World Bank releases Doing Business report – Somalia named the most challenging

[Deeq A.]

The World Bank’s Doing Business 2018 report ranks 190 economies based on how easy it is to do business there, taking into account trading regulations, property rights, contract enforcement, investment laws, the availability of credit and a number of other factors.

1. New Zealand (Rank 1)
For the second year in a row, New Zealand retains its position at the top of the Doing Business rankings. The Oceanic country may be thousands of miles away from major markets in the West, but global supply chains and new communication technologies are eroding this hindrance. New Zealand’s strengths are particularly pronounced when it comes to starting a business; the country boasts the smallest number of procedures required – just one – and the shortest time needed to fulfil them (half a day). It also scores highly in terms of building regulation transparency, tax payment services and protecting minority investors.

2. Georgia (Rank 9)
The only lower-middle-income economy to feature in the top 20, at first glance Georgia appears to be something of an anomaly. With a population of just 3.7 million and a GDP per capita that ranks among the lowest in Europe, it is not a country often considered a business hotspot. However, the Georgian Government has made great efforts to enhance private enterprise in the country, implementing 47 business regulation reforms since the Doing Business report began in 2003 – more than any other country in the survey. Among the many changes, Georgia has made electricity more affordable and created more accessible insolvency proceedings for debtors and creditors.

3. UAE (Rank 21)
The UAE is the best-performing country in the Middle East and North Africa region, and climbed five places from last year. The country performs particularly well in the availability of electricity and the efficiency of issuing construction permits. In addition, great strides have been made towards improving credit reporting, with credit bureaus now offering scores to banks and other financial institutions, helping them to more accurately determine the creditworthiness of borrowers. The formation of a regulatory reform committee, which pays close attention to the Doing Business metrics and how to score highly, has also helped the UAE’s rise.

4. Thailand (Rank 26)
Thailand is one of the world’s most improved economies in terms of the ease of doing business, having implemented eight reforms during the 2016/17 period covered by the report. The adoption of a new secured transactions law has bolstered the rights of creditors and borrowers, while changes to risk assessment and land administration systems boosted efficiency markedly. These reforms, and a host of others, have created a much more welcoming business climate in the country. Not so long ago, starting a company in Thailand took an average of 27.5 days. Now, it takes less than five, demonstrating the South-East Asian country’s impressive recent development.

5. Chile (Rank 55)
Chile was ranked 34th in the 2014 Doing Business report, but has suffered a significant drop in the years since. While the World Bank has been keen to stress that the fall is simply due to other nations improving at a faster rate, some suspect foul play. Critics of the report have gone as far as suggesting that Chile’s lower ranking is politically motivated, influenced by opponents of the country’s left-leaning former president, Michelle Bachelet. The 12 methodological changes made between 2014 and 2016, which have largely damaged Chile’s score, have only added credence to claims of the report’s bias.

6. India (Rank 100)
India may already be the world’s sixth-largest economy, and is growing fast, but it still has a long way to go if it’s to make doing business in the country easier. Fortunately, the government is working hard to climb the ranking. The processes for making tax payments were streamlined in 2016, thanks to the introduction of income computation and disclosure standards. Contract enforcement has also improved due to the adoption of performance measurement reports on a wider scale. One area where India has had great success is protecting minority investors, where enhanced standards of governance have had a significant impact.

7. Nigeria (Rank 145)
Nigeria made it onto the report’s list of the 10 most improved economies for the first time this year as a result of recently enforced business reforms. Africa’s most populous state recently increased transparency regarding construction permits and the transferral of property rights. Starting a business has also become a faster process since the government introduced the electronic stamping of registration documents. Nigeria is still playing catch-up in other areas, and ranks particularly poorly in terms of electricity access and cross-border trade. The country’s overall position shows there is much work still to be done.

8. Somalia (Rank 190)
For the second year in a row, Somalia has the unwanted distinction of being named the most challenging place in which to do business. Dire economic conditions, a fragile political climate and the ongoing threat of terrorism make it difficult for Somalia to create much upward momentum. A mostly dollarised economy and a worrying number of regulatory loopholes have also meant that the informal economy often seems more prominent than the formal one. Business potential does exist, particularly if diaspora professionals can be enticed back to the country, but the chances of Somalia rising significantly up the Doing Business rankings look slim for now.

Source: World Finance