Doing Business Report Reveals Important Insights for Africa Investors

Posted by Ryan Shen-Hoover on Saturday, October 17, 2009 at 3:35pm.

Early last month, the World Bank released Doing Business 2010, its provocative ranking of the world’s easiest (and most difficult) places to do business. This year, little Rwanda grabbed headlines as the world’s top reformer. New legislation protecting the rights of the nation’s investors helped propel it up 76 places in the rankings. The World Bank now considers it one of the best places in the world to be an entrepreneur.

Rwanda’s stock market is still in an embryonic stage, and thus of limited interest to most African stock-pickers. So, let’s take a look at how the hosts of the continent’s largest bourses fared.

	World Bank’s 2010 Ease of Doing Business Rankings Country 2010 Global Rank 2009 Global Rank Mauritius 17 24 South Africa 34 32 Botswana 45 39 Namibia 66 54 Zambia 90 99 Ghana 92 87 Kenya 95 84 Uganda 112 106 Nigeria 125 120 Tanzania 131 126 Malawi 132 131

As you can see, the group’s performance was decidedly mixed.

Mauritius once again ranked as Africa’s most favorable business environment, and it didn’t simply rest on its laurels during the year. It slashed the time it takes to register property to just 26 days from 210 days a year earlier. The country also shortened the average amount of time it takes for its courts to enforce a contract, and the reduced the length of severance payments required for laid-off workers.

Zambia was the only other reformer on the list - moving up nine spots. It did so by improving the depth of its credit registry. A private bureau has now compiled credit histories for four out of every 1000 Zambian adults. Sure, that doesn’t sound like much, but - hey - it’s a start. The government also made it a bit less complicated for businesses to hire employees.

Namibia emerged as the biggest backslider. It’s still one of Africa’s better business environments, but the lack of real improvement in any area meant it slipped in the rankings. Chalk the poor result up to a lack of focus on attracting and nurturing capital.

Kenya didn’t fare so well either. It substantially increased the cost of obtaining a construction permit and enforcing a claim for non-payment. Many observers perceive corruption to be on the rise in Kenya. Perhaps the rising costs are manifestations of this alarming trend.

While we should definitely take these rankings with a grain of salt, the big moves may be giving investors important signals. To download the full report, visit www.doingbusiness.org.