Malawi slips on world economies

Sandra Bloemenkamp, World Bank country manager for Malawi, says one of the key lessons that Malawi should derive from the results of the just released 'Doing Business 2012 Report' is that reforms have to be sustained in order for them to be effective.

"For example, more than a year since the enactment of the Credit Reference Bureau Act, no credit bureau has been licensed," she said.

Bloemenkamp also says although the report does not measure issues such as macro-economic stability, it is important for Malawi to address the broader macro-economic environment.

"[These should include] exchange rate management issues, and, fuel and forex shortages which are negatively affecting the business climate and discouraging local and foreign investors alike," she said.

The press release signed by an official of International Finance Corporation of the World Bank, Lucie Cecile Giraud; Washington DC based World Bank official Aby Toure and Malawi's World Bank Office Communications Associate, Zeria Banda, says at the time of releasing the 2011 Doing Business report, Malawi was ranked at 132.

"But after back calculations to account for adjustments in data correction, methodology changes, and new indicators, Malawi slipped further to 141 for 2011. So for 2012, Malawi dropped from 141 to 145. The assessment period is June 2010 to May 2011," according to the release.

Improvements

The report notes that Malawi improved its credit information system by passing a new law allowing the creation of a private credit bureau. Malawi also made resolving insolvency easier by adopting new rules providing clear procedural requirements and time frames for winding up a company.

Strengthening insolvency regimes was one of the areas where globally there was the most improvement in 2010-11 compared to any previous year. Malawi however slackened on the indicator on property registration because the previous year's improvement in the time for processing compliance certificates at the Ministry of Lands was not sustained.

A transparent world

The 'Doing Business 2012 Report' has the theme Doing Business in a More Transparent World. Globally, the report finds that economies continued to implement reforms that enhance local firms' ability to do business, with transparency and access to information playing a key role in the reforms.

New data show that improving access to information on business regulations can aid entrepreneurs. Fee schedules and documentation requirements are most easily accessible in the Organisation for Economic Co-operation and Development (OECD) economies and least accessible in Sub-Saharan Africa and the Middle East and North Africa. However, e-government initiatives are on the rise.

"More than 100 economies use electronic systems for services ranging from business registration to customs clearance to court filings," said Sylvia Solf, lead author of the report.

"This saves time and money for business and government alike. It also provides new opportunities for increasing transparency," she said.

The report finds that a record number of economies in Sub-Saharan Africa improved business regulations for local entrepreneurs in the past year.

Rankings

In the Southern Africa Development Community, Mauritius leads the group with a global rank of 23, followed by South Africa (35), Botswana (54), Namibia (78), Zambia (84), Seychelles (103), Swaziland (124), Tanzania (127), Mozambique (139), Lesotho (143), Malawi (145), Zimbabwe (171), Angola (172) and Democratic Republic of the Congo (178).

For the fourth year in a row, Mauritius was the easiest place in Sub-Saharan Africa for an entrepreneur to do business, but globally, Singapore led on the overall ease of doing business, followed by Hong Kong SAR, China; New Zealand; the United States; and Denmark.

Giraud, Toure and Banda say the other most improved economies for entrepreneurs in Sub-Saharan Africa are São Tomé and Príncipe, Cape Verde, Sierra Leone and Burundi, who implementing reforms in areas such as paying taxes, getting credit, starting a business, dealing with construction permits, registering property, and resolving insolvency.

"The Doing Business report assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency, and trading across borders," observed the three World Bank officials.

This year, the rankings on ease of doing business have expanded to include indicators on getting electricity. The report is jointly produced by the International Finance Corporation and the World Bank.