Introducing reforms to facilitate business operations and improve the investment climate helped Egypt improve its ranking in the World Bank Group’s Doing Business Report for 2019, issued recently under the name of “Training for Reform”.
Egypt came in 120 among 190 economies surveyed in the report and achieved progress in five areas: the establishment of companies; access to credit; the protection of small investors; the payment of taxes; and the settlement of insolvency cases.
The Doing Business Index ranks countries against each other based on how the regulatory environment encourages business operations and stronger protections of property rights. Economies with a high rank of one to 20 have simpler and better regulations for businesses, it says.
According to the report, the implemented reforms were the most in Egypt in one year over the last decade and the second-largest number of reforms implemented by a Middle East and North Africa (MENA) country in 2018.
Starting a business in Egypt has become easier by removing the requirement to obtain a bank certificate and establishing a one-stop shop to complete the required procedures in 11 days instead of 16 days, according to the report.
Egypt also increased the ability of projects to obtain financing by issuing a movable safeguards law that for the first time allows companies to obtain financing by guarantees for movable property.
Egypt also enhanced the protection of small investors through amendments to the companies law and its executive regulations, the report added.
“The remarkable acceleration in the pace of reform of business in Egypt is a sign of optimism for the country’s commitment to entrepreneurship and empowering private-sector institutions,” Samia Msadek, acting World Bank country director for Egypt, Yemen and Djibouti, said in a press release.
“We look forward to continued efforts in order to adopt fair, transparent and efficient regulatory practices to stimulate private-sector-led job-creation efforts,” Msadek added.
Reforms in Egypt have included facilitating the settlement of insolvencies by applying a reorganisation mechanism for insolvent companies, allowing debtors to initiate reorganisation proceedings, and granting creditors greater participation in the proceedings, the report mentioned.
Egypt has also performed well in the area of building permits. The cost of completing all the procedures required to obtain a licence to construct a warehouse is only 1.6 per cent of the warehouse value, compared to an average of 4.7 per cent in other MENA countries, the report said.
As for taxes, the report added that Egypt had made paying taxes easier by extending value added tax (VAT) cash refunds to manufacturers in cases of capital investment.
The Doing Business Report registered a peak of activity worldwide this year.“Governments around the world set a new record in bureaucracy-busting efforts for the domestic private sector, implementing 314 business reforms over the past year,” it said.
This year’s reforms surpass the previous all-time high of 290 reforms two years ago.
There were reforms carried out by 128 countries to benefit small and medium-sized enterprises as well as entrepreneurs and enabling job creation and stimulating private investment.
“The private sector is key to creating sustainable economic growth and ending poverty around the world,” World Bank President Jim Young Kim said in a press release.
“Fair, efficient and transparent rules which the report promotes are the bedrock of a vibrant economy and entrepreneurship environment. It is critical for governments to accelerate efforts to create the conditions for private enterprises to thrive and communities to prosper,” Kim added.
Since it was launched in 2003, the Doing Business Report has registered more than 3,500 reforms in the 10 areas of business regulation measured.
These areas are: 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.
It also measures labour-market regulation, which is not included in this year’s ranking.
Around the world registering a business now takes an average of 20 days and costs 23 per cent of income per capita, compared to 47 days and 76 per cent on income per capita in 2006.
Moreover, the average paid-in minimum capital that entrepreneurs must deposit is six per cent of income per capita, compared with 145 per cent of income per capita in 2006.
The report added that the global average time to prepare, file and pay taxes has fallen from 324 hours in 2005 to 237 hours in 2017.
According to the report, this year’s 10 top improvers include a range of economies from five regions.
The economies with the most notable improvements in 2019 are Afghanistan, Djibouti, China, Azerbaijan, India, Togo, Kenya, Cote d’Ivoire, Turkey and Rwanda.
In the MENA region, the UAE jumped 10 places and came in at the 11th position globally from 21st position last year to lead the Arab world for the sixth consecutive year.
Djibouti’s reform efforts were also acknowledged. It was listed as one of the top ten most improved economies for the second year in a row, jumping 55 places from 154th to 99th position.
The MENA region’s economies as a whole significantly accelerated the pace of reforms in the past year, with 43 reforms compared to 29 the previous year. However, it continues to lag on gender-related issues, with barriers for women entrepreneurs in place in 14 countries.
Sub-Saharan Africa was the region with the highest number of reforms for the third consecutive year. Around 107 reforms across 40 countries, representing one third of the implemented reforms worldwide, were captured by the report in Sub-Saharan Africa.
The private sector has felt the improvement since the average time and cost to register a business has declined from 59 days and 192 per cent of income per capita in 2006 to 23 days and 40 per cent of income per capita today, according to the report.
* A version of this article appears in print in the 8 November, 2018 edition of Al-Ahram Weekly under the headline: Better ranking for Egypt