Africa begins to unravel red tape

Africa continues to be one of the most challenging regions of the world in which to do business.

This is highlighted in both the 2016 World Bank Ease of Doing Business 2016 report and the 2015

International Monetary Fund (IMF) Regional Economic Outlook for sub-Saharan Africa. The reports confirm what FTW is told by companies offering logistics services in neighbouring countries and farther up into the continent. There are, however, some signs of it getting easier, with a reduction in red tape in particular.

Sub-Saharan Africa accounted for about 30% of the regulatory reforms, making it easier to do business in 2014/15, followed by Europe and Central Asia. Leading the reforms is West Africa, where countries are working through the Organisation for the Harmonisation of Business Law in Africa. Some 14 of the 17 have signatories implemented business regulation reforms in the past year. Twenty-four of these reforms reduced the complexity and cost of regulatory processes, while the other five strengthened legal institutions.

There is a fresh urgency for reforms to be introduced. The IMF economic outlook for sub-Saharan Africa says growth in the region has “weakened markedly and is now projected at 3.75% this year and 4.25% in 2016 – from 5% in 2014. The slowdown is uneven. According to the IMF, countries such as Côte d’Ivoire, the Democratic Republic of the Congo, Ethiopia, Mozambique, and Tanzania are still expected to register growth of 7% or more this year and next.

According to the Ease of Doing Business index the best place to be in Africa is Mauritius, which is rated 32nd. Mauritius scores highly on good judicial practices, and a reduction in the time taken to obtain construction permits. It ranks 66th in the “trading across borders” category – the one which directly impacts freight and forwarding industry and its clients. It measures the time taken and the cost of importing or exporting a container. This includes the number of documents that need to be processed and the internal logistics costs.

On the mainland the easiest place to do business is Rwanda in 62nd position, but it comes in at 156th in the critical trading across borders measurement. Next is Botswana on 72 (51st in trading across borders) and South Africa on 73 (but ranked 179th in trading across borders). After that comes Zambia (97th on ease of doing business and 152nd on trading across borders) and Namibia (101st and 118th).

The trading across borders score is particularly important for Namibia, which is positioning itself as the logistics gateway for imports and exports into the Southern African Development Community (SADC). Kenya, which is listed among the economies that improved the most in 2014/2015, is now ranked 108th in ease of doing business and 131st in trading across borders. Investment in the country’s transport and power generation sectors is expected to support growth in Kenya, according to the IMF report.

Also moving up fast is Uganda (122nd and 128th) and Benin (158th and 116th).

– Ed Richardson


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As appeared on - the daily southern African freight and trade news portal