Doing Business in Africa

CNBC Africa’s Esther Awoniyi caught with Cemile Hacibeyoglu, a private sector specialist at the World Bank Group to track the progress of the ease of doing business in Africa.

This year marks 15 years since the ease of doing reports by the world bank was put together and I know that it’s dramatically formed the way Africans do business here on the continent but help us understand how dramatic these changes have been.

HACIBEYOGLU: Let me just start with introducing what they doing business index does and measures. You just mentioned that it has been the 15th anniversary last year’s edition that came out in October but this is an annual publication of the World Bank group that measures ease of doing business and benchmarks economies according to how easy or difficult it is to do business in these economies. Currently it measures 190 economies across the globe but when it started 15 years ago it was just looking at a little over 130 economies and it wasn’t even capturing the whole spectrum of different areas of business operations that apply to small and medium enterprises.
Today the report looks at areas that relate to the small and medium enterprises the daily lives of these enterprises if you wish, from starting a business to paying taxes to trading across borders to all the way to if you have to go to court or even be bankrupt so if you wish, it’s a very good barometer of how the business environment is in a given economy and of course if you do put out such a public tool in a public space countries are very interested to see how they do compared to their peers, compared to the neighbours and we have seen this report directly really encourage and incentivise countries to do better in the business environment. So globally it has been really has played that role in encouraging countries to improve the business environment but very much so in africa as well.

I know that for Africa specially Sub-Saharan Africa, the region continues to lag other regions when it comes to implementing as some of these reforms to tell us about that.

HACIBEYOGLU: You’ve hit the nail on the head with that, Africa still does on average Sub-Saharan Africa still does have the lowest average as a region the average is about 243 out of 190 economies as you can see there’s definitely room for improvement but it’s not about where we are today as the region, it’s about the journey when it comes to it, especially when you analyse trends if you looked at what was happening about 10 years ago you could only see 3 out of 10 economies improving, today it’s 8 out of 10 economy is improving so 36 out of 48 economies each year or for the past three years introduce at least one more reform that make it easier for businesses to operate within their economies and what does it say it means that African economies have put economic diversification private sector led growth at the heart of the competitiveness agendas.

So would you say that that has been the major problem why the region has lagged? The major challenges why it’s been that way?

HACIBEYOGLU: I think from where the region is coming; from a lower place compared to others in that sense the journey will be longer but I think the progress we have made it certainly is one of the best. In terms of number of reforms, we do top every other region the only other more active region is eastern Europe and central Asia and if you look a little bit into trends on the reasons for that they very much incentivised by policies promoted by or driven by joining the EU and all the others for funding and incentives associated with that but Africa on its own has a really come a long way in increasing this reform pace and really ceasing this moment and understanding the importance of private sector lead growth for competitiveness of the continent.

Do you think that that conversation putting the private sector at the centre of business in especially driving economic reforms, do you think this is a message that is resonating across the continent?

HACIBEYOGLU: Very much so and we’re seeing this throughout the numbers as I said. Actually this past year, the 15th edition of the report, we saw a record high number of reforms across the country it was 83 reforms, we haven’t seen this number. The year before we thought it was a record with 80, this year 83 and I just think the only way is up as I said the number it’s just the number of reforms so the pace but it’s also the number of economies so we are reaching know even post-conflict economies, smaller economies or big economies, we’re in Nigerian now, big economies that didn’t used to think about this kind of reforms are also working in this direction so definitely the trend is very positive.

What is it that distinguishes those countries that have been successful that have that momentum from those who don’t?

HACIBEYOGLU: So these countries realise the importance of economic growth and they realise the importance of having a business environment that is conducive for businesses to thrive so they realise that is not just about investment or results-driven growth but it’s also about your average citizen and their interactions with the government because in most developing economies in the world, about 90% of jobs they come from small and medium enterprises. So you can’t really be talking about growth in developing economies if you don’t address the business environment for small and medium enterprises.

Is it easier to implement many of these reforms in an economy that has low poverty and unemployment levels?

HACIBEYOGLU: It gets more complex with the levels of capacity of the government with the levels of vision of the government it does get more difficult so africa’s context in that sense maybe bringing back to your original point of why are we so behind I think the starting point is a bit low in that sense but I want to say that we are outpacing the other regions in the way we are doing in the determination in which we are working.

So there is opportunity for leapfrogging

HACIBEYOGLU: Absolutely.