Time for Africa

Haitham Nouri , Tuesday 17 Dec 2019

When it comes to the ease of doing business and competitiveness in Africa, Mauritius and Rwanda lead by example

Time for Africa

A number of economic reports were recently released assessing the performance of African countries, particularly those south of the Sahara. The reports revealed marked improvement in those African countries’ economic performance, despite political upheaval in the region.

Two of the most prominent reports were the Doing Business 2020 Report released by the World Bank and the Global Competitiveness Report 2019 published by the World Economic Forum.

When speaking of doing business and competitiveness in Africa, observers pause at the exceptional experience of Mauritius and Rwanda, the latter of which in two decades became an African success story.

Mauritius — an archipelago in East Africa — advance to 13th position globally in the World Bank’s Ease of Doing Business Report 2020, listed way ahead of France, Germany, Canada, Japan and China.

This is the first time an African country has enjoyed such a privileged position in the report, which tracks economic reforms in 190 countries.

World Bank researchers pointed out that Mauritius’ seven-point leap, compared to the previous edition of the report, was the result of systematic reforms implemented by the country to improve its business climate over the past decade.

In the Global Competitiveness Report issued by the World Economic Forum in Switzerland, Mauritius ranked first in Africa and 52nd globally, thanks to quality of institutions, relatively high security rates in the region, advanced social capital, strong corporate governance and a strong commitment to sustainability.

Mauritius has also improved its infrastructure. Due to its application of information and communications technology, it has become one of the countries that is most open to the world.

Nevertheless, Mauritius’ progress is offset by a slight decrease in macroeconomic stability driven by an increase in public debt and a decline in educational attainment.

Several other African countries emerged alongside Mauritius. In doing business, Togo’s strenuous efforts reflected on its ranking in the global doing business index. It advanced 40 positions, from 137 to 97, in one year.

Togo followed in Rwanda’s footsteps, especially in establishing trade businesses, registering real estate and obtaining credit.

But Togo is still tagging behind Rwanda, ranked 38th.

Senegal, Nigeria, Zimbabwe, Côte d’Ivoire, Uganda and Niger also progressed in doing business this year.

Some of these countries improved by 10 or 15 spots, with the common factors between them being the reforms they embarked on to facilitate access to credit and digitisation of tax payment systems, which decreased companies’ expenses, reduced the period of import and export and facilitated the legal procedures adopted to simplify the implementation of contracts and procedures for resolving insolvency.

In terms of competitiveness, South Africa rose up after a decade of administrative and political slumber, ascending seven ranks to reach 60th position.

South Africa is a promising regional financial hub, with developed markets in ​​stocks, insurance and credit. It has developed one of the most advanced infrastructures on the continent and is one of the larger markets in Africa.

However, South Africa’s health indicators are still low, and deteriorated security has stood for a long time in the way of the country’s ability to receive large investments.

According to International Monetary Fund estimates, these African countries will be in the top 10 list of economic growth next year: Ethiopia, Rwanda, Ghana, Cote d’Ivoire, Senegal, Benin, Kenya, Uganda and Burkina Faso. Tanzania joined the list this year, replacing Guinea.

The region’s overall economic growth rate is expected to reach 3.8 per cent, meeting the global forecast set at 3.7 per cent.

Debt, however, remains a thorn in the side of African countries. They will be staring danger in the eye if a global recession occurs in 2020. Commodity prices will decrease with the reduction in demand. This is when many African countries will have difficulties managing their debt service, especially if interest rates continue to rise.

Nevertheless, reading the African economic reality objectively shows that “the African rise” is a concept promoted to beautify  African realities, covering structural imbalances that African economies have suffered since their independence.

With the exception of East Africa, the industrial sector spiralled down across the continent, with resource-based industries accounting for 49 per cent of total added value.

The value of African industrial exports has decreased in the past two decades, putting the continent at a major economic crossroads.

Still, a little development is better than none at all.

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