation (10 included in the DB2014 ranking, covering 189 economies)

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4

Mauritius is among top 30 economies on the ease of doing business in 2012/13

The classification of sub-Saharan African economies on the overall ease of Doing Business in 2012/13

Rankings (1 – 189)

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2009 2010 2011 2012 2013 2014

No. of reforming countries

28 29 27 36 28 31

No. of reforms 58 67 49 75 44 66

Countries in top 10 3 2 3 4 1 4

Senegal, Burkina Faso,

BotswanaLiberia, Rwanda

Rwanda, Cape Verde, Zambia

Sao Tome Principe, Cape Verde, Sierra

Leone, Burundi

BurundiRwanda,

Djibouti, Cote d’Ivoire, Burundi

Top SSA country rank

24 20 20 23 19 20

Mauritius Mauritius Mauritius Mauritius Mauritius Mauritius

Sub-Saharan Africa’s progress over the years for Sub-Saharan Africa in Doing Business

Every year about 30 countries in SSA have undertaken at least one Doing Business reform, with the region usually accounting for 3 of the world’s top 10 reformers.

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Booking Doing Business reforms(Annual reform and country count for SSA)

Rwanda top global

reformer

Rwanda top global

reformer ever; S

outh

Sudan includedRecord no. of S

SA

countries

Sources: Internal WB-IFC documents, www.doingbusiness.org. Note: SSA total reform count for 2012 pending confirmation.

Pace of reforms remains strong in 2012/13: share of economies with at least one reform making it easier to do business

Worldwide, 114 economies implemented 238 reforms in 2012/2013, 18% rise with respect to 2011/2012.

66% of Sub-Saharan economies reformed in 1 or more areas of business regulation in 2012/13

66%

40%

75%

73%

Latin America and the

Caribbean

OECD high Income

Europe and Central Asia

Middle East and North

Africa

South Asia

East Asia and Pacific

Sub-Saharan Africa

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With a total of 66 reforms, 28 economies in Sub-Saharan Africa improved business regulations this year

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Reforms reducing regulatory complexity and cost continued to be more common in 2012/13

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The time to open a business has fallen from 55 days to 30 days

Sub-Saharan Africa is the region that has shown the most improvement in reducing the time to start a business

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Indicator variability across areas of business regulation in some of the best performing Sub-Saharan African economies

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Indicator World’s top ranked Sub-Saharan’s top ranked

Starting a business New ZealandRwanda (9)

Mauritius (19)

Dealing with construction permits

Hong Kong SAR (China)South Africa (26)

Namibia (31)

Getting electricity IcelandMauritius (48)Rwanda (53)

Registering property GeorgiaRwanda (8)

Sudan (41), Botswana (41)

Getting credit Malaysia / United KingdomKenya (13), Nigeria (13), Rwanda (13), Zambia (13)

Ghana (28), South Africa (28)

Protecting investors New ZealandSouth Africa(10)Mauritius (12)

Paying taxes United Arab EmiratesMauritius (13)

Seychelles (19)

Trading across borders SingaporeMauritius (12)Seychelles (29)

Enforcing contracts LuxembourgCape Verde (35)

Rwanda (40)

Resolving insolvency JapanBotswana (34)Mauritius (61)

Several Sub-Saharan economies rank highly in numerous areas of business regulations

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Four African economies are among the 10 economies that improved the most in at least three areas assessed by Doing Business in 2012/13

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Ease ofDoingBusine

ssrank

Starting a

Business

Dealing with

construction permits

Getting electricity

Registering property

Getting credit

Protecting investors

Paying taxes

Trading across

borders

Enforcing contracts

Resolving insolvency

1 Ukraine 112 √ √ √ √ √ √ √ √

2 Rwanda 32 √ √ √ √ √ √ √ √

3Russian Federation

92 √ √ √ √ √

4Philippines 108 √ √ √

5 Kosovo 86 √ √ √

6 Djibouti 160 √ √ √

7Côte d’ Ivoire 167 √ √ √ √

8 Burundi 140 √ √ √ √ √ √

9Macedonia, FYR 25 √ √ √ √ √ √

10

Guatemala 79 √ √ √

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The top 20 economies improving the most over the past 5 years - 9 of them in Sub-Saharan Africa

Distance to frontier (points of percentage)

Economy Region 2009 2013Improvement

(percentage points)1 Ukraine ECA 43.3 58.4 15.22 Burundi SSA 35.3 48.9 13.63 Belarus ECA 53.5 65.6 12.14 Sierra Leone SSA 40.1 52.2 12.15 Guinea-Bissau SSA 34.3 45.8 11.46 Rwanda SSA 60.8 71.1 10.37 Kosovo ECA 55.3 65.0 9.88 Russian Federation ECA 52.9 61.9 9.19 Macedonia, FYR ECA 65.1 74.1 9.0

10 Poland OECD 63.1 72.0 8.911 Armenia ECA 60.4 68.2 7.812 Georgia ECA 73.6 81.1 7.513 Togo SSA 42.3 49.7 7.314 Solomon Islands EAP 54.2 61.5 7.315 Benin SSA 39.0 46.2 7.216 Liberia SSA 44.5 51.6 7.117 Moldova ECA 57.5 64.5 7.018 Malaysia EAP 74.9 81.9 7.019 Côte d'Ivoire SSA 43.1 50.1 7.020 Guinea SSA 36.7 43.7 6.9

The 50 economies narrowing the distance to frontier the most since 2005 – 18 of them in Sub-Saharan Africa

Note: Rankings are based on the difference for each economy between its distance to frontier in 2005 and that in 2013. The data refer to the 174 economies included in Doing Business 2006 (2005). Fifteen economies were added in subsequent years. The distance to frontier measure shows how far on average an economy is at a point in time from the best performance achieved by any economy on each Doing Business indicator since 2003 or the first year in which data for the indicator were collected. The measure is normalized to range between 0 and 100, with 100 representing the frontier. EAP = East Asia and the Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; OECD = OECD high income; SAS = South Asia; SSA = Sub-Saharan Africa.a. Reforms making it easier to do business as recorded by Doing Business since 2005.Source: Doing Business database.

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Strategy for successful reform

• Leadership at the highest political level

• Long-term vision and clear targets

• Appropriate structure (steering committee, technical taskforce)

• Broad but realistic program of improvement of the business environment

• Coherent reform efforts, year after year: “start with quick wins and build on demonstrable effects”

• Clear definition of responsibilities among implementing agencies

• Follow-up, communication strategy and training

Key aspects of success in the reform process

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IFC Investment Climate in Africa

IC Africa has grown its project portfolio by 45% a year between 2006 and 2013.

The country and product focus has been varied: 75% of total expenditure is spread across

12 countries The product portfolio is widely spread, with

business regulation and infrastructure /social sectors accounting for the largest share.

Sources: Advisory services operations portal data. Notes: Kenya data does not include new project starting in 2013; country and product data includes projections to 2016.

Rapid growth (IC Africa expenditure, 2006-13; US$)

Country focus (IC Africa expenditure, 2006-16; US$)

Product focus (IC Africa expenditure, 2006-16; US$)

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CAGR 45%

IFC Investment Climate in Africa

Sources: Advisory services operations portal data. Notes: Kenya data does not include new project launched in 2013. IDA countries defined as having GNI per capita of less than $1,195 in 2013.

Sudan

Algeria

Niger

Angola Zambi

a

Botswana Madagasc

ar

Mauritius

Seychelles

South Africa

Namibia

Morocco

Mauritania

Lybia

Egypt

Chad

Mali

NigeiaEthiopi

a

Eritrea

Somalia

Democratic Republic

of the Congo

Central African Rep.

Tanzania

Kenya

Mozambique

Rep. of the Congo

Uganda

Liberia

IvoryCoas

t

Ghana

Camer-

oon

Gabon

Equatorial Guinea

Guinea

Gambia

Sierra Leone

Tunisia

Guinea-Bissau

Togo

Benin

Lesotho

Swaziland

Zimbabwe

Malawi

Djibouti

South

Sudan

Investment climate program expenditureSSA quintile and approx range

1st, $5-10m

5th, <$250K

4th, $250k-1m

3rd, $1-2.5m

2nd, $2.5-5m

In FY 13 IC Africa supported reform efforts in 36 countries: 18 Fragile and Conflict-

Affected Situations (FCS) 31 International Development

Association (IDA) 3 non-IDA.

In addition there are 5 regional programs: Health in Africa East African Community OHADA (Organization for the

Harmonization of Business Law in Africa)

Indicator Based Reforms IC Power

In FY 13 there were 61 projects at various stages of implementation.

Burkina

Faso

RwandaBurundi

Comoros

Senegal

Cape Verde

Sao Tomé and Principe

Continental spend(Total project expenditure by country, 2006-16)

Collaboration with WB

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IC in AfricaIC reform and competitiveness

A vibrant private sector drives economic growth and employment. Supporting this growth requires price liberalization and macroeconomic stabilization programs, against which considerable progress has been made over the past two decades.

Beyond this, the quality of laws, regulations and institutions that effect businesses are key, particularly as economies strive to move from factor to efficiency-driven growth.

This is the major focus of the World Bank Group’s Investment Climate (WBG-IC) reform efforts, many of which have focused on reforms as captured by the Doing Business index.

Factor-driven economies Pillar 1. Institutions Pillar 2. Infrastructure Pillar 3. Macroeconomic

environment Pillar 4. Health and primary

education

Efficiency-driven economies

Pillar 5. Higher education and training

Pillar 6. Goods market efficiency

Pillar 7. Labor market efficiency Pillar 8. Financial market

development Pillar 9. Technological

readiness Pillar 10. Market size

Innovation-driven economies Pillar 11. Business

sophistication Pillar 12. Innovation

Pillars of competitiveness (GCR focus areas)

DB as a litmus test of deeper competitiveness performance(Correlation between DB and GCI rankings, 0.82)

DB ranking

GC

I ran

king

Sources: World Bank, “Doing Business 2012,” 2012; WEF/WBG/AfDB, “Africa Competitiveness Report 2013,” 2013. Note: Global Competitiveness Report/Index 19

Thank you