Economies in the Middle East and North Africa region implemented the most reforms in the recent period to help small and medium-sized enterprises do business, the World Bank’s Doing Business Report for 2020 highlighted.
Four countries of the region are among the top countries worldwide that improved their business climates.
MENA economies adopted 57 business regulatory reforms in the 12 months to 1 May, up from 43 during the previous 12-month period covered by the report, while 13 of the region’s 20 economies implemented reforms and the region’s average ease of doing business score improved by 1.8 points.
“Economies of the Gulf region have been particularly active, implementing 35 business-climate-improving measures in the past year,” according the report.
For 2019, four Arab countries ranked among the world’s top 10 improvers, the report said; Saudi Arabia, Jordan, Bahrain and Kuwait accounted for almost half of the region’s reforms in the period concerned.
Meanwhile, the United Arab Emirates remained the strongest performer overall in the region, placing 16th (out of 190) on worldwide ease of doing business rankings.
“It is a year of records for economies in the Middle East and North Africa, and we are committed to continuing our support to all countries in the region,” World Bank Regional Vice President for the Middle East and North Africa Ferid Belhaj said.
Belhaj added that the next generation of reforms should focus on transparency, fair competition and good governance, to make MENA open for business and attract investment, which is needed to create jobs for young people and women.
For Jordan, the report said that it joined the top reformers for the first time, with three key reforms. Its economy strengthened access to credit by introducing a new secured transactions law, amending the insolvency law, and launching a unified, modern and notice-based collateral registry, among other measures.
Bahrain, with nine reforms, led both the region and the world in number of reforms implemented. It introduced recently a new bankruptcy law, strengthened the rights of minority shareholders and revamped the process of obtaining building permits through a new online platform. Enforcing contracts was also made easier by creating a specialised commercial court, establishing time standards for key court events, and allowing electronic summons.
Saudi Arabia came as this year’s top improver thanks to the increase in its overall ease of doing business score. It carried out a record, for the country, of eight reforms in the past year.
It established a one-stop shop for company incorporation and eliminated the requirement for married women to provide additional documentation when applying for a national identity card.
It also made importing and exporting faster by enhancing the electronic trade single window, enabling risk-based inspections, launching an online platform for certification of imported goods, and upgrading infrastructure at Jeddah Port.
Kuwait also earned a spot in the top 10 improvers for the first time with seven reforms, including streamlining building permits by integrating additional authorities into the electronic permit platform and enhancing inter-agency communication. The country also made trading across borders easier by enhancing the customs risk management system and implementing a new electronic clearance system.
Morocco carried out six reforms, including strengthening minority investor protections, reducing the corporate income tax rate, and introducing e-payment of port fees.
The report highlighted that the United Arab Emirates, Egypt and Oman implemented four reforms each. All three strengthened the rights of minority investors, streamlined business registration processes, and made it easier for businesses to import and export goods.
Collectively, according to the report, the region’s economies focused their reforms on improving electricity infrastructure and protecting minority investors, with 40 percent of the countries in the region reforming in these areas.
“Overall, the region performs the best in the areas of paying taxes, getting electricity, and dealing with construction permits. Obtaining a building permit takes on average 124 days, 28 days less than among OECD high-income economies. Similarly, entrepreneurs in the region need to complete 16.5 payments on average to comply with their fiscal requirement, compared to 23 globally. Bahrain is the best performer globally in tax compliance time, requiring just 22.5 hours per year to file and pay taxes,” reads the report.
However, the report found that getting credit in the Middle East and North Africa remains harder than anywhere else in the world, partly due to insufficient protections for lenders and borrowers in collateral and bankruptcy laws.
“The region also underperforms in the areas of trading across borders and resolving insolvency. The cost of complying with border requirements for exporting averages $442 and takes 53 hours, three and four times more than the averages among OECD high-income economies. In bankruptcy, the average recovery rate in the region is 27 cents on the dollar, compared with 70 cents in OECD high-income ones,” the report noted.
The report also found that barriers against women are still widespread in the region, with 13 of the region’s economies imposing additional procedures for female entrepreneurs to start businesses.