Uganda drops seven places in ease of doing business ranking

PIC: The ranking took into consideration business elements such as access to and reliability of electricity

ECONOMY | RANKING

Uganda has dropped seven places to 122 in the rankings out of 190 economies this year 2017, compared to 115 out of 190 economies in the previous year 2016.

Uganda's finance minister Matia Kasaija last year promised improvements in the business environment to improve Uganda's rankings in the ease of doing business.

The World Bank Group has released its annual ‘Doing Business report 2018: Reforming to Create Jobs'. In the ease of doing business global rankings, Mauritius is in 25th place, followed by Rwanda (41), and Kenya (80) as the region's top ranked economies.

The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level.

The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Uganda has not done well in areas it was expected to excel.

Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labour market regulation.

Sub-Saharan Africa economies adopted many business reforms says the report. A total of 83 business reforms were carried out in the past year, surpassing the previous year's record of 81 reforms. This brings to a total of 798 the number of reforms carried out in the past 15 years in the 48 economies of the region monitored.

The region is well represented in this year's global top 10 improvers, based on reforms undertaken, with Malawi; Nigeria; and Zambia. Malawi, which implemented four reforms, made significant improvements in the area of Getting Credit by adopting a new law that sets clear rules related to bankruptcy procedures and by establishing a new credit bureau.

Nigeria improved access to credit by guaranteeing borrowers the right to inspect their credit data from the credit bureau and also made starting a business faster by allowing electronic stamping of registration documents. Reforms in Zambia included the strengthening of access to credit by adopting a new Movable Property Act and by setting up a new collateral registry.

Much of the reform activity in the past year focused on the areas of Trading Across Borders and Starting a Business, with 15 reforms each, followed by Dealing with Construction Permits, where 14 reforms accounted for 64 percent of the 22 reforms recorded in this area globally. Zambia implemented a global automated system for customs data (ASYCUDA), making it easier for businesses to trade across borders, while Angola and Mozambique made trading across borders easier by improving port infrastructure.

Several economies, including Benin, Cabo Verde, the Democratic Republic of Congo, Gabon, Ghana, Niger, Nigeria and the Seychelles increased the transparency of dealing with construction permits by publishing regulations related to construction online. Angola also made dealing with construction permits easier and less time-consuming by improving its system for building permit applications.

Kenya implemented the most reforms in the region in the past year, with six. Among other improvements, Kenya made starting a business easier by reducing the number of procedures required to register a business, and reduced the time for import documentary compliance by utilizing a single window system. Kenya also improved the reliability of electricity supply by investing in distribution lines and transformers and by setting up a specialized squad to restore power when outages occur and implemented an online platform (itax) for filing and paying corporate income tax.

Four other economies Mauritania, Nigeria, Rwanda and Senegal implemented five reforms each during the past year. Rwanda, which is second only to New Zealand in Registering Property, implemented online services to further facilitate property transfers. As a result, it now takes only seven days to legally transfer a property title in Rwanda.

Notable reforms in Senegal included the introduction of stricter pre-trial hearing rules that led to a reduction of the time necessary to resolve a commercial dispute. These new rules have reduced the time to enforce a contract from 925 days to 740 days. Senegal also made starting a business and registering property less costly by reducing the notary fees for company incorporation and lowering the costs of transferring property, respectively.

Mauritius, the region's top-ranked economy, carried out four reforms, which included outsourcing the design and construction of sewerage connection works, thus, speeding up the process of obtaining a construction permit and improving processes to facilitate cross border trade. Mauritius also made it easier to transfer property by reducing the transfer tax, implementing a complaint mechanism and publishing service standards.

In the ease of doing business global rankings, Mauritius is in 25th place, followed by Rwanda (41), and Kenya (80) as the region's top ranked economies.

The Sub-Saharan Africa region continues to struggle in the area of getting electricity. On average, obtaining an electricity connection takes 115 days in the region, compared to the global average of 92 days.

"Sub-Saharan Africa is beset with myriad crises, including conflict and violence. We hope to continue recording the region's successes in enabling entrepreneurship to address the challenge of job-creation, particularly for the region's millions of young women and men," said Rita Ramalho, acting director of the World Bank's Global Indicators Group, which produces the report.

Highlights of the region's economies' successes over the past 15 years include:

• Making it easier to register a business has been a major focus for the region in the 15 years since Doing Business was first published, with 163 reforms recorded in this area. In 2003, it took 61 days on average to start a business in the region. Today, it takes 24 days, which compare with the global average of 20 days. In Kenya, for example, the time needed to start a business has been more than halved from 60 days in 2003, to 25 days today.

• In the area of enforcing contracts, Rwanda reduced the time to settle a commercial dispute from 395 days 15 years ago, to 230 days today. In Resolving Insolvency, Zambia increased the recovery rate from 17 cents on the dollar in 15 years ago, to 48 cents on the dollar today.

• The biggest reformers in the region have been Rwanda with 52 reforms in 15 years, followed by Kenya with 32 reforms and Mauritius with 31 reforms.