Ethiopia is placed 132 out of 189 countries for ease of doing business, according to a new report.
Singapore and New Zealand took the top spots, while Libya and Eritrea are labeled as the worst in the Doing Business Report, published by the World Bank and International Finance Corporation.
Joining Singapore and New Zealand on the list of the top 10 economies with the most business-friendly regulatory environments are; Hong Kong, China; Denmark; the Republic of Korea; Norway; the United States; the United Kingdom; Finland; and Australia.
The report finds that 85 percent of economies in Europe and Central Asia implemented at least one regulatory reform aimed at making it easier for local entrepreneurs to do business in 2013/14, a larger percentage than in any other region.
“Since 2004 the Doing Business report has captured more than 2,400 regulatory reforms making it easier to do business. In the year from June 1, 2013, to June 1, 2014, 123 economies implemented at least one reform in the areas measured by Doing Business” the report reads.
Doing Business 2015: Going Beyond Efficiency shows that in the past year, economies in Europe and Central Asia further improved the regulatory environment for local entrepreneurs, adding to the gains recorded in the past decade. For example, 10 years ago, starting a new business took a Macedonian entrepreneur 48 days. Today, the process can be completed in 2 days.
The report further said that 21 economies, including 6 in Sub-Saharan Africa and 6 in the OECD high-income group, implemented 3 or more reforms reducing burdensome bureaucracy or improving legal and regulatory frameworks. Globally, more than 80 percent of the economies covered by Doing Business had an improvement in their distance to frontier score, “it is now easier to do business in most parts of the world” according to the report.
“Sub-Saharan Africa, the region with the largest number of economies, accounted for the largest number of regulatory reforms in 2013/14, with 39 reducing the complexity and cost of regulatory processes and 36 strengthening legal institutions.
Sub-Saharan Africa had the second largest share of economies implementing at least one reform and the second largest average improvement in distance to frontier scores. Latin America and the Caribbean and South Asia remain the 2 regions with the smallest share of economies implementing regulatory reforms as captured by Doing Business.
The report also stated that online access to credit reporting systems is growing in the developing world. “Ethiopia’s central bank established a credit information center to allow banks to submit data and inquiries electronically. A pilot program was launched in August 2011 with 3 commercial banks, and by April 2012 the online system was fully implemented.”
“Today 17 Ethiopian banks are registered as data users and provide monthly updates. The objective for the online system is to preserve and distribute 5 years of historical data on the repayment status of all loans.”
Among the 21 economies with the most reforms making it easier to do business in 2013/14, 10 stand out as having improved the most in performance on the Doing Business indicators: Tajikistan, Benin, Togo, Cote d’Ivoire, Senegal, Trinidad and Tobago, the Democratic Republic of Congo, Azerbaijan, Ireland and the United Arab Emirates.
“Together, these 10 top improvers implemented 40 regulatory reforms making it easier to do business. Among these 10, only Cote d’Ivoire featured among the 10 top improvers in last year’s report.”
However the report states that being recognized as top improvers does not mean that these economies have exemplary business regulations; instead, it shows that these economies have placed serious efforts in regulatory reform in the past year and made the biggest advances toward the frontier in regulatory practice. “Many of the 10 top improvers still face many challenges on their way to international best practices in business regulation, including high bureaucratic obstacles, political instability and weak financial institutions” the report reads.
This year’s Doing Business report launches a 2-year process of introducing important improvements in 8 of the 10 sets of Doing Business indicators. These improvements provide a new conceptual framework in which the emphasis on the efficiency of regulation is complemented by an increased emphasis on its quality. In the area of dealing with construction permits, for example, Doing Business will measure the quality of building regulations and the qualifications of the people reviewing the building plans in addition to the efficiency of the process for completing all the formalities to build a warehouse.
Doing Business 2015 is the 12th in a series of annual reports investigating the regulations that enhance business activity and those that constrain it. The report presents quantitative indicators on business regulations and the protection of property rights that can be compared across 189 economies. Doing Business measures regulations affecting 11 areas of the life of a business. Ten of these areas are included in this year’s ranking on the ease of doing business: 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.