Top 10 African Countries Excelling in Business Ease: Insight for Entrepreneurs and Business Owners
Introduction
“Ease of doing business” encapsulates a nation’s friendliness towards entrepreneurial ventures and investments. Top 10 African countries excelling is a metric that assesses how effortlessly businesses can establish, operate, and flourish within a country. It involves factors like simplified regulations, efficient government services, and a supportive atmosphere for innovation.
A favorable business environment significantly impacts economic growth. Countries prioritizing ease of doing business witness accelerated development, attracting local entrepreneurs and global investors. Streamlined regulatory processes reduce bureaucracy, fueling a vibrant business ecosystem that spurs job creation, innovation, and overall economic advancement.
The business climate in Africa is experiencing a transformative surge, positioning the continent as a burgeoning destination for entrepreneurs and investors.
According to World Bank “Ease of Business” report, below are Top 10 African Countries Excelling in business ease. There are multiple criteria that contribute to this and, that includes: ease of starting a business, construction permit, electricity, registering property, getting credit, trading across borders, public-private partnership and taxes.
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Below are the Top 10 African countries excelling in business ease and what stands them out.
1. Mauritius:
Mauritius, ranking first on our list of business-friendly African countries, has not only secured the 13th position globally in the 2020 World Bank report but has also advanced seven places from its 2019 ranking.
The country maintains its commitment to transforming its business environment, aiming to be a business facilitation leader globally. Notably, Mauritius has made significant strides in the ease of doing business, particularly in the automation of license permits and electronic submission of business licensing. The implementation of the National Electronic Licensing System and the Mauritius e-Registry System has streamlined procedures and enhanced transparency.
With a strategic goal to be among the most business-friendly nations globally, Mauritius continues to set the standard for an attractive business climate in Africa and beyond.
Air Mauritius is a successful business in the aviation industry, the growth of this company can be traced to the tourism and aviation industry growth in Mauritius.
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2. Rwanda:
Rwanda has maintained its impressive second position in The World Bank’s annual Doing Business ranking, showcasing its commitment to enhancing the business climate. With a score of 76.5 out of 100, Rwanda is globally ranked 38th.
The World Bank acknowledges three key reforms in construction permits, starting a business, and electricity access that propelled Rwanda to this position. Notably, the country supports newly formed small and medium-sized enterprises by exempting them from trading license tax for their first two years. Efforts to streamline permit acquisition, improve building quality control, and upgrade power grid infrastructure contribute to Rwanda’s attractive business environment, fostering foreign investment.
Mara Group is a worthy example of a successful business in Rwanda that has enjoyed success due to the investment of the country in technology and innovation.
3. Morocco:
Morocco claims the third spot on our list, holding an impressive 53rd position globally with a score of 73.4 out of 100 in the World Bank’s ease of doing business indicators. Surpassing other North African nations, Morocco stands out for its exceptional business climate.
The government’s commitment is evident, especially in simplifying construction permits. Through an online platform, Morocco ensures businesses can easily apply for and obtain certificates of conformity. Noteworthy efforts include tax reduction policies, promoting electronic payments at ports for efficient customs clearance, and extended work hours at ports. Morocco’s commitment to investment facilitation, supported by legal and economic guarantees initiated by the monarch, establishes a conducive environment for business operations and startup ventures.
4. Kenya:
Kenya secures the 4th position on this list as the most powerful country in the Eastern region of Africa, boasting an impressive ease of doing business ranking of 73.2 and a global rank of 56th. Despite the global economic challenges, Kenya’s predicted economic growth rate of 5 percent signifies its resilience.
Political reconciliation post the 2017 disputed elections has led to a government committed to economic growth and business environment improvement, attracting foreign investments. Kenya benefits from consumer demand expansion, integration into the East African Community, structural reforms, and infrastructural investments, contributing to its appeal for business operations.
Renowned for its welcoming business environment, Kenya ranks third in Sub-Saharan Africa for innovation. Recognized by the World Bank for reforms protecting minority investors and facilitating small business access to credit, Kenya scores well in electricity connection and insolvency resolution, further enhancing its business-friendly reputation.
5. Tunisia:
Between 2010 and 2017, Tunisia faced a decline in its Ease of Doing Business, but in 2018, it began to improve, reaching the 5th position in Africa in 2020. Notably, it jumped from 88th to 78th globally. Impressively ranking 19th and 32nd globally in ‘ease of doing business’ and ‘dealing with construction permits,’ Tunisia’s achievements result from a government-led three-year action plan initiated in 2017.
The plan aimed to enhance the business environment, with short, medium, and long-term measures. With expert assistance from international financial institutions like the World Bank, Tunisia identified 50 administrative measures and reforms, leading to an eight-position jump in 2019. Tunisia’s commitment suggests it is poised to achieve its goal of becoming one of the top 50 easiest countries to do business globally within the next decade.
6. South Africa:
South Africa holds the 6th position in Africa’s Ease of Doing Business, yet its global ranking dropped from 82nd in 2019 to 84th in 2020. The decline is attributed to limited reforms and challenges like weak governance, corruption, and inadequate infrastructure in Sub-Saharan Africa. Businesses in the region, including South Africa, face delays, taking an average of 96 hours for compliance with document requirements, significantly higher than 3.4 hours in high-income countries.
Despite these challenges, South Africa excels in providing electricity for businesses and has improved in dealing with construction permits, with Cape Town ranked in the top 25% globally, issuing permits in an average of 17 days compared to the previous 45 days.
7. Botswana:
Botswana, situated in Southern Africa, holds the 7th position on the list and is ranked 86th globally with a score of 66.2 out of 100 according to the World Bank. The country’s development in the mining sector, improved mining infrastructure, and a focus on attracting foreign investment contribute to its growing economy.
Efforts by the government and financial institutions enhance the ease of access to credit, particularly in the robust banking and insurance sector. Botswana excels in cross-border trade, ranking among the top 100 globally, and stands out in obtaining building permits, utilizing an electronic platform with an average waiting period of 18 days.
8. Zambia:
Zambia secures the 8th position on the list, having been among the most improved countries in ease of doing business by the World Bank in 2011. It has consistently performed as one of the top five countries in the southern region of Africa.
The Zambian government is committed to enhancing its business environment, recently entering the international capital market with its inaugural sovereign bond issuance. Positive credit ratings from international agencies like Fitch Ratings and Standards and Poor’s have facilitated this move. Aggressive efforts are underway to improve the ease and reduce the overall costs of doing business, especially for small and startup businesses, through infrastructure enhancements and collaborations with the Central Bank to create a favorable macroeconomic environment.
9. Seychelles:
Seychelles secures the 9th position with a World Bank ranking of 62.41 out of 100, placing 96th globally. Recognized as the 4th most competitive country in 2019, Seychelles boasts a diverse economy driven by sectors like tourism, agriculture, energy, and telecommunications.
Heavy investments in infrastructure demonstrate the government’s commitment to industry growth and foreign investment attraction. The nation focuses on ease for both local and foreign businesses to start, operate, and liquidate. While acknowledging challenges, the Seychelles Chamber of Commerce and Industry sees promising signs of economic progression, envisioning further climbs in the global ranking in the coming decade.
10. Djibouti:
Djibouti, situated in Eastern Africa, achieved a remarkable climb from 154th to 99th in global rankings, becoming one of the top 10 easiest African countries for business. The notable growth is attributed to comprehensive reforms implemented across key business aspects.
The launch of the Djibouti International Free Trade Zone (DIFTZ), valued at $15 billion, played a pivotal role. Djibouti’s strategic location with two of the world’s busiest maritime trade routes and changes to its legal framework further enhanced its business environment. Djibouti stands out as the sole country in Northern Africa and the Middle East, excluding Afghanistan, to feature among the World Bank’s most improved economies.
Conclusion
A significant obstacle confronting business owners operating in African countries is the complex process of tax remittance and establishing effective relationships with government agencies. Obtaining the requisite documents and accreditations necessary for conducting business in the country poses a considerable challenge.
As a business owner, harnessing strategic partnerships with reputable companies and trusted agencies in the target country of your business expansion is crucial. This approach provides invaluable insights and practical tips, saving you time, money, and resources while facilitating a quicker and more sustainable launch of your business operations.
Top 10 African countries excelling in business ease not only shows the diverse economic landscapes but also the impressive strides made by businesses within these nations. From the bustling technology hubs in Kenya to the mineral-rich terrains of Zambia, each country showcases unique economic factors that contribute to their success.
The commitment of governments to improve business environments, coupled with strategic investments in infrastructure and technology, positions these countries as beacons of opportunity for both local and international entrepreneurs.
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