Information Gold Mine
Let’s say you have a great idea for starting a new business in Africa, but you’re not sure which country offers the best opportunity. You want an easy way to compare different countries in terms of the costs and ease of doing business. You want information about starting a business there and about such subjects as moving goods, customs, taxes, contract enforcement and protection for investors. You also want to be sure that the information is being provided by sources with good solid experience in that country. Where do you start your research? I recommend the World Bank’s annual “Doing Business” report. It’s a treasure trove of information, and it’s free! Just go to www.doingbusiness.org.
The report is best known for its rankings on the ease of doing business within 183 economies, which is something like checking baseball statistics for the league leaders in batting average and home runs. The overall rankings are based on a country’s rating in nine categories.
Singapore filled its customary first place position in the overall rankings in the most recent report, “Doing Business 2011: Making a Difference for Entrepreneurs,” which was issued last November. The Asian city-state also scored first in the category called “trading across borders.” Mauritius was the top-rated African country, coming in at No. 20 in “ease of doing business”; Botswana at No. 21 for “paying taxes.” The U.S. ranked fifth in the “ease of doing business” category.
The report also has regional breakdowns for sub-Saharan Africa, East Asia, South Asia, the Middle East and North Africa, Latin America and the Caribbean, and Eastern Europe.
The rankings are valuable, but in a sense they’re like a spectator sport. If you’re actually looking to do business, it’s the nitty-gritty details that comprise the rankings within each section that are most useful. For example, the rankings in the trade category are based on the average cost for the inland portion of shipping a container, the time it takes to clear the border and the number of documents required. The report provides further details on each of those steps in the import-export process, such as the cost and time for documents preparation and customs clearance.
The indicators in the tax category include the types of taxes, the time it takes to prepare and file taxes and tax rates. Details in the contract enforcement category include the average number of procedural steps and the time it takes to resolve a dispute, from the moment the plaintiff files the lawsuit in court until payment.
The report also provides information on employing workers and getting electricity, which includes the number of procedures and days to obtain a permanent electricity connection. The employment category includes details on hiring and firing and the rigidity of working hours.
You can download a detailed profile on each economy, with lots of charts and graphs, and you can compare how it has performed in previous years, going back to 2004. “Doing Business” also provides reports on individual cities and regions within 30 economies, including Kenya and Nigeria. These reports show how differences in local regulations and in the enforcement of national-level regulations can enhance or constrain local business activity.
Other sections explain the methodology that goes into the report, the number and occupation of the survey contributors for each country and lists the participants willing to be identified. Most of the contributors are lawyers, accountants, consultants and freight forwarders who have lived and worked in the country for some time. The number of contributors within each section depends on their specialty. In South Africa, for example, six experts contributed to the section on starting a business, and three for the section on trade, but only one for the section on closing a business. So you should take that into account in making your decision.