Africa rising narrative takes a hit as index shows business environment declining since 2011

The countries showing the largest decline are; South Sudan, Central African Republic, Egypt, Ethiopia and Madagascar

AFRICAN nations on the whole have not ranked too highly on the ease of doing business index put forward by the World Bank, but last year’s report did give a lot of hope. 

It fitted into the “Africa rising” narrative, describing how sub-Saharan Africa accounted for five of the 10 top improvers in 2013/14. The region also accounted for the largest number of regulatory reforms making it easier to do business in the past year - 75 of the 230 worldwide - and that more than 70% of its economies carried out at least one such reform.

However, the latest Ibrahim index on African governance (IIAG) throws cautionary water on these findings, showing instead a concerning downward trend since 2011 in Africa’s business environment. 

In fact, the business environment has shown the most deterioration in score of any sub-category in the IIAG since 2011 (-2.5), having shown a year-on-year deterioration for four consecutive years. 

The countries showing the largest downward trend in this period are; South Sudan (-18.8), Central African Republic (-18.3), Egypt (-13.6), Ethiopia (-12.3) and Madagascar (-11.8). 

On average across Africa, this trend has been largely driven by the two most deteriorated indicators in the IIAG; soundness of banks (-11.0) and customs procedures (-9.0).

In terms of the soundness of banks, which assesses factors such as needing   recapitalisation to being generally healthy with sound balance sheets, countries of particular concern include; Lesotho (-37.7), Tunisia (-35.6), Libya (-30.4), Cape Verde (-24.6) and Ghana (-21.5). 

Countries of particular concern under customs procedures (-9.0), which relates to the entry and exit of merchandise, include; Angola (-22.7), Mali (-22.5), Mauritania (-30.4), Tunisia (-29.8) and Zimbabwe (-22). 

Under business environment, there were also marginal negative trends in;

Competitive bidding (-0.5) - a sub-indicator that assesses the extent to which bids from competing contractors,   suppliers or vendors are invited through open advertising of the scope,   specifications and terms of the proposed contract, and whether the criteria   by which bids are evaluated are available for scrutiny.

Bureaucracy and red tape (-1.4) - this indicator assesses the pervasiveness of red tape, including the extent of   bureaucratic delay and complexity in obtaining the appropriate documentation   or authorisation to engage in business activities.

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