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Some of the Best and Worst “Doing Business” Environments in Africa

By Hartmut Sieper, columnist.

 

It is amazing how fast some African countries have reformed over the last couple of years. On the other hand, many countries are lagging behind making it very difficult for investors and entrepreneurs to support economic development by doing business.

In a five-year measure off of Doing Business indicators between 2006 and 2011, 6 of the 12 top countries are in Africa: Rwanda (rank 2), Burkina Faso (rank 4), Mali (rank 6), Ghana (rank 8), Mozambique (rank 11), and Egypt (rank 12). In those countries, doing business became much easier.

Rwanda and Burundi 

Rwanda belongs to the top reformers. The small landlocked country in East Africa that is suffering from limited natural resources, high population pressure and very high transportation costs to the world markets, wants to position itself as a hub for ICT services, according to the will of President Paul Kagame.

He runs the country rather as a CEO than as a head of state. Consequently, he initiated measures of making it easier for companies and individuals to do business. Since a one-stop shop was introduced, it is possible to start a business within three days, and it takes only two procedures. This brings Rwanda’s rank to nine worldwide.

On the contrary, it is much more difficult to start a business in neighboring country Burundi. There, it takes 11 procedures to complete a company registration, and the whole process takes 32 days. The cost is 129% of the average yearly income per capita, compared with just 9% in Rwanda. As a result, Burundi ranks 135 in the world.

These astounding differences are hard to understand since both countries are similar in size and population and have at least one official language (French) in common.  They also have the same ethnic groups (mainly Hutu and Tutsi) and share the same sad history (genocide in 1994).

One key difference is that Rwanda has developed sound government policies and clear market-oriented goals to boost economic activity. And, Rwanda has chosen English as the preferred commercial language since 1994. This significant change will help Rwanda better exploit the huge opportunities arising from being a member of the East African community. English is the common language in Uganda, Tanzania, and Kenya, as well as Kisuaheli. [ more ]

 

http://www.trans-africa-invest.com

Hartmut Sieper, owner and managing director of German-based Trans Africa Invest GmbH, attracts investors, companies, technologies and entrepreneurs from industrialized countries to the African markets.

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