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Best and worst sub-Saharan African countries for startups
We delved into the World Bank’s Economy Rankings for 2012, released earlier this year and found that despite African countries not featuring in the top 20 overall for ease of doing business, they still offer aspects that could make them attractive to startups. We also identified some aspects of economies in Africa that make it really hard for entrepreneurs to prosper.
First, let’s take a look at the countries in the region that have aspects that are likely to attract startups. Be sure to have a look at the full detailed report for complete rankings and methodology.
Ranked number one (of 46) in the region and 23rd (of 183) in the world, Mauritius takes the top spot overall for ease of doing business. Mauritius is ranked number one for electricity access and cost, offering the lowest tax rate and least tax filing headaches in sub-Saharan Africa, and for making international trade attractive through low import/export rates.
Rwanda is rated the sub-Saharan African country with the least procedures, legal fees and capital requirements for new business registrations. Rwanda is ranked number three overall in sub-Saharan Africa and number 45 in the world.
South Africa has the least amount of red tape for getting construction permits and obtaining utility connections. Its businesses also enjoy some of the quickest processing times for construction permits on the continent. The country is also ranked number one for credit access (rights, laws, protection and information) and investor protection in the region. SA is ranked number two overall in sub-Saharan Africa and number 35 in the world.
Ghana is ranked number one for property registration in the region. Ghana has fewer procedures and processes applications faster and cheaper than other sub-Saharan countries. Ghana is ranked number five overall in the region and number 63 in the world.
Enforcing contracts, resolving disputes and lawsuits in Tanzania takes less time and costs less money than in any other country in the competing region. Tanzania is ranked 14th overall in sub-Saharan Africa, but 127th in the world. Tanzania takes a hit in the global rankings for making property registration and obtaining property construction permits difficult.
Ranked number four in the region and 54th in the world, Botswana takes top honours when it comes to resolving insolvency. The cost of bankruptcy proceedings is low, the recovery rate is high and it takes less time than in other sub-Saharan African countries to close a business.
Now let’s take a look at aspects that make some sub-Saharan African countries less attractive to new businesses.
The World Bank rates Chad the most difficult place in sub-Saharan Africa and the world to do business in. It gets particularly low marks for the costs involved in starting a business, its 65% tax rate, and tedious insolvency resolution costing 60% of the estate’s value and taking on average four years to resolve.
Eritrea takes last place for dealing with construction permits as there are no commercial building permits issued to the private sector. It also gets one of the lowest rankings for credit access. The country is ranked number 43 overall in sub-Saharan Africa and number 180 in the world — three places from the bottom.
Guinea-Bissau gets an F for electricity access. Ranked number 40 overall and 176 in the world the lack of electricity and the high cost thereof, prompted the World Bank to initiate an emergency electricity and water rehabilitation project in 2010.
The country faces its hardest challenge in terms of the high costs involved, number of procedures and wait time in registering property. Nigeria is ranked number 133rd overall in the world for ease of doing business and number 15 in sub-Saharan Africa.
Madagascar and São Tomé and Príncipe
Madagascar is ranked 17th overall in the region and 137 in the world. São Tomé and Príncipe is ranked 33rd in the region and 163rd in the world. Both countries get very low marks for credit access (rights, laws, protection and information).
Both countries get low marks for investor protection. Guinea is ranked 42nd overall in the region and 179 in the world. Gambia is ranked number 23 in the region and number 149 in the world.
44th overall in sub-Saharan Africa and 181 in the world, doing business in Congo is particularly hard because of taxes. There’s a 65.9% tax rate and businesses spend about 606 hours per year filing taxes.
Bordering on Chad, the CAR takes last place for cross border trade. Sky high costs and time required for both imports and exports puts the country in second last place (45th) in the region overall and 182nd in the world.
Angola is ranked 37th in sub-Saharan Africa and 172 in the world overall for ease of doing business. It faces great difficulties with dispute resolution. High claim costs, numerous procedures and long processing times contribute to overall challenges the country faces with filing payment disputes.
