Botswana slips in doing business 2011

MBONGENI MGUNI
Staff Writer | Friday November 5, 2010 00:00

Released yesterday, Doing Business 2011 analyses business operating environments in 183 countries, across nine categories used to gauge the favourability of individual economies to entrepreneurs. The Report covers the period June 2009 to May 2010.

Botswana maintained position three in Africa, after South Africa and Mauritius, with the former maintaining its rankings globally from last year while the latter climbed three places up. An analysis of the Doing Business 2011 indicates that Botswana's drop was more a reflection of other countries boosting their regulatory environments, as opposed to the country's business climate massively deteriorating. African states such as Rwanda, Cape Verde and Zambia were among the 10 economies worldwide that most improved the ease of doing business for entrepreneurs, while Botswana scores slipped slightly in eight of the nine categories as result of other countries' superior performance.

According to the Report, Botswana's biggest drops were in Starting a Business, Dealing with Construction Permits, Protecting Investors and Paying Taxes. The country, however, performed exceptionally in the Enforcing Contracts category where it rose nine places in the rankings.

In the various categories and sub-categories, Botswana's scores were largely similar to its Doing Business 2010 scores, but these proved uncompetitive against the huge strides made by African and other nations in the 2011 Report. In the Starting a Business category, Botswana still takes 10 procedures and 61 days to start a business, the figures remaining the same between 2010 and 2011. However, countries such as Zambia and Rwanda have overtaken Botswana, with the latter now taking only two procedures and three days, from nine procedures in 2005.

Under Dealing with Construction permits, Botswana had the highest number of procedures to deal with construction permits at 24, compared to Angola and Namibia with 12 and a SADC regional average of 17.1 procedures.

Botswana's marginally poorer performance under Protecting Investors and Paying Taxes was also a result of other countries' better policy changes, such as Mauritius which reduced the corporate income tax rate from 25percent to 15percent.

Botswana was however, well above the regional average in both investor protection and taxes, ranking third in SADC for the former and achieving the third lowest tax rate in the region.

The country climbed nine rankings in enforcement of contracts, by having the lowest number of procedures to enforce a contract in SADC and also being amongst countries that take the least amount of time to enforce a contract. Botswana also performed well in terms of the costs of enforcing contracts as a percentage of the claim.

According to the Doing Business 2011, Botswana's performance has generally improved in the reports between 2006 and 2011, with countries such as Mozambique, Madagascar, Mauritius, Malawi and Zambia having implemented the most positive change across the nine categories.

Many African economies have also made it easier to import and export over the years, a trend driven in part by regional trade integration efforts.

'These welcome developments are another reminder that regulatory cooperation between economies pays off,' said Janamitra Devan, World Bank Group Vice President for Financial and Private Sector Development.

'About 30 percent of global trade facilitation reforms in the past year took place in sub-Saharan Africa alone'.According to the 2011 report, among the 30 most improved economies in the past five years, a third are in sub-Saharan Africa.