researches for africaresearches for africa
author
Cihangir B.
Business
09 / 2020

Top 10 Easiest African Countries to Invest In

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It should come as no surprise that investors are lined up to tap into Africa's potential. A continent that has experienced such impressive economic growth over the past two decades is sure to attract both local and foreign investors. One of the more prominent reasons that Africa is one of the best places to invest in widely untapped business opportunities in several profitable industries, including transportation and technology. More than that, the countries in Africa are blessed with the availability of precious raw materials, as well as a ready consumer market and a young and educated workforce. 

Despite all the advantages of investing in this booming continent, Africa is home to 54 different countries, making it practically impossible to invest in all of them. So how do you go about the selection process? You might assume that going after the economic giants, such as South Africa and Nigeria, is the way to go (and they are one route you can take); however, consider another option. In terms of policy and business reforms, some smaller economies on the continent are better performing. 

There are parameters used in a report by The World Bank to measure the ease of doing business in a country. Some of these parameters include ease of starting a business, contracts, registering property, access to credit, training, and taxes. Today, we present you with the top 10 easiest African economies to do business in, as reported by The World Bank. 

1. Mauritius

mauritius

At the very top of our list is the island nation of Mauritius, situated in the southeastern part of Africa. Some might say that their number one position is not as impressive as the fact that they are also ranked as 13th out of 195 in the 2020 World Bank report, moving seven places up from 20th position in 2019. 

Amid a rapidly changing global landscape, this country manages to consistently transform its business environment, thereby streamlining the business climate over the years. 

Mauritius has an ongoing strategy to become the business facilitation leader in Africa and to be among the most business-friendly countries in the world, alongside Hong Kong and Singapore. Needless to say, they are getting really close to achieving that goal. 

As aforementioned, the World Bank measures the ease of doing business in a country using several parameters. Some of them are construction permits and property registration. On that front,  Mauritius has improved significantly over the past year. 

The automation of license permits has led to streamlined procedures that make dealing with construction permits in Mauritius much more straightforward. 

Submission of business licensing, including occupation certificates and building and land use permits, can now be conveniently carried out electronically, all thanks to their enforcement of the National Electronic Licensing System. 

More so, a national register of statistics on land dispute resolution and immovable properties, known as the Mauritius e-Registry System, has now been administered, resulting in better transparency of information available to businesses. All of these contribute to Mauritius topping this list, and the way things are going, they might be here for a while. 

2. Rwanda

rwanda

Just like Mauritius, Rwanda has maintained its second position from 2019 on the most recent The World Bank’s annual Doing Business ranking. One of the more commendable things about Rwanda is that it is one of the few Sub-Saharan African countries that has dramatically boosted its business climate over the years. Against a score point of 100, this country scored 76.5 and is ranked 38th position on a global scale. 

According to The World Bank, Rwanda has executed three critical reforms over the past year that have landed them this position on the list. They constitute dealing with construction permits, starting a business, and getting electricity. 

Rwanda’s business environment is amicable for businesses that are just starting. In fact, their new reform includes exempting small and medium-sized companies that have been newly formed from the otherwise required trading license tax for their first two years of operation in the country. More so, they have also worked on reducing the time it takes for these businesses to obtain water and sewage connection permits, all in an attempt to create an environment that promotes business success. 

And it doesn’t just stop there. This country has improved the quality control of buildings by making it a requirement for all construction professionals to acquire liability insurance on all facilities once they are in use. 

The reliability of power supply in this economy is another commendable effort that puts it second on this list. The Rwanda Development Board upgraded the power grid infrastructure. All of these attributed to Rwanda’s friendly business environment and resulted in them attracting significant amounts of foreign investment. 

3. Morocco

morocco

The third position on this list goes to Morocco. It also ranks 53rd position globally and obtained a 73.4 mark out of 100 according to the World Bank’s ease of conducting business indicators. From this rating, you may notice that Morocco offers the best business climate in entire North Africa, even ahead of Egypt and Tunisia. The effort that the Moroccan government has put towards making this happen, from inception to wind-down, does not go unnoticed. 

To start with, Morocco has made significant headway in dealing with construction permits. According to the World Bank report, this economy ensures construction permit dealings are more straightforward for businesses by not only establishing an online platform but also routinely improving it to ensure topnotch performance. 

Furthermore, they have streamlined the entire process to make it possible for establishments to apply for and obtain certificates of conformity from their online platform. 

Morocco also made a mark through its tax reduction policy. In addition to this, they are promoting an electronic payment method at their ports to make the paperless customs clearance more efficient. They equally extended work hours at their ports. Morocco’s facilitation of investments has also led to a business environment that is easy to operate. 

Launching businesses in Morocco is further promoted thanks to more appropriate legal and economic guarantees set in place by order of their monarch. The king suggested the establishment of proper mechanisms that aid in settling investments and business-related disputes on both a national and international level. This was indicated alongside alternative methods of judicial approaches, such as arbitration and mediation. 

4. Kenya

kenya

In the entire Eastern region of Africa, Kenya is known for being the most powerful country. This means that most people agree that Kenya has earned its spot on this list as the 4th easiest country to business in Africa. It was awarded an ease of doing business ranking of 73.2 and, on a global scale, is ranked 56th. 

The benefits of doing business in this country are endless. First of all, with a predicted economic growth rate of 5 percent despite the projected global economic downturn headed our way, Kenya is a country that will always find itself afloat. The political reconciliation that happened after its disputed elections in 2017 enabled Kenya to elect a government that is more committed to the country’s economic growth and improving the state of their business environment in efforts to promote foreign investments. 

This economy has enjoyed the benefits of expansion in consumer demand as well as its recent integration in the East African Community (EAC). All these, in addition to its structural reforms and infrastructural investments, make Kenya an attractive country to do business. More than that, this nation simply prides itself on its welcoming business environment. It’s infrastructural development also works towards improving its GDP and also making businesses more comfortable to operate. Altogether, it ranks third in Sub-Saharan Africa when it comes to innovation. The World Bank commended this growing economy for its reforms towards protecting minority investors and making access to credit by small businesses more attainable. More so, it scored a 70/100 on electricity connection and a 50 on insolvency resolution. 

5. Tunisia

tunisia

Between the years 2010 to 2017, Tunisia’s Ease of Doing Business was worsening by the year. As of 2018, however, it experienced its first improvement, and for the third year in a row, it has climbed up the list, earning it the 5th position in Africa. The country has jumped eight places on the global scale from 88th to 80th between 2018 and 2019, and now in 2020, it is ranked 78th with a rating of 68.7. 

On the parameter of ‘ease of doing business’ and ‘dealing with construction permits,’ Tunisia has performed impressively, ranking 19th and 32nd on a global scale, respectively.

All of these achievements by Tunisia came as a result of government efforts that started in 2017 after yet another terrible ranking performance. The minister of Development, Investment, and International Corporations headed a three-year action plan to improve the business environment of the country. Short, medium and long term measures were equally put in place, with the ultimate goal being to rank as one of the top 50 easiest countries to do business worldwide. Ranking 78th in 2020, it can be predicted that Tunisia is not far off from achieving their goal within the next decade. 

To carry out their plan, this country has since requested expert help from international financial institutions, including the World Bank itself. To that end, it dedicated a task that includes representatives from both the private and public sectors for each of the 10 World Bank indicators. In its first year of executing this plan, Tunisia identified up to 50 different administrative measures and impactful reforms that led to them jumping eight positions in 2019. It is quite evident that if this economy continues like this, they’ll be saying hello to the Top 50 spot much sooner than predicted. 

6. South Africa

africa

South Africa’s position at 6th place on the Ease of Doing Business in Africa indicator would have been impressive if not for the fact that their global position has dropped. In 2019, South Africa was ranked 82nd out of 190 economies in the report, however in 2020, it is ranked 84th, it’s lowest ranking yet. The nation’s decline in the World Bank’s ranking is associated with several things. Firstly, the report shows that South Africa only implemented a single reform in 2019, and four over the past five years. More so, the World Bank stated that weak governance, corruption, and inadequate infrastructure are a few reasons why countries in Sub-Saharan Africa, including South Africa, are lagging. 

Also, when it comes to measuring parameters such as trading across borders and paying taxes,  businesses take an average of 96 hours to comply with document requirements in most Sub-Saharan African countries. That speed is incredibly low compared to the 3.4 hours in high-income countries. 

Despite all these, all hope is not lost for South Africa. The country ranks high when it comes down to providing electricity for businesses. Also, in dealing with construction permits, Cape-town was ranked in the top 25 percent of cities worldwide. This is as a result of improvements carried out by the city’s development management department. As such, issuing permits take an average 17 days only, compared to 45 days recorded in previous years. 

7. Botswana

botswana

Botswana, located in the Southern region of Africa, takes up the 7th position on our list. It was also ranked 86th on a worldwide scale, with a 66.2 out a 100, according to the World Bank. Botswana is a nation that only a decade ago, was nowhere near the top 10. So you might be wondering what they did differently. Well, for one, this country’s development mining sector alongside improvements in mining infrastructure has contributed to their growing economy. Their mining sector attracts quite several foreign investors interested in tapping into their natural resources. 

And because they attack more and more international investments each year, the government puts in efforts to improve their business environment in a bid to make it more attractive to foreign investors. 

In addition to this, it is also quite essential to note that this nation’s banking and insurance sector is grand. One of the indicators by the World Bank is the ease of access to credit. Altogether, the Botswana governments and financial institutions are working hard to ensure that access to credit by businesses are much easier to obtain. 

Also, it’s cross border trade is ranked relatively high, ranking it among the top 100 countries on that indicator’s rating. Most noteworthy is their ranking for obtaining building permits. Ranked 31st worldwide, Botswana uses an electronic platform to get permits, and at an average waiting period of 18 days, this comes at no surprise to us. 

8. Zambia

zambia

Number 8 on this list is Zambia. Zambia was among the ten most improved countries when it comes to ease of doing business by the World bank in the year 2011, and their growth since then has been steady. In addition to that, this country was ranked highly amongst the top five performing countries in the entire southern region of Africa. 

The Zambian government made it a goal to climb up on this list, and they’re not letting anything stop them. In the past year, they issued a policy decision that enables them to enter the international capital market. They intend to do this by giving their very first sovereign bond. This decision came as a result of positive credit ratings awarded by international credit rating firms, including Fitch Ratings and Standards and Poor’s. Both organizations rated Zambia a B+ in regards to long term foreign and local currency. 

Also, the Zambian government put in aggressive efforts to ensure that the ease of doing business in the nation improves. They are also trying to reduce the overall costs of doing business, especially for starter and small-sized businesses. To achieve this, an improvement in infrastructure including telecommunications, roads, energy, and water all are being carried out. To add to that, the government partnered with the Central Bank to develop a good macroeconomic environment that has since led to a reduced cost of borrowing. Access to long term financial aid at lower interest rates is also a result of this, and Zambia still has more tricks up its sleeves. 

9. Seychelles

seychelles

With a 62.41 out of a 100 on the World Bank ranking, Seychelles is 9th on our list. It was ranked 96th globally, earning it a spot in the top 100 countries. Also, the nation of Seychelles was awarded the title of the  4th most competitive country out of 37 countries ranked in 2019, and things are only looking upwards for the nation. This country is incredibly diverse, to say the least. When it comes to its profitable industries, Seychelles attributes its success to a variety of sectors, including tourism, agriculture, energy, and telecommunications. These sectors are responsible for attracting the majority of foreign investors. As such, the government has spent a lot on infrastructural investments to ensure the growth of their industries. 

Also, because they want to attract more investments, the nation ensured that both local and foreign businesses find it reasonably easy to start up, operate, and liquidate their enterprises. According to the chairman of the Seychelles Chamber of Commerce and Industry (SCCI), the country is showing promising signs of economic progression. She also stated that appropriate laws, regulations, and facilities are continuously being put in place to ensure that anyone can start trading as soon as possible.

She commented that it's because the nation thrives off businesses available to it, so keeping these businesses happy is a priority. 

The chairman recognizes that Seychelles still has its challenges, and there's a fair amount of work to be done to climb up the global ranking. But, if they keep going at this rate, then in the next decade or so, they should be topping this list. 

10. Djibouti

djibouti

Last on this list is Djibouti. Located in Eastern Africa, this nation made one of the most noteworthy improvements by jumping from 154th to 99th position on a global scale. This growth rate, according to the World Bank, was as a result of implementing different reforms across critical areas in its business landscape. The efforts, of course, have paid off, as it is now amongst the top 10 easiest African countries to do business in. 

One of the main drivers behind Djibouti’s growth is that it recently launched the Djibouti International Free Trade Zone (DIFTZ). This free trade zone is the largest in the continent and is worth a whopping 15 billion dollars in infrastructure investment programs.

More so, the nation greatly benefited from having two of the three busiest maritime trade routes in the world. Changes to its code of commerce and legal framework have also contributed to its position. Djibouti is the only country in entire Northern Africa and the Middle East to make an appearance on the World Bank’s list of most improved economies, aside from Afghanistan. 

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