The International Finance Corporation, a member of the World Bank Group, has published the 10th issue of the Doing Business report. The 2013 annual report covers 11 categories measuring business regulation in 185 economies.
The report said Egypt has implemented no reforms to increase the ease of doing business since the last report. It ranked sixth, however, among countries narrowing the gap with front-running economies under a metric described as distance to frontier.
The distance to frontier is a measure of business regulatory efficiency that was introduced in last year’s report, with the “frontier” being the best performing country on each of the observed indicators across all economies and years since 2005.
According to this measure, Egypt achieved a 16.3 percentage point improvement, making it the top improver in the Middle East and North Africa (MENA) over this period. The report mentions, however, that no significant improvement was witnessed in the past four years, with the majority of improvement taking place before 2009.
In the same ranking, Georgia, Rwanda, Belarus, Burkina Faso and Macedonia came before Egypt. The other three MENA region countries who figured among the top 50 improvers were Saudi Arabia in 26th, Morocco in 30th and Yemen in 31st place.
Egypt moved up a rank in the doing business ranking comparing to 2011. It went down, three places however in the “starting a business” category, moving from 23rd to 26th. To start a business in Egypt takes, on average, six separate procedures, seven days and 10.2 per cent of average annual per capita income.
In the “dealing with construction permits” category, Egypt dropped from 158th to 165th place. On average obtaining a construction permit takes 22 procedures and 218 days. Egypt also moved down three places in the “getting credit” category, from 80th to 83rd, stayed stable at 152nd in the “enforcing contracts” category.
The only improvement indicated was in the “resolving insolvency” category, where the country moved up by a position from to 139th place, with a recovery rate of 17.6 cents in the dollar.
The report says that the reform momentum in the MENA region was affected by the Arab Spring. Nations which entered a transitional era were faced by a multitude of economic, social and political difficulties, which slowed progress in the parameters of the report.
The report also mentioned structural challenges that hinder the private sector’s activity in the region. Business managers rated government intervention, anti-competitive practices, corruption and regulatory policy uncertainty as their biggest concerns, while bankers cited a lack of corporate transparency as the main obstacle to extending more finance to small and medium-sized enterprises.
Despite these challenges, nearly half of economies in the region implemented regulatory reforms between June 2011 to June 2012, and since 2005 an average of nine institutional or regulatory reforms per economy have been implemented.
Among these economies, the report mentioned Oman which guaranteed a borrower’s right to inspect their personal credit data, and the United Arab Emirates which further streamlined start-up requirements, implemented an online system for filing and paying taxes, and reduced the time to obtain an electricity connection.
The region had an average ranking of 98 out of 185 in the global ease of doing business.
More globally, the report highlighted areas of improvement in some categories since 2005, such as the average time to start a business that has fallen from 50 days to 30 and the average time to transfer property that fell by from 90 to 55, and the average transaction cost to 5.9 per cent of the property value from 7.1 per cent.
There have been improvements in simplifying tax compliance, which reduced the time required to pay taxes by 54 hours annually on average.
The report relies on the analysis of data collected over eight years to demonstrate that improvement in business regulation is important for growth. It states that in low-income economies that made it easier to do business, the growth rate increased by nearly half a percentage point the following year.
Not only was the growth rate boosted by improvements in business regulation, foreign direct investments also benefited from such reforms. The report says that economies doing well in this regard are more capable of providing an attractive business environment for foreign firms.
Singapore topped the global ranking on the ease of doing business for the seventh year in a row; the best Arab countries in the classification were Saudi Arabia in the 22nd and the UAE in 26th.
Dailynewsegypt
