103376 Regional Profile 2016 Sub-Saharan Africa (SSA) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 2 © 2016 The International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington, DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 18 17 16 15 This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 3 CONTENTS Introduction .................................................................................................................................. 4 The business environment .......................................................................................................... 5 Starting a business ..................................................................................................................... 14 Dealing with construction permits ........................................................................................... 28 Getting electricity ....................................................................................................................... 40 Registering property .................................................................................................................. 49 Getting credit .............................................................................................................................. 61 Protecting minority investors ................................................................................................... 73 Paying taxes ................................................................................................................................ 82 Trading across borders .............................................................................................................. 94 Enforcing contracts .................................................................................................................. 113 Resolving insolvency ................................................................................................................ 121 Distance to frontier and ease of doing business ranking .................................................... 128 Resources on the Doing Business website ............................................................................ 131 Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 4 INTRODUCTION Doing Business sheds light on how easy or difficult it is also shows the regional average, the best performance for a local entrepreneur to open and run a small to globally for each indicator and data for the following medium-size business when complying with relevant comparator regions: . The data in this report are current regulations. It measures and tracks changes in as of June 1, 2015 (except for the paying taxes indicators, regulations affecting 11 areas in the life cycle of a which cover the period January–December 2014). business: starting a business, dealing with construction The Doing Business methodology has limitations. Other permits, getting electricity, registering property, getting areas important to business—such as an economy’s credit, protecting minority investors, paying taxes, proximity to large markets, the quality of its trading across borders, enforcing contracts, resolving infrastructure services (other than those related to insolvency and labor market regulation. Doing Business trading across borders and getting electricity), the 2016 presents the data for the labor market regulation security of property from theft and looting, the indicators in an annex. The report does not present transparency of government procurement, rankings of economies on labor market regulation macroeconomic conditions or the underlying strength of indicators or include the topic in the aggregate distance institutions—are not directly studied by Doing Business. to frontier score or ranking on the ease of doing The indicators refer to a specific type of business, business. generally a local limited liability company operating in In a series of annual reports Doing Business presents the largest business city. Because standard assumptions quantitative indicators on business regulations and the are used in the data collection, comparisons and protection of property rights that can be compared benchmarks are valid across economies. The data not across 189 economies, from Afghanistan to Zimbabwe, only highlight the extent of obstacles to doing business; over time. The data set covers 47 economies in Sub- they also help identify the source of those obstacles, Saharan Africa, 32 in Latin America and the Caribbean, 25 supporting policy makers in designing regulatory reform. in East Asia and the Pacific, 25 in Eastern Europe and More information is available in the full report. Doing Central Asia, 20 in the Middle East and North Africa and Business 2016 presents the indicators, analyzes their 8 in South Asia, as well as 32 OECD high-income relationship with economic outcomes and recommends economies. The indicators are used to analyze economic regulatory reforms. The data, along with information on outcomes and identify what reforms have worked, where ordering the Doing Business 2016 report, are available on and why. the Doing Business website at This regional profile presents the Doing Business http://www.doingbusiness.org. indicators for economies in Sub-Saharan Africa (SSA). It Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 5 THE BUSINESS ENVIRONMENT CHANGES IN DOING BUSINESS 2016 As part of a two-year update in methodology, Doing The case study underlying the trading across borders Business 2016 expands the focus of five indicator sets indicators has been changed to increase its relevance. (dealing with construction permits, getting electricity, For each economy the export product and partner are registering property, enforcing contracts and labor now determined on the basis of the economy’s market regulation), substantially revises the comparative advantage, the import product is auto parts, methodology for one indicator set (trading across and the import partner is selected on the basis of which borders) and implements small updates to the economy has the highest trade value in that product. The methodology for another (protecting minority investors). indicators continue to measure the time and cost to export and import. The indicators on dealing with construction permits now include an index of the quality of building regulation and Beyond these changes there is one other update in its implementation. The getting electricity indicators now methodology, for the protecting minority investors include a measure of the price of electricity consumption indicators. A few points for the extent of shareholder and an index of the reliability of electricity supply and governance index have been fine-tuned, and the index transparency of tariffs. Starting this year, the registering now also measures aspects of the regulations applicable property indicators include an index of the quality of the to limited companies rather than privately held joint land administration system in each economy in addition stock companies. to the indicators on the number of procedures and the For more details on the changes, see the “What is time and cost to transfer property. And for enforcing changing in Doing Business?” chapter starting on page contracts an index of the quality and efficiency of judicial 27 of the Doing Business 2016 report. For more details processes has been added while the indicator on the on the data and methodology, please see the “Data number of procedures to enforce a contract has been Notes” chapter starting on page 119 of the Doing dropped. Business 2016 report. For more details on the distance to The scope of the labor market regulation indicator set frontier metric, please see the “Distance to frontier and has also been expanded, to include more areas capturing ease of doing business ranking” chapter in this profile. aspects of job quality. The labor market regulation indicators continue to be excluded from the aggregate distance to frontier score and ranking on the ease of doing business. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 6 THE BUSINESS ENVIRONMENT For policy makers trying to improve their economy’s permits, getting electricity, registering property, regulatory environment for business, a good place to getting credit, protecting minority investors, paying start is to find out how it compares with the regulatory taxes, trading across borders, enforcing contracts environment in other economies. Doing Business and resolving insolvency. The labor market provides an aggregate ranking on the ease of doing regulation indicators are not included in this year’s business based on indicator sets that measure and aggregate ease of doing business ranking, but the benchmark regulations applying to domestic small to data are presented in the economy profile. medium-size businesses through their life cycle. The ease of doing business ranking compares Economies are ranked from 1 to 189 by the ease of economies with one another; the distance to frontier doing business ranking. Doing Business presents results score benchmarks economies with respect to for 2 aggregate measures: the distance to frontier score regulatory best practice, showing the absolute and the ease of doing business ranking. The ranking of distance to the best performance on each Doing economies is determined by sorting the aggregate Business indicator. When compared across years, the distance to frontier scores, rounded to two decimals. An distance to frontier score shows how much the economy’s distance to frontier score is indicated on a regulatory environment for local entrepreneurs in an scale from 0 to 100, where 0 represents the worst economy has changed over time in absolute terms, performance and 100 the frontier. (See the chapter on while the ease of doing business ranking can show the distance to frontier and ease of doing business). only how much the regulatory environment has The 10 topics included in the ranking in Doing Business changed relative to that in other economies. 2016: starting a business, dealing with construction Figure 1.1 Where economies stand in the global ranking on the ease of doing business Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 7 THE BUSINESS ENVIRONMENT For policy makers, knowing where their economy stands in regional average (figure 1.2). Another perspective is the aggregate ranking on the ease of doing business is provided by the regional average rankings on the topics useful. Also useful is to know how it ranks compared with included in the ease of doing business ranking (figure 1.3) other economies in the region and compared with the and the distance to frontier scores (figures 1.4 and 1.5). Figure 1.2 How economies in Sub-Saharan Africa (SSA) rank on the ease of doing business Note: The rankings are benchmarked to June 2015 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population- weighted average for the 2 cities. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 8 THE BUSINESS ENVIRONMENT Figure 1.3 Rankings on Doing Business topics - Sub-Saharan Africa (SSA) (Scale: Rank 189 center, Rank 1 outer edge) Regional average ranking Source: Doing Business database. Figure 1.4 Distance to frontier scores on Doing Business topics - Sub-Saharan Africa (SSA) (Scale: Score 0 center, Score 100 outer edge) Note: The rankings are benchmarked to June 2015 and based on the average of each economy’s distance to frontier (DTF) scores for the 10 topics included in this year’s aggregate ranking. The distance to frontier score benchmarks economies with respect to regulatory practice, showing the absolute distance to the best performance in each Doing Business indicator. An economy’s distance to frontier score is indicated on a scale from 0 to 100, where 0 represents the worst performance and 100 the frontier. For the economies for which the data cover 2 cities, scores are a population-weighted average for the 2 cities. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 9 Figure 1.5 How far has Sub-Saharan Africa (SSA) come in the areas measured by Doing Business? Source: Doing Business database. Note: The distance to frontier score shows how far on average an economy is from the best performance achieved by any economy on each Doing Business indicator. Starting a business is comparable to 2010. Getting credit, protecting minority investors, paying taxes and resolving insolvency had methodology changes in 2014 and thus are only comparable to 2013. Dealing with construction permits, registering property, trading across borders, enforcing contracts and getting electricity had methodology changes in 2015 and thus are only comparable to 2014. The measure is normalized to range between 0 and 100, with 100 representing the best performance (the frontier). See the data notes starting on page 119 of the Doing Business 2016 report for more details on the distance to frontier score. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 10 THE BUSINESS ENVIRONMENT Just as the overall ranking on the ease of doing business The absolute values of the indicators tell another part of tells only part of the story, so do changes in that ranking. the story (table 1.1). Policy makers can learn much by Yearly movements in rankings can provide some comparing the indicators for their economy with those indication of changes in an economy’s regulatory for the lowest- and highest-scoring economies in the environment for firms, but they are always relative. An region as well as those for the best performers globally. economy’s ranking might change because of These comparisons may reveal unexpected strengths in developments in other economies. An economy that an area of business regulation—such as a regulatory implemented business regulation reforms may fail to rise process that can be completed with a small number of in the rankings (or may even drop) if it is passed by procedures in a few days and at a low cost. others whose business regulation reforms had a more significant impact as measured by Doing Business. Table 1.1 Summary of Doing Business indicators for Sub-Saharan Africa (SSA) Lowest regional Best regional Best global Indicator Regional average performance performance performance Starting a Business 189 (Central African 19 (Burundi) 128 1 (New Zealand) (rank) Republic) Starting a Business 31.36 (Central African 94.51 (Burundi) 74.42 99.96 (New Zealand) (DTF Score) Republic) Procedures (number) 18.0 (Equatorial Guinea) 3.0 (3 Economies*) 8.0 1.0 (New Zealand*) 135.0 (Equatorial Time (days) 4.0 (Burundi) 26.8 0.5 (New Zealand) Guinea) Cost (% of income per 330.1 (South Sudan) 0.3 (South Africa) 53.4 0.0 (Slovenia) capita) Paid-in min. capital (% 540.1 (Central African 0.0 (25 Economies*) 45.1 0.0 (105 Economies*) of income per capita) Republic) Dealing with Construction Permits 189 (Eritrea) 31 (Mozambique) 130 1 (Singapore) (rank) Dealing with Construction Permits 0.00 (Eritrea) 77.58 (Mozambique) 58.77 92.97 (Singapore) (DTF Score) Procedures (number) 27.0 (Guinea) 10.0 (8 Economies*) 14.3 7.0 (5 Economies*) Time (days) 448.0 (Zimbabwe) 74.0 (Liberia) 162.2 26.0 (Singapore) Cost (% of warehouse 30.8 (Madagascar) 0.3 (Botswana) 6.6 0.0 (Qatar) value) Building quality control 1.0 (Equatorial Guinea) 13.0 (Mauritius) 6.9 15.0 (New Zealand) index (0-15) Getting Electricity 188 (Madagascar) 41 (Mauritius) 149 1 (Korea, Rep.) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 11 Lowest regional Best regional Best global Indicator Regional average performance performance performance (rank) Getting Electricity 18.27 (Madagascar) 81.93 (Mauritius) 46.97 99.88 (Korea, Rep.) (DTF Score) Procedures (number) 9.0 (Nigeria) 3.0 (Togo*) 5.4 3.0 (14 Economies*) Time (days) 465.0 (Liberia) 34.0 (Rwanda) 130.1 18.0 (Korea, Rep.*) Cost (% of income per 16,315.4 (Burundi) 260.0 (Mauritius) 4,075.6 0.0 (Japan) capita) Reliability of supply and transparency of 0.0 (33 Economies*) 6.0 (Mauritius) 0.9 8.0 (18 Economies*) tariff index (0-8) Registering Property 182 (Togo) 12 (Rwanda) 132 1 (New Zealand) (rank) Registering Property 30.93 (Togo) 87.75 (Rwanda) 50.98 94.46 (New Zealand) (DTF Score) Procedures (number) 12.1 (Nigeria) 3.0 (Rwanda) 6.2 1.0 (4 Economies*) Time (days) 288.0 (Togo) 9.0 (Sudan) 57.5 1.0 (3 Economies*) Cost (% of property 18.9 (Cameroon) 0.1 (Rwanda) 8.3 0.0 (Saudi Arabia) value) Quality of the land 3.0 (Central African administration index 25.0 (Rwanda) 8.4 28.5 (3 Economies*) Republic) (0-30) Getting Credit (rank) 185 (Eritrea*) 2 (Rwanda) 118 1 (New Zealand) Getting Credit (DTF 0.00 (Eritrea*) 95.00 (Rwanda) 35.85 100.00 (New Zealand) Score) Strength of legal rights 0.0 (Eritrea*) 11.0 (Rwanda) 4.9 12.0 (3 Economies*) index (0-12) Depth of credit 0.0 (26 Economies*) 8.0 (Rwanda*) 2.3 8.0 (26 Economies*) information index (0-8) Credit registry 0.0 (Guinea) 82.6 (Mauritius) 5.8 100.0 (Portugal) coverage (% of adults) Credit bureau coverage 1.0 (Lesotho) 62.8 (Namibia) 7.1 100.0 (22 Economies*) (% of adults) Protecting Minority 185 (São Tomé and 14 (South Africa) 125 1 (3 Economies*) Investors (rank) Príncipe) Protecting Minority 25.00 (São Tomé and 71.67 (South Africa) 44.68 83.33 (3 Economies*) Investors (DTF Score) Príncipe) Strength of minority 7.2 (South Africa) 4.5 8.3 (3 Economies*) 2.5 (São Tomé and investor protection Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 12 Lowest regional Best regional Best global Indicator Regional average performance performance performance index (0-10) Príncipe) Extent of conflict of interest regulation 2.3 (Ethiopia) 8.0 (South Africa) 4.9 9.3 (Singapore*) index (0-10) Extent of shareholder 1.7 (São Tomé and governance index (0- 6.7 (Nigeria) 4.1 8.0 (4 Economies*) Príncipe) 10) 1 (United Arab Paying Taxes (rank) 187 (Mauritania) 13 (Mauritius) 131 Emirates*) Paying Taxes (DTF 99.44 (United Arab 17.71 (Mauritania) 91.92 (Mauritius) 58.01 Score) Emirates*) Payments (number per 3.0 (Hong Kong SAR, 63.0 (Côte d'Ivoire) 7.0 (South Africa) 38.6 year) China*) Time (hours per year) 907.9 (Nigeria) 85.0 (Seychelles) 308.6 55.0 (Luxembourg) Total tax rate (% of 216.5 (Comoros) 13.6 (Lesotho) 46.5 25.9 (Ireland) profit) Trading Across 189 (Eritrea) 30 (Swaziland) 136 1 (16 Economies*) Borders (rank) Trading Across 0.00 (Eritrea) 92.68 (Swaziland) 48.96 100.00 (16 Economies*) Borders (DTF Score) Time to export: Border 515 (Congo, Dem. Rep.) 3 (Swaziland) 108 0 (15 Economies*) compliance (hours) Cost to export: Border 1,975 (Congo, Rep.) 17 (Mali) 542 0 (18 Economies*) compliance (USD) Time to export: Documentary 698 (Congo, Dem. Rep.) 3 (Lesotho) 97 0 (Jordan) compliance (hours) Cost to export: 2,500 (Congo, Dem. Documentary 25 (Togo) 246 0 (20 Economies*) Rep.) compliance (USD) Time to import: Border 588 (Congo, Dem. Rep.) 4 (Botswana*) 160 0 (19 Economies*) compliance (hours) Cost to import: Border 2,089 (Congo, Dem. 98 (Botswana) 643 0 (28 Economies*) compliance (USD) Rep.) Time to import: Documentary 360 (South Sudan) 3 (3 Economies*) 123 1 (21 Economies*) compliance (hours) Cost to import: 1,025 (Burundi) 38 (Comoros) 351 0 (30 Economies*) Documentary Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 13 Lowest regional Best regional Best global Indicator Regional average performance performance performance compliance (USD) Enforcing Contracts 185 (Angola) 27 (Mauritius) 132 1 (Singapore) (rank) Enforcing Contracts 26.26 (Angola) 70.50 (Mauritius) 47.67 84.91 (Singapore) (DTF Score) Time (days) 1,715.0 (Guinea-Bissau) 228.0 (South Sudan) 653.1 150.0 (Singapore) Cost (% of claim) 119.0 (Mozambique) 14.3 (Tanzania) 44.9 9.0 (Iceland) Quality of judicial 2.5 (Eritrea) 13.0 (Mauritius) 6.4 15.5 (3 Economies*) processes index (0-18) Resolving Insolvency 189 (9 Economies*) 39 (Mauritius) 128 1 (Finland) (rank) Resolving Insolvency 0.00 (9 Economies*) 65.94 (Mauritius) 30.32 93.81 (Finland) (DTF Score) Recovery rate (cents on 8.4 (Liberia) 67.4 (Mauritius) 19.9 92.9 (Japan) the dollar) 6.2 (São Tomé and Time (years) 1.5 (Mozambique) 3.0 0.4 (Ireland) Príncipe) 76.0 (Central African Cost (% of estate) 8.0 (Guinea) 23.1 1.0 (Norway) Republic) Strength of insolvency 9.0 (Central African 14.5 (South Africa) 6.3 15.0 (4 Economies*) framework index (0-16) Republic*) * Two or more economies share the top ranking on this indicator. A number shown in place of an economy’s name indicates the number of economies that share the top ranking on the indicator. For a list of these economies, see the Doing Business website (http://www.doingbusiness.org). Note: The global best performer on time for paying taxes is defined as the lowest time recorded among all economies in the DB2016 sample that levy the 3 major taxes: profit tax, labor taxes and mandatory contributions, and VAT or sales tax. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 14 STARTING A BUSINESS WHAT THE STARTING A BUSINESS Formal registration of companies has many INDICATORS MEASURE immediate benefits for the companies and for business owners and employees. Legal entities can Procedures to legally start and operate a outlive their founders. Resources are pooled as company (number) several shareholders join forces to start a company. Formally registered companies have access to Preregistration (for example, name services and institutions from courts to banks as well verification or reservation, notarization) as to new markets. And their employees can benefit Registration in the economy’s largest from protections provided by the law. An additional business city 1 benefit comes with limited liability companies. These Postregistration (for example, social security limit the financial liability of company owners to their registration, company seal) investments, so personal assets of the owners are not put at risk. Where governments make registration Time required to complete each procedure easy, more entrepreneurs start businesses in the (calendar days) formal sector, creating more good jobs and Does not include time spent gathering generating more revenue for the government. information What do the indicators cover? Each procedure starts on a separate day (2 procedures cannot start on the same day). Doing Business measures the ease of starting a Procedures that can be fully completed business in an economy by recording all procedures online are recorded as ½ day. officially required or commonly done in practice by an entrepreneur to start up and formally operate an Procedure completed once final document is industrial or commercial business—as well as the received time and cost required to complete these procedures. No prior contact with officials It also records the paid-in minimum capital that Cost required to complete each procedure companies must deposit before registration (or (% of income per capita) within 3 months). The ranking of economies on the ease of starting a business is determined by sorting Official costs only, no bribes their distance to frontier scores for starting a No professional fees unless services required business. These scores are the simple average of the by law distance to frontier scores for each of the component indicators. Paid-in minimum capital (% of income per capita) To make the data comparable across economies, Doing Business uses several assumptions about the Deposited in a bank or with a notary before business and the procedures. It assumes that all registration (or within 3 months) information is readily available to the entrepreneur  Conducts general commercial or industrial and that there has been no prior contact with activities. officials. It also assumes that the entrepreneur will pay no bribes. And it assumes that the business:  Has a start-up capital of 10 times income per capita.  Is a limited liability company, located in the largest business city , is 100% domestically 1  Has a turnover of at least 100 times income per owned with between 10 and 50 employees. capita.  Does not qualify for any special benefits.  Does not own real estate. For the 11 economies with a population of more than 100 million, data for a second city have been added. 1 Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 15 STARTING A BUSINESS Where do the region’s economies stand today? How easy is it for entrepreneurs in economies in Sub- business suggest an answer (figure 2.1). The average Saharan Africa (SSA) to start a business? The global ranking of the region and comparator regions provide a rankings of these economies on the ease of starting a useful benchmark. Figure 2.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of starting a business Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 16 STARTING A BUSINESS The indicators underlying the rankings may be more and the paid-in minimum capital requirement (figure revealing. Data collected by Doing Business show what 2.2). Comparing these indicators across the region and it takes to start a business in each economy in the with averages both for the region and for comparator region: the number of procedures, the time, the cost regions can provide useful insights. Figure 2.2 What it takes to start a business in economies in Sub-Saharan Africa (SSA) Procedures (number) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 17 STARTING A BUSINESS Time (days) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 18 STARTING A BUSINESS Cost (% of income per capita) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 19 STARTING A BUSINESS Paid-in minimum capital (% of income per capita) Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 20 STARTING A BUSINESS What are the changes over time? Economies around the world have taken steps making it often as part of a larger regulatory reform program. easier to start a business—streamlining procedures by Among the benefits have been greater firm satisfaction setting up a one-stop shop, making procedures simpler and savings and more registered businesses, financial or faster by introducing technology, and reducing or resources and job opportunities. eliminating minimum capital requirements. Many have What business registration reforms has Doing Business undertaken business registration reforms in stages—and recorded in Sub-Saharan Africa (SSA) (table 2.1)? Table 2.1 How have economies in Sub-Saharan Africa (SSA) made starting a business easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform Angola made starting a business easier by improving DB2016 Angola registration procedures and reducing the fees to register a company. Benin made starting a business less costly by reducing the DB2016 Benin fees for filing company documents at the one-stop shop. Burkina Faso made starting a business easier by reducing the DB2016 Burkina Faso minimum capital requirement. The Comoros made starting a business easier by reducing the DB2016 Comoros minimum capital requirement. Gabon made starting a business easier by reducing the paid- DB2016 Gabon in minimum capital requirement. Guinea made starting a business easier by reducing the DB2016 Guinea minimum capital requirement. Kenya made starting a business easier by reducing the time it DB2016 Kenya takes to assess and pay stamp duty. Madagascar made starting a business more difficult by DB2016 Madagascar requiring a bank-certified check to pay the tax authority. Mauritania made starting a business easier by eliminating the DB2016 Mauritania minimum capital requirement. Niger made starting a business easier by reducing the DB2016 Niger minimum capital requirement. Rwanda made starting a business easier by eliminating the DB2016 Rwanda need for new companies to open a bank account in order to register for VAT. Senegal made starting a business easier by reducing the DB2016 Senegal minimum capital requirement. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 21 DB year Economy Reform Togo made starting a business less costly by reducing the DB2016 Togo fees to register with the tax authority. Uganda made starting a business easier by introducing an DB2016 Uganda online system for obtaining a trading license and by reducing business incorporation fees. The Democratic Republic of Congo made starting a business DB2016 Congo, Dem. Rep. easier by simplifying registration procedures and reducing the minimum capital requirement. Zambia made starting a business more difficult by increasing DB2016 Zambia the registration fees. Benin made starting a business easier by reducing the DB2015 Benin minimum capital requirement and the fees to be paid at the one-stop shop. Côte d’Ivoire made starting a business easier by reducing the minimum capital requirement, lowering registration fees and DB2015 Côte d'Ivoire enabling the one-stop shop to publish notices of incorporation. The Gambia made starting a business easier by eliminating DB2015 Gambia, The the requirement to pay stamp duty. Mauritania made starting a business easier by creating a one- DB2015 Mauritania stop shop and eliminating the publication requirement and the fee to obtain a tax identification number. Mauritius made starting a business easier by reducing trade DB2015 Mauritius license fees. Malawi made starting a business easier by streamlining company name search and registration and by eliminating DB2015 Malawi the requirement for inspection of company premises before issuance of a business license. Rwanda made starting a business more difficult by requiring companies to buy an electronic billing machine from a DB2015 Rwanda certified supplier, but also made it easier by launching free mandatory online registration. Senegal made starting a business easier by reducing the DB2015 Senegal minimum capital requirement. São Tomé and Príncipe made starting a business easier by DB2015 São Tomé and Príncipe eliminating the minimum capital requirement for business entities with no need to obtain a commercial license. Swaziland made starting a business easier by shortening the DB2015 Swaziland notice and objection period for obtaining a new trade license. Togo made starting a business easier by enabling the one- DB2015 Togo stop shop to publish notices of incorporation and eliminating the requirement to obtain an economic operator card. The Democratic Republic of Congo made starting a business DB2015 Congo, Dem. Rep. easier by creating a one-stop shop. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 22 DB year Economy Reform Burundi made starting a business easier by allowing registration with the Ministry of Labor at the one-stop shop DB2014 Burundi and by speeding up the process of obtaining the registration certificate. Benin made starting a business easier by creating a one-stop DB2014 Benin shop. Côte d’Ivoire made starting a business easier by creating a one-stop shop, reducing the notary fees and replacing the DB2014 Côte d'Ivoire requirement for a copy of the founders’ criminal records with one for a sworn declaration at the time of company registration. The Republic of Congo made starting a business easier by DB2014 Congo, Rep. reducing the registration costs and eliminating the merchant card. The Comoros made starting a business easier by eliminating DB2014 Comoros the requirement to deposit the minimum capital in a bank before incorporation. Cape Verde made starting a business easier by abolishing the DB2014 Cabo Verde minimum capital requirement. Gabon made starting a business easier by replacing the DB2014 Gabon requirement for a copy of the founders’ criminal records with one for a sworn declaration. Ghana made starting a business more difficult by requiring DB2014 Ghana entrepreneurs to obtain a tax identification number prior to company incorporation. Guinea made starting a business easier by enabling the one- DB2014 Guinea stop shop to publish incorporation notices and by reducing the notary fees. Liberia made starting a business easier by eliminating the DB2014 Liberia business trade license fees. Madagascar made starting a business more difficult by DB2014 Madagascar increasing the cost to register with the National Center for Statistics. Mali made starting a business more difficult by ceasing to DB2014 Mali regularly publish the incorporation notices of new companies on the official website of the one-stop shop. Niger made starting a business easier by replacing the requirement for a copy of the founders’ criminal records with DB2014 Niger one for a sworn declaration at the time of company registration. Rwanda made starting a business easier by reducing the time DB2014 Rwanda required to obtain a registration certificate. Swaziland made starting a business easier by shortening the DB2014 Swaziland administrative processing times for registering a new Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 23 DB year Economy Reform business and obtaining a trading license. Togo made starting a business easier by reducing the time DB2014 Togo required to register at the one-stop shop and by reducing registration costs. The Democratic Republic of Congo made starting a business more complicated by increasing the minimum capital requirement. At the same time, it made the process easier by DB2014 Congo, Dem. Rep. reducing the time and by eliminating the requirement to obtain a certificate confirming the location of the new company’s headquarters. Zambia made starting a business easier by raising the DB2014 Zambia threshold at which value added tax registration is required. Benin made starting a business easier by appointing a DB2013 Benin representative of the commercial registry at the one-stop shop and reducing some fees. Burundi made starting a business easier by eliminating the requirements to have company documents notarized, to DB2013 Burundi publish information on new companies in a journal and to register new companies with the Ministry of Trade and Industry. Chad made starting a business easier by setting up a one- DB2013 Chad stop shop. The Comoros made starting a business easier and less costly by replacing the requirement for a copy of the founders’ DB2013 Comoros criminal records with one for a sworn declaration at the time of the company’s registration and by reducing the fees to incorporate a company. The Democratic Republic of Congo made starting a business DB2013 Congo, Dem. Rep. easier by appointing additional public notaries. The Republic of Congo made starting a business easier by DB2013 Congo, Rep. eliminating or reducing several administrative costs associated with incorporation. Guinea made starting a business easier by setting up a one- stop shop for company incorporation and by replacing the DB2013 Guinea requirement for a copy of the founders’ criminal records with one for a sworn declaration at the time of the company’s registration Lesotho made starting a business easier by creating a one- stop shop for company incorporation and by eliminating the DB2013 Lesotho requirements for paid-in minimum capital and for notarization of the articles of association. Madagascar made starting a business easier by allowing the DB2013 Madagascar one-stop shop to deal with the publication of the notice of incorporation. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 24 DB year Economy Reform Tanzania made starting a business easier by eliminating the DB2013 Tanzania requirement for inspections by health, town and land officers as a prerequisite for a business license. Togo made starting a business easier and less costly by reducing incorporation fees, improving the work flow at the one-stop shop for company registration and replacing the DB2013 Togo requirement for a copy of the founders’ criminal records with one for a sworn declaration at the time of the company’s registration. Uganda introduced changes that added time to the process of obtaining a business license, slowing business start-up. But DB2012 Uganda it simplified registration for a tax identification number and for value added tax by introducing an online system. Madagascar eased the process of starting a business by eliminating the minimum capital requirement, but also made DB2012 Madagascar it more difficult by introducing the requirement of obtaining a tax identification number. South Africa made starting a business easier by implementing its new company law, which eliminated the requirement to DB2012 South Africa reserve a company name and simplified the incorporation documents. Mali made starting a business easier by adding to the services DB2012 Mali provided by the one-stop shop. Rwanda made starting a business easier by reducing the DB2012 Rwanda business registration fees. São Tomé and Príncipe made starting a business easier by establishing a one-stop shop, eliminating the requirement for DB2012 São Tomé and Príncipe an operating license for general commercial companies and simplifying publication requirements. Senegal made starting a business easier by replacing the requirement for a copy of the founders’ criminal records with DB2012 Senegal one for a sworn declaration at the time of the company’s registration. Liberia made starting a business easier by introducing a one- DB2012 Liberia stop shop. Guinea-Bissau made starting a business easier by establishing a one-stop shop, eliminating the requirement for an DB2012 Guinea-Bissau operating license and simplifying the method for providing criminal records and publishing the registration notice. The Democratic Republic of Congo made business start-up DB2012 Congo, Dem. Rep. faster by reducing the time required to complete company registration and obtain a national identification number. DB2012 Ghana Ghana increased the cost to start a business by 70%. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 25 DB year Economy Reform Côte d’Ivoire made starting a business easier by reorganizing DB2012 Côte d'Ivoire the court clerk’s office where entrepreneurs file their company documents. Comoros made the process of starting a business more DB2012 Comoros difficult by increasing the minimum capital requirement. The Central African Republic made starting a business easier by reducing business registration fees and by replacing the DB2012 Central African Republic requirement for a copy of the founders’ criminal records with one for a sworn declaration at the time of the company’s registration. Chad made starting a business easier by eliminating the requirement for a medical certificate and by replacing the DB2012 Chad requirement for a copy of the founders’ criminal records with one for a sworn declaration at the time of the company’s registration. Burkina Faso made starting a business easier by replacing the requirement for a copy of the founders’ criminal records with DB2012 Burkina Faso one for a sworn declaration at the time of the company’s registration. Cameroon made starting a business easier by replacing the requirement for a copy of the founders’ criminal records with DB2012 Cameroon one for a sworn declaration at the time of the company’s registration, and by reducing publication fees. Benin made starting a business easier by replacing the DB2012 Benin requirement for a copy of the founders’ criminal records with one for a sworn declaration at the time of the company’s Cameroon made starting a business easier by establishing a DB2011 Cameroon new one-stop shop and abolishing the requirement for verifying business premises and its corresponding fees. Cape Verde made business start-up easier by eliminating the need for a municipal inspection before a business begins DB2011 Cabo Verde operations and computerizing the system for delivering the municipal license. The Democratic Republic of Congo eased business start-up DB2011 Congo, Dem. Rep. by eliminating procedures, including the company seal. Kenya eased business start-up by reducing the time it takes to get the memorandum and articles of association stamped, DB2011 Kenya merging the tax and value added tax registration procedures and digitizing records at the registrar. São Tomé and Principe made starting a business more DB2011 São Tomé and Príncipe difficult by introducing a minimum capital requirement for limited liability companies. Mozambique eased business start-up by introducing a DB2011 Mozambique simplified licensing process. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 26 DB year Economy Reform Zambia eased business start-up by eliminating the minimum DB2011 Zambia capital requirement. Zimbabwe eased business start-up by reducing registration DB2011 Zimbabwe fees and speeding up the name search process and company and tax registration. Uganda made it more difficult to start a business by DB2011 Uganda increasing the trade licensing fees. Togo made starting a business easier and less costly by DB2010 Togo setting up a one-stop shop and thereby making it possible to consolidate several procedures. Niger made starting a business easier by eliminating the procedures to register with the Conseil Nigérien des DB2010 Niger Utilisateurs des Transports Publics (CNUT) and with the chamber of commerce. Rwanda made starting a business easier by eliminating the notarization requirement; introducing standardized memoranda of association; putting publication online; DB2010 Rwanda consolidating name-checking, registration fee payment, tax registration and company registration procedures; and reducing the time required to process completed applications. Mozambique made starting a business easier by eliminating DB2010 Mozambique the minimum capital and bank deposit requirements. Sierra Leone made starting a business easier by establishing a DB2010 Sierra Leone one-stop shop for company registration. Liberia made starting a business easier by eliminating the DB2010 Liberia requirement to obtain an environmental impact assessment when forming a general trading company. Madagascar made starting a business easier by streamlining DB2010 Madagascar procedures at the one-stop shop and eliminating the stamp duty and the minimum capital requirement. Mali made starting a business easier by creating a one-stop shop where all registration procedures can be completed, DB2010 Mali including registering a company with the registrar and tax agency, applying for online publication and obtaining a national identification number. Ethiopia made starting a business easier by streamlining DB2010 Ethiopia registration procedures. Ghana simplified business start-up by further streamlining DB2010 Ghana registration procedures through the creation of a customer service desk at the one-stop shop. Guinea-Bissau simplified business start-up by making the DB2010 Guinea-Bissau company name search electronic, introducing some computers and flash drives and reducing the registration fees. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 27 DB year Economy Reform The Central African Republic simplified business start-up by DB2010 Central African Republic establishing a one-stop shop (Guichet Unique de Formalité des Entreprises), which merged several procedures into one. Cape Verde made starting a business easier by implementing DB2010 Cabo Verde an online company registration system. Cameroon made starting a business easier by exempting DB2010 Cameroon newly formed companies from paying the business license tax for their first 2 years of existence. Botswana made starting a business easier by simplifying the DB2010 Botswana process to obtain a business license and the process to register for taxes. Burkina Faso made starting a business easier by allowing online publication of the articles of incorporation directly on DB2010 Burkina Faso the website of the one-stop shop, by reducing registration fees and by streamlining tax registration. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 28 DEALING WITH CONSTRUCTION PERMITS Regulation of construction is critical to protect the WHAT THE DEALING WITH CONSTRUCTION public. But it needs to be efficient, to avoid excessive PERMITS INDICATORS MEASURE constraints on a sector that plays an important part in every economy. Where complying with building regulations is excessively costly in time and money, Procedures to legally build a warehouse (number) many builders opt out. They may pay bribes to pass inspections or simply build illegally, leading to Submitting all relevant documents and hazardous construction that puts public safety at risk. obtaining all necessary clearances, licenses, Where compliance is simple, straightforward and permits and certificates inexpensive, everyone is better off. Submitting all required notifications and receiving all necessary inspections What do the indicators cover? Obtaining utility connections for water and Doing Business records all procedures required for a sewerage business in the construction industry to build a warehouse along with the time and cost to complete Registering and selling the warehouse after its each procedure. In addition, this year Doing Business completion introduces a new measure, the building quality Time required to complete each procedure control index, evaluating the quality of building (calendar days) regulations, the strength of quality control and safety Does not include time spent gathering mechanisms, liability and insurance regimes, and information professional certification requirements. Each procedure starts on a separate day. The ranking of economies on the ease of dealing with Procedures that can be fully completed online construction permits is determined by sorting their are recorded as ½ day distance to frontier scores for dealing with construction permits. These scores are the simple Procedure considered completed once final document is received average of the distance to frontier scores for each of the component indicators. No prior contact with officials To make the data comparable across economies, Cost required to complete each procedure (% several assumptions about the construction of warehouse value) company, the warehouse project and the utility Official costs only, no bribes connections are used. Assumptions about the construction company Building quality control index (0-15) Sum of the scores of six component indices: The construction company (BuildCo): Quality of building regulations (0-2)  Is a limited liability company (or its legal equivalent). Quality control before construction (0-1)  Operates in the economy’s largest business Quality control during construction (0-3) city. For 11 economies the data are also Quality control after construction (0-3) collected for the second largest business city. Liability and insurance regimes (0-2)  Is 100% domestically and privately owned Professional certifications (0-4) with five owners, none of whom is a legal entity.  Is fully licensed and insured to carry out construction projects, such as building warehouses. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 29 The construction company (BuildCo) (continued):  Has 60 builders and other employees, all of  Will be a new construction (there was no them nationals with the technical expertise previous construction on the land), with no and professional experience necessary to trees, natural water sources, natural reserves obtain construction permits and approvals. or historical monuments of any kind on the plot.  Has at least one employee who is a licensed architect or engineer and  Will have complete architectural and registered with the local association of technical plans prepared by a licensed architects or engineers. BuildCo is not architect. If preparation of the plans requires assumed to have any other employees who such steps as obtaining further are technical or licensed experts, such as documentation or getting prior approvals geological or topographical experts. from external agencies, these are counted as procedures.  Has paid all taxes and taken out all necessary insurance applicable to its  Will include all technical equipment required general business activity (for example, to be fully operational. accidental insurance for construction  Will take 30 weeks to construct (excluding all workers and third-person liability). delays due to administrative and regulatory  Owns the land on which the warehouse will requirements). be built and will sell the warehouse upon Assumptions about the utility connections its completion. The water and sewerage connections:  Is valued at 50 times income per capita. • Will be 150 meters (492 feet) from the Assumptions about the warehouse existing water source and sewer tap. If there is no water delivery infrastructure in the economy, a  The warehouse: borehole will be dug. If there is no sewerage  Will be used for general storage activities, infrastructure, a septic tank in the smallest size such as storage of books or stationery. The available will be installed or built. warehouse will not be used for any goods  Will not require water for fire protection requiring special conditions, such as food, reasons; a fire extinguishing system (dry chemicals or pharmaceuticals. system) will be used instead. If a wet fire  Will have two stories, both above ground, protection system is required by law, it is with a total constructed area of assumed that the water demand specified approximately 1,300.6 square meters below also covers the water needed for fire (14,000 square feet). Each floor will be 3 protection. meters (9 feet, 10 inches) high.  Will have an average water use of 662 liters  Will have road access and be located in the (175 gallons) a day and an average periurban area of the economy’s largest wastewater flow of 568 liters (150 gallons) a business city (that is, on the fringes of the day. Will have a peak water use of 1,325 liters city but still within its official limits). For 11 (350 gallons) a day and a peak wastewater economies the data are also collected for flow of 1,136 liters (300 gallons) a day. the second largest business city.  Will have a constant level of water demand • Will not be located in a special economic and wastewater flow throughout the year. or industrial zone. Will be located on a land  Will be 1 inch in diameter for the water plot of approximately 929 square meters connection and 4 inches in diameter for the (10,000 square feet) that is 100% owned by sewerage connection. BuildCo and is accurately registered in the cadastre and land registry. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 30 DEALING WITH CONSTRUCTION PERMITS Where do the region’s economies stand today? How easy it is for entrepreneurs in economies in Sub- dealing with construction permits suggest an answer Saharan Africa (SSA) to legally build a warehouse? The (figure 3.1). The average ranking of the region and global rankings of these economies on the ease of comparator regions provide a useful benchmark. Figure 3.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of dealing with construction permits Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 31 DEALING WITH CONSTRUCTION PERMITS The indicators underlying the rankings may be more the time and the cost (figure 3.2). Comparing these revealing. Data collected by Doing Business show what it indicators across the region and with averages both for takes to comply with formalities to build a warehouse in the region and for comparator regions can provide each economy in the region: the number of procedures, useful insights. Figure 3.2 What it takes to comply with formalities to build a warehouse in economies in Sub-Saharan Africa (SSA) Procedures (number) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 32 DEALING WITH CONSTRUCTION PERMITS Time (days) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 33 DEALING WITH CONSTRUCTION PERMITS Cost (% of warehouse value) * Indicates a “no practice” mark. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the econom y at the bottom of the ranking on the relevant indicator. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 34 DEALING WITH CONSTRUCTION PERMITS Building Quality Control Index (0-15) * Indicates a “no practice” mark. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. Note: The index ranges from 0 to 15, with higher values indicating better quality control and safety mechanisms in the construction permitting system. The indicator is based on the same case study assumptions as the measures of efficiency. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 35 DEALING WITH CONSTRUCTION PERMITS What are the changes over time? Smart regulation ensures that standards are met while compliance costs reasonable, governments around the making compliance easy and accessible to all. Coherent world have worked on consolidating permitting and transparent rules, efficient processes and adequate requirements. What construction permitting reforms has allocation of resources are especially important in sectors Doing Business recorded in Sub-Saharan Africa (SSA) where safety is at stake. Construction is one of them. In (table 3.1)? an effort to ensure building safety while keeping Table 3.1 How have economies in Sub-Saharan Africa (SSA) made dealing with construction permits easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform Benin made dealing with construction permits less time- DB2016 Benin consuming by establishing a one-stop shop and by reducing the number of signatories required on building permits. Gabon made dealing with construction permits more DB2016 Gabon complicated by increasing the time required for obtaining a building permit. Kenya made dealing with construction permits more difficult by requiring an additional approval before issuance of the DB2016 Kenya building permit and by increasing the costs for both water and sewerage connections In Mauritius the time required for dealing with construction DB2016 Mauritius permits was reduced by the hiring of a more efficient subcontractor to establish sewerage connections. In Namibia the process of dealing with construction permits DB2016 Namibia became more time-consuming as a result of inefficiency at the municipality. Niger made dealing with construction permits easier by DB2016 Niger reducing the time required for companies to obtain a water connection. Rwanda made dealing with construction permits easier by DB2016 Rwanda adopting a new building code and new urban planning regulations. The Democratic Republic of Congo made dealing with DB2016 Congo, Dem. Rep. construction permits less expensive by halving the cost to obtain a building permit. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 36 DB year Economy Reform Ghana made dealing with construction permits less time- DB2015 Ghana consuming by streamlining the process to obtain a building permit. Kenya made dealing with construction permits more costly DB2015 Kenya by increasing the building permit fees. Madagascar made dealing with construction permits easier DB2015 Madagascar by reducing the time needed to obtain a building permit. Mali made dealing with construction permits easier by DB2015 Mali reducing the time needed to obtain a geotechnical study. Rwanda made dealing with construction permits easier by DB2015 Rwanda eliminating the fee for obtaining a freehold title and by streamlining the process for obtaining an occupancy permit. Senegal made dealing with construction permits less time- DB2015 Senegal consuming by reducing the time for processing building permit applications. The Democratic Republic of Congo made dealing with DB2015 Congo, Dem. Rep. construction permits more costly by increasing the building permit fee. Burundi made dealing with construction permits easier by DB2014 Burundi establishing a one-stop shop for obtaining building permits and utility connections. Botswana made dealing with construction permits easier by DB2014 Botswana eliminating the requirement for an environmental impact assessment for low-risk projects. Côte d’Ivoire reduced the time required for obtaining a DB2014 Côte d'Ivoire building permit by streamlining procedures at the onestop shop (Service du Guichet Unique du Foncier et de l’Habitat). Cameroon made dealing with construction permits more complex by introducing notification and inspection requirements. At the same time, DB2014 Cameroon Cameroon made it easier by decentralizing the process for obtaining a building permit and by introducing strict time limits for processing the application and issuing the certificate of conformity. DB2014 Gabon Gabon made dealing with construction permits easier by Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 37 DB year Economy Reform reducing the time required to obtain a building permit and by eliminating the requirement for an on-site inspection before construction starts. Mozambique made dealing with construction permits easier by improving internal processes at the Department of DB2014 Mozambique Construction and Urbanization—though it also increased the fees for building permits and occupancy permits. Rwanda made dealing with construction permits easier and less costly by reducing the building permit fees, DB2014 Rwanda implementing an electronic platform for building permit applications and streamlining procedures. Togo made dealing with construction permits easier by DB2014 Togo improving internal operations at the City Hall of Lomé. Benin reduced the time required to obtain a construction DB2013 Benin permit by speeding up the processing of applications. Burundi made obtaining a construction permit easier by DB2013 Burundi eliminating the requirement for a clearance from the Ministry of Health and reducing the cost of the geotechnical study. The Central African Republic made obtaining a construction DB2013 Central African Republic permit more costly. The Republic of Congo made dealing with construction DB2013 Congo, Rep. permits less expensive by reducing the cost of registering a new building at the land registry. Guinea made obtaining a building permit less expensive by DB2013 Guinea clarifying the method for calculating the cost. Malawi made dealing with construction permits more DB2013 Malawi expensive by increasing the cost to obtain the plan approval and to register the property. São Tomé and Príncipe made obtaining a construction DB2013 São Tomé and Príncipe permit more expensive by increasing the fees. Tanzania made dealing with construction permits more DB2013 Tanzania expensive by increasing the cost to obtain a building permit. São Tomé and Príncipe made dealing with construction DB2012 São Tomé and Príncipe permits easier by reducing the time required to process building permit applications. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 38 DB year Economy Reform Senegal made obtaining a building permit more expensive DB2012 Senegal by increasing the cost. Mauritania made dealing with construction permits easier by DB2012 Mauritania opening a one-stop shop. The Democratic Republic of Congo reduced the DB2012 Congo, Dem. Rep. administrative costs of obtaining a construction permit. Burkina Faso made dealing with construction permits less DB2012 Burkina Faso costly by reducing the fees to obtain a fire safety study. Burundi made dealing with construction permits easier by DB2012 Burundi reducing the cost to obtain a geotechnical study. Burkina Faso made dealing with construction permits easier DB2011 Burkina Faso by cutting the cost of the soil survey in half and the time to process a building permit application by a third. Dealing with construction permits became easier in the Democratic Republic of Congo thanks to a reduction in the DB2011 Congo, Dem. Rep. cost of a building permit from 1% of the estimated construction cost to 0.6% and a time limit for issuing building permits. Rwanda made dealing with construction permits easier by passing new building regulations at the end of April 2010 DB2011 Rwanda and implementing new time limits for the issuance of various permits. Côte d’Ivoire eased construction permitting by eliminating DB2011 Côte d'Ivoire the need to obtain a preliminary approval. DB2011 Guinea Guinea increased the cost of obtaining a building permit. Benin created a new municipal commission to streamline DB2011 Benin construction permitting and set up an ad hoc commission to deal with the backlog in permit applications. Sierra Leone made dealing with construction permits easier DB2011 Sierra Leone by streamlining the issuance of location clearances and building permits. Mali eased construction permitting by implementing a DB2011 Mali simplified environmental impact assessment for noncomplex commercial buildings. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 39 DB year Economy Reform Tanzania made dealing with construction permits more DB2010 Tanzania difficult by introducing changes that resulted in additional procedures and cost. Kenya made dealing with construction permits more costly DB2010 Kenya by raising fees. Liberia made dealing with construction permits easier by reducing the building permit fee and eliminating the requirement to obtain a tax waiver certificate before DB2010 Liberia submitting a building permit application. In addition, the cost of obtaining a power generator declined, and with the reopening of Libtelco fixed telephone connections became more readily available. Mali made dealing with construction permits easier by DB2010 Mali speeding up the process for obtaining a water connection. Burkina Faso made dealing with construction permits easier DB2010 Burkina Faso by establishing a one-stop shop for processing building permits in Ouagadougou. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 40 GETTING ELECTRICITY Access to reliable and affordable electricity is vital WHAT THE GETTING ELECTRICITY for businesses. To counter weak electricity supply, many firms in developing economies have to rely on INDICATORS MEASURE self-supply, often at a prohibitively high cost. Whether electricity is reliably available or not, the Procedures to obtain an electricity connection first step for a customer is always to gain access by (number) obtaining a connection. Submitting all relevant documents and What do the indicators cover? obtaining all necessary clearances and permits Doing Business records all procedures required for a Completing all required notifications and local business to obtain a permanent electricity receiving all necessary inspections connection and supply for a standardized Obtaining external installation works and warehouse, as well as the time and cost to complete possibly purchasing material for these works them. These procedures include applications and Concluding any necessary supply contract and contracts with electricity utilities, clearances from obtaining final supply other agencies and the external and final connection works. In addition, this year Doing Business adds Time required to complete each procedure two new measures: the reliability of supply and (calendar days) transparency of tariffs index (included in the Is at least 1 calendar day aggregate distance to frontier score and ranking on Each procedure starts on a separate day the ease of doing business) and the price of electricity (omitted from these aggregate measures). Does not include time spent gathering The ranking of economies on the ease of getting information electricity is determined by sorting their distance to Reflects the time spent in practice, with little frontier scores for getting electricity. These scores follow-up and no prior contact with officials are the simple average of the distance to frontier Cost required to complete each procedure (% scores for each of the component indicators. To of income per capita) make the data comparable across economies, several assumptions are used. Official costs only, no bribes Assumptions about the warehouse Excludes value added tax The reliability of supply and transparency of The warehouse: tariffs index  Is owned by a local entrepreneur. Sum of the scores of six component indices:  Is located in the economy’s largest business Duration and frequency of outages city. For 11 economies the data are also collected for the second largest business city. Tools to monitor power outages  Is located in an area where similar warehouses Tools to restore power supply are typically located. In this area a new Regulatory monitoring of utilities’ performance electricity connection is not eligible for a Financial deterrents aimed at limiting outages special investment promotion regime (offering special subsidization or faster service, for Transparency and accessibility of tariffs example), and located in an area with no Price of electricity (cents per kilowatt-hour)* physical constraints. For example, the property Price based on monthly bill for commercial is not near a railway. warehouse in case study  Is a new construction and is being connected *Price of electricity is not included in the calculation of to electricity for the first time. distance to frontier nor ease of doing business ranking Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 41 The warehouse (continued):  Has two stories, both above ground, with Assumptions about the monthly consumption a total surface area of approximately  It is assumed that the warehouse operates 8 1,300.6 square meters (14,000 square hours a day for 30 days a month, with feet). The plot of land on which it is built equipment utilized at 80% of capacity on is 929 square meters (10,000 square feet). average, and that there are no electricity cuts  Is used for storage of goods. (assumed for simplicity). The subscribed capacity of the warehouse is 140 kVA, with a power factor of 1 (1 kVA = 1 kW). The monthly Assumptions about the electricity connection energy consumption is therefore 26,880 kWh, and the hourly consumption 112 kWh (26,880 The electricity connection: kWh/30 days/8 hours).  Is a permanent one.  If multiple electricity suppliers exist, the  Is a three-phase, four-wire Y, 140-kilovolt- warehouse is served by the cheapest supplier. ampere (kVA) (subscribed capacity) connection (where the voltage is 120/208  Tariffs effective in March of the current year are used for calculation of the price of V, the current would be 400 amperes; electricity for the warehouse. where it is 230/400 B, the current would be nearly 200 amperes).  Is 150 meters long. The connection is to either the low-voltage or the medium- voltage distribution network and either overhead or underground, whichever is more common in the area where the warehouse is located.  Requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road.  Includes only a negligible length in the customer’s private domain.  Will supply monthly electricity consumption of 26,880 kilowatt-hours (kWh).  Does not involve work to install the internal electrical wiring. This has already been completed, up to and including the customer’s service panel or switchboard and installation of the meter base. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 42 GETTING ELECTRICITY Where do the region’s economies stand today? How easy is it for entrepreneurs in economies in Sub- 4.1). The average ranking of the region and comparator Saharan Africa (SSA) to connect a warehouse to regions provide a useful benchmark. electricity? The global rankings of these economies on the ease of getting electricity suggest an answer (figure Figure 4.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of getting electricity Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 43 GETTING ELECTRICITY The indicators underlying the rankings may be more time and the cost (figure 4.2). Comparing these revealing. Data collected by Doing Business show what it indicators across the region and with averages both for takes to get a new electricity connection in each the region and for comparator regions can provide economy in the region: the number of procedures, the useful insights. Figure 4.2 What it takes to get an electricity connection in economies in Sub-Saharan Africa (SSA) Procedures (number) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 44 GETTING ELECTRICITY Time (days) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 45 GETTING ELECTRICITY Cost (% of income per capita) Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 46 GETTING ELECTRICITY Reliability of supply and transparency of tariff index (0-8) Source: Doing Business database. Note: The index ranges from 0 to 8, with higher values indicating greater reliability of electricity supply and greater transparency of tariffs. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 47 GETTING ELECTRICITY What are the changes over time? Obtaining an electricity connection is essential to enable ensure safety in the connection process while keeping a business to conduct its most basic operations. In many connection costs reasonable, governments around the economies the connection process is complicated by the world have worked to consolidate requirements for multiple laws and regulations involved—covering service obtaining an electricity connection. What reforms in quality, general safety, technical standards, procurement getting electricity has Doing Business recorded in Sub- practices and internal wiring installations. In an effort to Saharan Africa (SSA) (table 4.1)? Table 4.1 How have economies in Sub-Saharan Africa (SSA) made getting electricity easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform The utility in Botswana made getting electricity easier by DB2016 Botswana enforcing service delivery timelines for new connections and improving the stock of materials for connection works. The utility in Kenya reduced delays for new connections by DB2016 Kenya enforcing service delivery timelines and hiring contractors for meter installation. The utility in Senegal made getting an electricity connection less time-consuming by streamlining the review of applications and the process for the final connection as well DB2016 Senegal as by reducing the time needed to issue an excavation permit. It also made getting electricity less costly by reducing the security deposit. The utility in Togo reduced the time and procedures for getting an electricity connection through several initiatives, DB2016 Togo including by creating a single window enabling customers to pay all fees at once. The utility in Uganda reduced delays for new electricity connections by deploying more customer service engineers DB2016 Uganda and reducing the time needed for the inspection and meter installation. Malawi reduced the time required to get electricity by DB2015 Malawi engaging subcontractors to carry out external connection works. In Rwanda the electricity company made getting electricity DB2015 Rwanda less costly by eliminating several fees. Sierra Leone made getting electricity easier by eliminating the need for customers to submit an application letter inquiring DB2015 Sierra Leone about a new connection before submitting an application— and made the process faster by improving staffing at the utility. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 48 DB year Economy Reform In the Democratic Republic of Congo the utility in Kinshasa made getting electricity easier by reducing the number of DB2015 Congo, Dem. Rep. approvals required for new connections and reducing the burden of the security deposit. Burundi made getting electricity easier by eliminating the electricity utility’s monopoly on the sale of materials needed DB2014 Burundi for new connections and by dropping the processing fee for new connections. Angola made getting electricity easier by eliminating the requirement for customers applying for an electricity DB2013 Angola connection to obtain authorizations from the 2 utility companies. Guinea made getting electricity easier by simplifying the DB2013 Guinea process for connecting new customers to the distribution network. In Liberia obtaining an electricity connection became easier DB2013 Liberia thanks to the adoption of better procurement practices by the Liberia Electricity Corporation. Namibia made getting electricity easier by reducing the time DB2013 Namibia required to provide estimates and external connection works and by lowering the connection costs. Rwanda made getting electricity easier by reducing the cost DB2013 Rwanda of obtaining a new connection. Mozambique made getting electricity more difficult by requiring authorization of a connection project by the DB2012 Mozambique Ministry of Energy and by adding an inspection of the completed external works. In Ethiopia delays in providing new connections made getting DB2012 Ethiopia electricity more difficult. The Gambia made getting electricity faster by allowing DB2012 Gambia, The customers to choose private contractors to carry out the external connection works. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 49 REGISTERING PROPERTY Ensuring formal property rights is fundamental. WHAT THE REGISTERING PROPERTY Effective administration of land is part of that. If INDICATORS MEASURE formal property transfer is too costly or complicated, formal titles might go informal again. And where property is informal or poorly Procedures to legally transfer title on administered, it has little chance of being accepted immovable property (number) as collateral for loans—limiting access to finance. Preregistration (for example, checking for liens, notarizing sales agreement, paying property What do the indicators cover? transfer taxes) Doing Business records the full sequence of Registration in the economy’s largest business procedures necessary for a business to purchase city 2 property from another business and transfer the property title to the buyer’s name. The transaction is Postregistration (for example, filing title with the municipality) considered complete when it is opposable to third parties and when the buyer can use the property, Time required to complete each procedure use it as collateral for a bank loan or resell it. In (calendar days) addition, this year Doing Business adds a new Does not include time spent gathering measure to the set of registering property information indicators, an index of the quality of the land administration system in each economy. The Each procedure starts on a separate day. ranking of economies on the ease of registering Procedures that can be fully completed online are recorded as ½ day. property is determined by sorting their distance to frontier scores for registering property. These scores Procedure considered completed once final are the simple average of the distance to frontier document is received scores for each of the component indicators. To No prior contact with officials make the data comparable across economies, several assumptions about the parties to the Cost required to complete each procedure transaction, the property and the procedures are (% of property value) used. Official costs only, no bribes The parties (buyer and seller): No value added or capital gains taxes included  Are limited liability companies, 100% Quality of land administration index (0-30) domestically and privately owned and  Is located in a periurban commercial zone, and perform general commercial activities and no rezoning is required. are located in the economy’s largest business city .  Has no mortgages attached, has been under 2 the same ownership for the past 10 years.  Have 50 employees each, all of whom are nationals.  Consists of 557.4 square meters (6,000 square feet) of land and a 10-year-old, 2-story The property (fully owned by the seller): warehouse of 929 square meters (10,000  Has a value of 50 times income per capita. square feet). The warehouse is in good The sale price equals the value and entire condition and complies with all safety property will be transferred. standards, building codes and legal  Is registered in the land registry or cada- requirements. There is no heating system. stre, or both, and is free of title disputes. For the 11 economies with a population of more than 100 million, data for a second city have been added. 2 Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 50 REGISTERING PROPERTY Where do the region’s economies stand today? How easy is it for entrepreneurs in economies in Sub- property suggest an answer (figure 5.1). The average Saharan Africa (SSA) to transfer property? The global ranking of the region and comparator regions provide a rankings of these economies on the ease of registering useful benchmark. Figure 5.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of registering property Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 51 REGISTERING PROPERTY The indicators underlying the rankings may be more time and the cost (figure 5.2). Comparing these revealing. Data collected by Doing Business show what indicators across the region and with averages both for it takes to complete a property transfer in each the region and for comparator regions can provide economy in the region: the number of procedures, the useful insights. Figure 5.2 What it takes to register property in economies in Sub-Saharan Africa (SSA) Procedures (number) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 52 REGISTERING PROPERTY Time (days) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 53 REGISTERING PROPERTY Cost (% of property value) * Indicates a “no practice” mark. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 54 REGISTERING PROPERTY Quality of Land Administration Index (0-30) * Indicates a “no practice” mark. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. Source: Doing Business database. Note: The index ranges from 0 to 30, with higher values indicating better quality of the land administration system. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 55 REGISTERING PROPERTY What are the changes over time? Economies worldwide have been making it easier for buyers to use or mortgage their property earlier. What entrepreneurs to register and transfer property—such as property registration reforms has Doing Business by computerizing land registries, introducing time limits recorded in Sub-Saharan Africa (SSA) (table 5.1)? for procedures and setting low fixed fees. Many have cut the time required substantially—enabling Table 5.1 How have economies in Sub-Saharan Africa (SSA) made registering property easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform Côte d’Ivoire made transferring property less costly by DB2016 Côte d'Ivoire lowering the property transfer tax rate. The Republic of Congo made transferring property less costly DB2016 Congo, Rep. by lowering the property transfer tax rate. Cabo Verde made transferring property less costly by DB2016 Cabo Verde lowering the property registration tax. Gabon made transferring property less costly by lowering the DB2016 Gabon property registration tax. Guinea-Bissau made transferring property easier by lowering DB2016 Guinea-Bissau the property registration tax. Kenya made property transfers faster by improving electronic DB2016 Kenya document management at the land registry and introducing a unified form for registration. Madagascar made transferring property less costly by DB2016 Madagascar lowering the property transfer tax. Nigeria made transferring property in Lagos less costly by DB2016 Nigeria reducing fees for property transactions. Senegal made transferring property less costly by lowering DB2016 Senegal the property transfer tax. Chad made transferring property less costly by lowering the DB2016 Chad property transfer tax. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 56 DB year Economy Reform Côte d’Ivoire made transferring property easier by digitizing DB2015 Côte d'Ivoire its land registry system and lowering the property registration tax. Gabon made transferring property more costly by increasing DB2015 Gabon the property registration tax rate. Guinea made registering property easier by reorganizing the DB2015 Guinea records at the land registry and reducing the notary fees. Mozambique made registering property easier by DB2015 Mozambique streamlining procedures at the land registry and municipality. Senegal made it easier to transfer property by replacing the DB2015 Senegal authorization from the tax authority with a notification and setting up a single step at the land registry. Sierra Leone made registering property easier by introducing DB2015 Sierra Leone a fast-track procedure. Togo made transferring property easier by lowering the DB2015 Togo property registration tax rate. Zambia made transferring property more difficult by DB2015 Zambia increasing the property transfer tax rate. Burundi made transferring property easier by creating a one- DB2014 Burundi stop shop for property registration. Côte d’Ivoire made transferring property easier by DB2014 Côte d'Ivoire streamlining procedures and reducing the property transfer tax. Cape Verde made property transfers faster by digitizing its DB2014 Cabo Verde land registry. Guinea made transferring property easier by reducing the DB2014 Guinea property transfer tax. Guinea-Bissau made transferring property easier by DB2014 Guinea-Bissau increasing the number of notaries dealing with property transactions. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 57 DB year Economy Reform Liberia made transferring property easier by digitizing the DB2014 Liberia records at the land registry. Lesotho made transferring property easier by streamlining DB2014 Lesotho procedures and increasing administrative efficiency. Malawi made transferring property easier by reducing the DB2014 Malawi stamp duty. Namibia made transferring property more expensive by DB2014 Namibia increasing the transfer and stamp duties. Niger made transferring property easier by reducing the DB2014 Niger registration fees. Rwanda made transferring property easier by eliminating the requirement to obtain a tax clearance certificate and by DB2014 Rwanda implementing the web-based Land Administration Information System for processing land transactions. Senegal made transferring property easier by reducing the DB2014 Senegal property transfer tax. Chad made transferring property easier by lowering the DB2014 Chad property transfer tax. Uganda made transferring property easier by eliminating the DB2014 Uganda need to have instruments of land transfer physically embossed to certify payment of the stamp duty. Burundi made property transfers faster by establishing a DB2013 Burundi statutory time limit for processing property transfer requests at the land registry. The Comoros made it easier to transfer property by reducing DB2013 Comoros the property transfer tax. In Gabon registering property became more difficult because DB2013 Gabon of longer administrative delays at the land registry. DB2013 Mauritius Mauritius made property transfers faster by implementing an electronic information management system at the Registrar- Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 58 DB year Economy Reform General’s Department. Namibia made transferring property more difficult by DB2013 Namibia requiring conveyancers to obtain a building compliance certificate beforehand. Sierra Leone made registering property easier by DB2013 Sierra Leone computerizing the Ministry of Lands, Country Planning and the Environment. Uganda made transferring property more difficult by introducing a requirement for property purchasers to obtain an income tax certificate before registration, resulting in delays at the Uganda Revenue Authority and the Ministry of DB2013 Uganda Finance. At the same time, Uganda made it easier by digitizing records at the title registry, increasing efficiency at the assessor’s office and making it possible for more banks to accept the stamp duty payment. Zambia made registering property more costly by increasing DB2012 Zambia the property transfer tax rate. South Africa made transferring property less costly and more DB2012 South Africa efficient by reducing the transfer duty and introducing electronic filing. Swaziland made transferring property quicker by streamlining DB2012 Swaziland the process at the land registry. Uganda increased the efficiency of property transfers by DB2012 Uganda establishing performance standards and recruiting more officials at the land office. Rwanda made transferring property more expensive by DB2012 Rwanda enforcing the checking of the capital gains tax. São Tomé and Príncipe made registering property less costly DB2012 São Tomé and Príncipe by lowering property transfer taxes. Namibia made transferring property more expensive for DB2012 Namibia companies. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 59 DB year Economy Reform Malawi made property registration slower by no longer DB2012 Malawi sustaining last year’s time improvement in Compliance Certificate processing times at the Ministry of Lands. The Republic of Congo made registering property more DB2012 Congo, Rep. expensive by reversing a previous law that reduced the registration fee. Cape Verde made registering property faster by DB2012 Cabo Verde implementing time limits for the notaries and the land registry. The Central African Republic halved the cost of registering DB2012 Central African Republic property. Angola made transferring property less costly by reducing DB2012 Angola transfer taxes. Cape Verde eased property registration by switching from DB2011 Cabo Verde fees based on a percentage of the property value to lower fixed rates. The Democratic Republic of Congo reduced by half the DB2011 Congo, Dem. Rep. property transfer tax to 3% of the property value. Mali eased property transfers by reducing the property DB2011 Mali transfer tax for firms from 15% of the property value to 7%. Malawi eased property transfers by cutting the wait for DB2011 Malawi consents and registration of legal instruments by half. Sierra Leone lifted a moratorium on sales of privately owned DB2011 Sierra Leone properties. Zimbabwe made transferring property less costly by DB2010 Zimbabwe introducing a new policy on the capital gains tax that resulted in a reduction in the actual amount paid. Sierra Leone made transferring property more difficult by DB2010 Sierra Leone reinstating a moratorium on the authorization of property transfers by the director of surveys and lands. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 60 DB year Economy Reform Rwanda reduced the time required to transfer property DB2010 Rwanda through ongoing improvements in the property registration process. Mauritius made registering property easier by setting a DB2010 Mauritius statutory time limit of 15 days for issuance of the final property title by the land registry. Ethiopia made transferring property easier by decentralizing DB2010 Ethiopia administrative tasks and merging procedures at the land registry and municipality. Madagascar made transferring property more costly by DB2010 Madagascar making the use of a notary mandatory for property transactions. Botswana made registering property more difficult by adding DB2010 Botswana a requirement to notify the tax agency of the value added tax payment. Burkina Faso streamlined property registration by allowing the payment of transfer taxes at the land registry, reorganizing the land registry, setting statutory time limits for DB2010 Burkina Faso procedures and simplifying property valuation by government officials through the use of tables of values based on materials used. Angola speeded up property transfers by digitizing the land DB2010 Angola registry in Luanda and splitting it into 2 units, each responsible for half the land covered by the registry. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 61 GETTING CREDIT Two types of frameworks can facilitate access to WHAT THE GETTING CREDIT INDICATORS credit and improve its allocation: credit information MEASURE systems and borrowers and lenders in collateral and bankruptcy laws. Credit information systems enable lenders’ rights to view a potential borrower’s financial Strength of legal rights index (0–12) history (positive or negative)—valuable information to Rights of borrowers and lenders through consider when assessing risk. And they permit collateral laws borrowers to establish a good credit history that will Protection of secured creditors’ rights through allow easier access to credit. Sound collateral laws bankruptcy laws enable businesses to use their assets, especially movable property, as security to generate capital— Depth of credit information index (0–8) while strong creditors’ rights have been associated Scope and accessibility of credit information with higher ratios of private sector credit to GDP. distributed by credit bureaus and credit registries What do the indicators cover? Credit bureau coverage (% of adults) Doing Business assesses the sharing of credit information and the legal rights of borrowers and Number of individuals and firms listed in lenders with respect to secured transactions through largest credit bureau as percentage of adult 2 sets of indicators. The depth of credit information population index measures rules and practices affecting the Credit registry coverage (% of adults) coverage, scope and accessibility of credit Number of individuals and firms listed in information available through a credit registry or a credit registry as percentage of adult credit bureau. The strength of legal rights index population measures whether certain features that facilitate lending exist within the applicable collateral and bankruptcy laws. Doing Business uses two case scenarios, Case A and Case B, to determine the scope of the secured transactions system, involving a  Has up to 50 employees. secured borrower and a secured lender and  Is 100% domestically owned, as is the lender. examining legal restrictions on the use of movable The ranking of economies on the ease of getting collateral (for more details on each case, see the Data credit is determined by sorting their distance to Notes section of the Doing Business 2016 report). frontier scores for getting credit. These scores are These scenarios assume that the borrower: the distance to frontier score for the strength of  Is a private limited liability company. legal rights index and the depth of credit Has its headquarters and only base of information index. operations in the largest business city. For the 11 economies with a population of more than 100 million, data for a second city have been added. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 62 GETTING CREDIT Where do the region’s economies stand today? How well do the credit information systems and getting credit suggest an answer (figure 6.1). The collateral and bankruptcy laws in economies in Sub- average ranking of the region and comparator regions Saharan Africa (SSA) facilitate access to credit? The provide a useful benchmark. global rankings of these economies on the ease of Figure 6.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of getting credit Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 63 GETTING CREDIT Another way to assess how well regulations and the strength of legal rights index for Sub-Saharan Africa institutions support lending and borrowing in the region (SSA) and comparators on the strength of legal rights is to see where the region stands in the distribution of index. Figure 6.3 shows the same thing for the depth of scores across regions. Figure 6.2 highlights the score on credit information index. Figure 6.2 How strong are legal rights for borrowers and lenders? Region scores on strength of legal rights index Note: Higher scores indicate that collateral and bankruptcy laws are better designed to facilitate access to credit. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 64 Figure 6.3 How much credit information is shared—and how widely? Region scores on depth of credit information index Note: Higher scores indicate the availability of more credit information, from either a credit registry or a credit bureau, to facilitate lending decisions. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 65 GETTING CREDIT What are the changes over time? When economies strengthen the legal rights of lenders information, they can increase entrepreneurs’ access to and borrowers under collateral and bankruptcy laws, and credit. What credit reforms has Doing Business recorded increase the scope, coverage and accessibility of credit in Sub-Saharan Africa (SSA) (table 6.1)? Table 6.1 How have economies in Sub-Saharan Africa (SSA) made getting credit easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform The Comoros improved access to credit information by DB2016 Comoros establishing a new credit registry. Kenya improved access to credit information by passing DB2016 Kenya legislation that allows the sharing of positive information and by expanding borrower coverage. Liberia improved access to credit by adopting new laws on DB2016 Liberia secured transactions that establish a modern, unified and notice-based collateral registry. Lesotho improved access to credit information by DB2016 Lesotho establishing its first credit bureau. Madagascar improved access to credit by broadening the range of assets that can be used as collateral (including future DB2016 Madagascar assets), by allowing a general description of assets granted as collateral and by allowing a general description of debts and obligations. Mali improved its credit information system by introducing regulations that govern the licensing and functioning of DB2016 Mali credit bureaus in the member states of the West African Economic and Monetary Union (UEMOA). Mauritania improved access to credit information by lowering the threshold for the minimum size of loans to be included in DB2016 Mauritania the credit registry’s database and by expanding borrower coverage. Namibia improved access to credit information by DB2016 Namibia guaranteeing by law borrowers’ right to inspect their own data. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 66 DB year Economy Reform Niger improved its credit information system by introducing regulations that govern the licensing and functioning of DB2016 Niger credit bureaus in the member states of the West African Economic and Monetary Union (UEMOA). In Rwanda the credit bureau started to provide credit scores to banks and other financial institutions while the credit DB2016 Rwanda registry expanded borrower coverage, strengthening the credit reporting system. The Seychelles improved access to credit information by DB2016 Seychelles establishing a credit registry. In Uganda the credit bureau expanded borrower coverage, DB2016 Uganda improving access to credit information. DB2016 Zambia In Zambia the credit bureau began to provide credit scores. In Zimbabwe the credit bureau began to provide credit DB2016 Zimbabwe scores. Côte d’Ivoire improved its credit information system by DB2015 Côte d'Ivoire introducing regulations that govern the licensing and operation of credit bureaus. Cameroon improved its credit information system by passing DB2015 Cameroon regulations that provide for the establishment and operation of a credit registry database. Cabo Verde improved its credit information system by DB2015 Cabo Verde adopting a new law providing for the establishment of credit bureaus. Kenya improved its credit information system by passing legislation that allows the sharing of both positive and DB2015 Kenya negative credit information and establishes guidelines for the treatment of historical data. Mauritania improved its credit information system by DB2015 Mauritania lowering the minimum threshold for loans to be included in the registry’s database. Rwanda improved access to credit by establishing clear DB2015 Rwanda priority rules outside bankruptcy for secured creditors and establishing clear grounds for relief from a stay of enforcement actions by secured creditors during Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 67 DB year Economy Reform reorganization procedures. Senegal improved its credit information system by introducing regulations developed by the West African DB2015 Senegal Economic and Monetary Union that govern the licensing and operation of credit bureaus. Sierra Leone improved its credit information system by DB2015 Sierra Leone beginning to distribute both positive and negative data and by increasing the system’s coverage rate. Tanzania improved access to credit information by creating DB2015 Tanzania credit bureaus. South Africa made access to credit information more difficult by introducing regulations requiring credit bureaus to remove negative credit information from their databases, such as DB2015 South Africa adverse information on consumer behavior or enforcement action accumulated on a consumer’s record before April 1, 2014. The Democratic Republic of Congo improved access to credit DB2015 Congo, Dem. Rep. information by establishing a credit registry. In Zambia, the credit bureau improved access to credit DB2015 Zambia information by starting to exchange credit information with retailers and utilities. Mauritius improved access to credit information by DB2014 Mauritius expanding the scope of credit information and increasing the coverage of the historical data distributed from 2 years to 3. Rwanda strengthened its secured transactions system by providing more flexibility on the types of debts and DB2014 Rwanda obligations that can be secured through a collateral agreement. Tanzania improved its credit information system through new regulations that provide for the licensing of credit reference DB2014 Tanzania bureaus and outline the functions of the credit reference data bank. The Democratic Republic of Congo strengthened its secured transactions system by adopting the OHADA (Organization DB2014 Congo, Dem. Rep. for the Harmonization of Business Law in Africa) Uniform Act on Secured Transactions. The new law broadens the range of assets that can be used as collateral (including future assets) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 68 DB year Economy Reform and the range of obligations that can be secured, extends security interests to the proceeds of the original asset and introduces the possibility of out-of-court enforcement. Ethiopia improved access to credit information by establishing an online platform for sharing such information DB2013 Ethiopia and by guaranteeing borrowers’ right to inspect their personal data. Mauritius improved access to credit information by starting to DB2013 Mauritius collect payment information from retailers and beginning to distribute both positive and negative information. Nigeria improved access to credit information by distributing DB2013 Nigeria credit information from retail companies. Seychelles improved access to credit information by adopting DB2013 Seychelles new regulations that provide for the establishment and operation of a credit registry database. Sierra Leone improved access to credit information by DB2013 Sierra Leone establishing a public credit registry at its central bank and guaranteeing borrowers’ right to inspect their personal data. Sudan improved access to credit information by establishing DB2013 Sudan a private credit bureau. Access to credit in Togo was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be used as collateral DB2012 Togo (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. In Rwanda the private credit bureau started to collect and distribute information from utility companies and also started DB2012 Rwanda to distribute more than 2 years of historical information, improving the credit information system. Access to credit in Senegal was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Senegal used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 69 DB year Economy Reform Sierra Leone improved its credit information system by DB2012 Sierra Leone enacting a new law providing for the creation of a public credit registry. Access to credit in Niger was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be used as collateral DB2012 Niger (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Liberia strengthened its legal framework for secured transactions by adopting a new commercial code that DB2012 Liberia broadens the range of assets that can be used as collateral (including future assets) and extends the security interest to the proceeds of the original asset. Madagascar improved its credit information system by eliminating the minimum threshold for loans included in the DB2012 Madagascar database and making it mandatory for banks to share credit information with the credit bureau. Malawi improved its credit information system by passing a DB2012 Malawi new law allowing the creation of a private credit bureau. Access to credit in Mali was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be used as collateral DB2012 Mali (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Access to credit in Gabon was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Gabon used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Access to credit in Guinea was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Guinea used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 70 DB year Economy Reform Access to credit in Guinea-Bissau was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Guinea-Bissau used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Cape Verde improved its credit information system by DB2012 Cabo Verde introducing a new online platform and by starting to provide 5 years of historical data. Access to credit in the Central African Republic was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Central African Republic used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Access to credit in Chad was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be used as collateral DB2012 Chad (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Access to credit in Comoros was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Comoros used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Access to credit in the Republic of Congo was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Congo, Rep. used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Access to credit in Côte d’Ivoire was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Côte d'Ivoire used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 71 DB year Economy Reform Access to credit in Equatorial Guinea was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Equatorial Guinea used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Angola strengthened its credit information system by DB2012 Angola adopting new rules for credit bureaus and guaranteeing the right of borrowers to inspect their data. Access to credit in Benin was improved through amendments to the OHADA (Organization for the Harmonization of Business Law in Africa) Uniform Act on Secured Transactions DB2012 Benin that broaden the range of assets that can be used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Access to credit in Burkina Faso was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Burkina Faso used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Access to credit in Cameroon was improved through amendments to the OHADA Uniform Act on Secured Transactions that broaden the range of assets that can be DB2012 Cameroon used as collateral (including future assets), extend the security interest to the proceeds of the original asset and introduce the possibility of out-of-court enforcement. Ghana strengthened access to credit by establishing a centralized collateral registry and by granting an operating DB2011 Ghana license to a private credit bureau that began operations in April of 2010. Rwanda enhanced access to credit by allowing borrowers the right to inspect their own credit report and mandating that DB2011 Rwanda loans of all sizes be reported to the central bank’s public credit registry. Uganda enhanced access to credit by establishing a new DB2011 Uganda private credit bureau. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 72 DB year Economy Reform Zambia improved its credit information system by making it mandatory for banks and nonbank financial institutions DB2010 Zambia registered with the central bank to use credit reference reports and to provide data to the credit bureau. Sierra Leone strengthened its secured transactions system through a new company act that allows the use of fixed and DB2010 Sierra Leone floating charges and automatically extends a security interest to the products, proceeds and replacements of the collateral. Kenya improved access to credit information through a new DB2010 Kenya law on credit bureaus providing a framework for a regulated and reliable system of credit information sharing. Mauritius improved access to credit information by allowing the licensing of private credit information bureaus and by DB2010 Mauritius expanding the coverage of the Mauritius Credit Information Bureau to all institutions offering credit facilities. Nigeria improved its credit information system through a DB2010 Nigeria central bank guideline defining the licensing, operational and regulatory requirements for a privately owned credit bureau. Rwanda strengthened its secured transactions system by allowing a wider range of assets to be used as collateral, permitting a general description of debts and obligations in DB2010 Rwanda the security agreement, allowing out-of-court enforcement of collateral, granting secured creditors absolute priority within bankruptcy and creating a new collateral registry. Cape Verde improved access to credit information by allowing online access to the central bank’s credit information database for financial institutions providing and retrieving DB2010 Cabo Verde information. At the same time, Cape Verde raised the minimum threshold for personal loans included in the database from 1,000 to 5,000 escudos. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 73 PROTECTING MINORITY INVESTORS Protecting minority investors matters for the ability of WHAT THE PROTECTING MINORITY INVESTORS companies to raise the capital they need to grow, INDICATORS MEASURE innovate, diversify and compete. Effective regulations define related-party transactions precisely, promote clear and efficient disclosure requirements, require Extent of disclosure index (0–10) shareholder participation in major decisions of the Review and approval requirements for related-party company and set detailed standards of accountability transactions ; Disclosure requirements for related-party for company insiders. transactions What do the indicators cover? Extent of director liability index (0–10) Doing Business measures the protection of minority Ability of minority shareholders to sue and hold interested investors from conflicts of interest through one set of directors liable for prejudicial related-party transactions; indicators and shareholders’ rights in corporate Available legal remedies (damages, disgorgement of profits, governance through another. The ranking of economies fines, imprisonment, rescission of the transaction) on the strength of minority investor protections is determined by sorting their distance to frontier scores Ease of shareholder suits index (0–10) for protecting minority investors. These scores are the Access to internal corporate documents; Evidence simple average of the distance to frontier scores for the obtainable during trial and allocation of legal expenses extent of conflict of interest regulation index and the Extent of conflict of interest regulation index extent of shareholder governance index. To make the (0–10) data comparable across economies, a case study uses Simple average of the extent of disclosure, extent of director several assumptions about the business and the liability and ease of shareholder indices transaction. Extent of shareholder rights index (0-10) The business (Buyer): Shareholders’ rights and role in major corporate decisions  Is a publicly traded corporation listed on the economy’s most important stock exchange Extent of ownership and control index (0-10) (or at least a large private company with Governance safeguards protecting shareholders from undue multiple shareholders). board control and entrenchment  Has a board of directors and a chief executive Extent of corporate transparency index (0-10) officer (CEO) who may legally act on behalf of Buyer where permitted, even if this is not Corporate transparency on ownership stakes, compensation, specifically required by law. audits and financial prospects The transaction involves the following details: Extent of shareholder governance index (0–  Mr. James, a director and the majority 10) shareholder of the company, proposes that Simple average of the extent of shareholders rights, extent the company purchase used trucks from of ownership and control and extent of corporate another company he owns. transparency indices  The price is higher than the going price for Strength of investor protection index (0–10) used trucks, but the transaction goes forward. Simple average of the extent of conflict of interest  All required approvals are obtained, and all regulation and extent of shareholder governance indices required disclosures made, though the transaction is prejudicial to Buyer.  Shareholders sue the interested parties and the members of the board of directors. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 74 PROTECTING MINORITY INVESTORS Where do the region’s economies stand today? How strong are investor protections against self-dealing protection of minority investors, a higher ranking does in economies in Sub-Saharan Africa (SSA)? The global indicate that an economy’s regulations offer stronger rankings of these economies on the strength of investor investor protections against self-dealing in the areas protection index suggest an answer (figure 7.1). While measured. the indicator does not measure all aspects related to the Figure 7.1 How economies in Sub-Saharan Africa (SSA) rank on the strength of investor protection index Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 75 PROTECTING MINORITY INVESTORS The strength of minority investor protection index is the highlight the scores on the various minority investor average of the extent of conflict of interest regulation protection indices for Sub-Saharan Africa (SSA). index and the extent of shareholder governance index. Comparing the scores across the region and with The index ranges from 0 to 10, rounded to the nearest averages both for the region and for comparator regions decimal place, with higher values indicating stronger can provide useful insights. minority investor protections. Figures 7.2 and 7.3 Figure 7.2 How extensive are conflict of interest regulations? Extent of conflict of interest regulation index (0-10) Note: Higher values indicate stronger regulation of conflicts of interest. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 76 Figure 7.3 How extensive is shareholder governance? Extent of shareholder governance index (0-10) Note: Higher scores indicate stronger rights of shareholders in corporate governance. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 77 PROTECTING MINORITY INVESTORS What are the changes over time? Economies with the strongest protections of minority reforms to strengthen minority investor protections may investors from self-dealing require detailed disclosure move ahead on different fronts—such as through new or and define clear duties for directors. They also have well- amended company laws, securities regulations or functioning courts and up-to-date procedural rules that revisions to court procedures. What minority investor give minority shareholders the means to prove their case protection reforms has Doing Business recorded in Sub- and obtain a judgment within a reasonable time. So Saharan Africa (SSA) (table 7.1)? Table 7.1 How have economies in Sub-Saharan Africa (SSA) strengthened minority investor protections—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform Madagascar strengthened minority investor protections by requiring that directors with a conflict of interest fully disclose DB2016 Madagascar the nature of their interest to the board of directors. Nigeria strengthened minority investor protections by requiring that related-party transactions be subject to DB2016 Nigeria external review and to approval by disinterested shareholders. This reform applies to both Kano and Lagos. Rwanda strengthened minority investor protections by introducing provisions allowing holders of 10% of a company’s shares to call for an extraordinary meeting of shareholders, requiring holders of special classes of shares to DB2016 Rwanda vote on decisions affecting their shares, requiring board members to disclose information about their directorships and primary employment and requiring that audit reports for listed companies be published in a newspaper. Zimbabwe strengthened minority investor protections by DB2016 Zimbabwe introducing provisions allowing legal practitioners to enter into contingency fee agreements with clients. Benin strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Benin possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 78 DB year Economy Reform Burkina Faso strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Burkina Faso possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. The Central African Republic strengthened minority investor protections by introducing greater requirements for disclosure of related-party transactions to the board of DB2015 Central African Republic directors and by making it possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Côte d’Ivoire strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Côte d'Ivoire possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Cameroon strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Cameroon possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. The Republic of Congo strengthened minority investor protections by introducing greater requirements for disclosure of related-party transactions to the board of DB2015 Congo, Rep. directors and by making it possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. The Comoros strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Comoros possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 79 DB year Economy Reform Gabon strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Gabon possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Guinea strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Guinea possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. The Gambia strengthened minority investor protections by clarifying the duties of directors and providing new venues DB2015 Gambia, The and remedies for minority shareholders seeking redress for oppressive conduct. Guinea-Bissau strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Guinea-Bissau possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Equatorial Guinea strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Equatorial Guinea possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Mali strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Mali possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Niger strengthened minority investor protections by DB2015 Niger introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it possible for shareholders to inspect the documents Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 80 DB year Economy Reform pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Senegal strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors; by making it possible for shareholders to inspect the documents DB2015 Senegal pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions; and by making it possible for shareholder plaintiffs to request from the other party, and from witnesses, documents relevant to the subject matter of the claim during the trial. Chad strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Chad possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Togo strengthened minority investor protections by introducing greater requirements for disclosure of related- party transactions to the board of directors and by making it DB2015 Togo possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. The Democratic Republic of Congo strengthened minority investor protections by introducing greater requirements for disclosure of related-party transactions to the board of DB2015 Congo, Dem. Rep. directors and by making it possible for shareholders to inspect the documents pertaining to related-party transactions and to appoint auditors to conduct an inspection of such transactions. Rwanda strengthened investor protections through a new law DB2014 Rwanda allowing plaintiffs to cross-examine defendants and witnesses with prior approval of the questions by the court. The Democratic Republic of Congo strengthened investor protections by adopting the OHADA Uniform Act on DB2014 Congo, Dem. Rep. Commercial Companies and Economic Interest Groups, which introduces additional approval and disclosure requirements for related-party transactions and makes it possible to sue Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 81 DB year Economy Reform directors when such transactions harm the company. Lesotho strengthened investor protections by increasing the disclosure requirements for related-party transactions and DB2013 Lesotho improving the liability regime for company directors in cases of abusive related-party transactions. Burundi strengthened investor protections by introducing new requirements for the approval of transactions between interested parties, by requiring greater corporate disclosure DB2012 Burundi to the board of directors and in the annual report and by making it easier to sue directors in cases of prejudicial transactions between interested parties. Swaziland strengthened investor protections by requiring greater corporate disclosure, higher standards of accountability for company directors and greater access to DB2011 Swaziland corporate information for minority investors. Swaziland reduced the time to import by implementing an electronic data interchange system for customs at its border posts. Mali strengthened investor protections through an DB2010 Mali amendment to its civil procedure code increasing shareholders’ access to corporate information during trial. Rwanda strengthened investor protections through a new company law requiring greater corporate disclosure, DB2010 Rwanda increasing director liability and improving shareholders’ access to information. Sierra Leone strengthened investor protections through a DB2010 Sierra Leone new company act enhancing director liability and improving disclosure requirements. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 82 WHAT THE PAYING TAXES INDICATORS PAYING TAXES Taxes are essential. The level of tax rates needs to MEASURE be carefully chosen—and needless complexity in tax rules avoided. Firms in economies that rank Tax payments for a manufacturing company better on the ease of paying taxes in the Doing in 2014 (number per year adjusted for Business study tend to perceive both tax rates and electronic and joint filing and payment) tax administration as less of an obstacle to Total number of taxes and contributions paid, business according to the World Bank Enterprise including consumption taxes (value added tax, Survey research. sales tax or goods and service tax) Method and frequency of filing and payment What do the indicators cover? Time required to comply with 3 major taxes Using a case scenario, Doing Business records the (hours per year) taxes and mandatory contributions that a medium- size company must pay in a given year as well as Collecting information and computing the tax measures of the administrative burden of paying payable taxes and contributions. This case scenario uses a set Completing tax return forms, filing with of financial statements and assumptions about proper agencies transactions made over the year. Information is also Arranging payment or withholding compiled on the frequency of filing and payments as well as time taken to comply with tax laws. The Preparing separate tax accounting books, if ranking of economies on the ease of paying taxes is required determined by sorting their distance to frontier Total tax rate (% of profit before all taxes) scores on the ease of paying taxes. These scores are the simple average of the distance to frontier scores Profit or corporate income tax for each of the component indicators, with a Social contributions and labor taxes paid by threshold and a nonlinear transformation applied to the employer one of the component indicators, the total tax rate . 3 Property and property transfer taxes The financial statement variables have been updated to be proportional to 2012 income per capita; Dividend, capital gains and financial previously they were proportional to 2005 income transactions taxes per capita. To make the data comparable across Waste collection, vehicle, road and other taxes economies, several assumptions are used.  Taxes and mandatory contributions are  TaxpayerCo is a medium-size business that measured at all levels of government. started operations on January 1, 2013.  Taxes and mandatory contributions include  The business starts from the same financial corporate income tax, turnover tax and all position in each economy. All the taxes labor taxes and contributions paid by the and mandatory contributions paid during company. the second year of operation are recorded.  A range of standard deductions and exemptions are also recorded. The nonlinear distance to frontier for the total tax rate is equal to the distance to frontier for the total tax rate to the power of 0.8. 3 The threshold is defined as the total tax rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax rate below this threshold receive the same score as the economy at the threshold. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 83 PAYING TAXES Where do the region’s economies stand today? What is the administrative burden of complying with information for assessing the tax compliance burden for taxes in economies in Sub-Saharan Africa (SSA)—and businesses (figure 8.1). The average ranking of the region how much do firms pay in taxes? The global rankings of provides a useful benchmark. these economies on the ease of paying taxes offer useful Figure 8.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of paying taxes Note: All economies with a total tax rate below the threshold of 26.1% applied in DB2015, receive the same distance to frontier score for the total tax rate (a distance to frontier score of 100 for the total tax rate) for the purpose of calculating the ranking on the ease of paying taxes. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 84 PAYING TAXES The indicators underlying the rankings may be more major taxes (corporate income tax, VAT or sales tax and revealing. Data collected by Doing Business show what it labor taxes and mandatory contributions)—as well as the takes to comply with tax regulations in each economy in total tax rate (figure 8.2). Comparing these indicators the region—the number of payments per year and the across the region and with averages both for the region time required to prepare, and file and pay taxes the 3 and for comparator regions can provide useful insights. Figure 8.2 How easy is it to pay taxes in economies in Sub-Saharan Africa (SSA)—and what are the total tax rates? Payments (number per year) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 85 PAYING TAXES Time (hours per year) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 86 PAYING TAXES Total tax rate (% of profit) Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 87 PAYING TAXES What are the changes over time? Economies around the world have made paying taxes concrete results. Some economies simplifying faster and easier for businesses—such as by compliance with tax obligations and reducing rates have consolidating filings, reducing the frequency of seen tax revenue rise. What tax reforms has Doing payments or offering electronic filing and payment. Business recorded in Sub-Saharan Africa (SSA) (table Many have lowered tax rates. Changes have brought 8.1)? Table 8.1 How have economies in Sub-Saharan Africa (SSA) made paying taxes easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform Angola made paying taxes less costly for companies by DB2016 Angola reducing the corporate income tax rate. Gabon made paying taxes more costly for companies by DB2016 Gabon reducing the depreciation rates for some types of fixed assets. The Gambia made paying taxes easier for companies by introducing a VAT system that is less complicated than the DB2016 Gambia, The previous sales tax system—and made paying taxes less costly by reducing the corporate income tax rate. Liberia made paying taxes more complicated for companies DB2016 Liberia by introducing a minimum corporate income tax. Mozambique made paying taxes easier and less costly for companies by implementing an online system for filing social DB2016 Mozambique security contributions and by increasing the depreciation rate for copying machines. Rwanda made paying taxes easier for companies by DB2016 Rwanda introducing electronic filing and making its use compulsory. Swaziland made paying taxes less costly for companies by reducing the corporate income tax rate. On the other hand, DB2016 Swaziland Swaziland raised the ceiling for the National Provident Fund contribution. DB2016 Congo, Dem. Rep. The Democratic Republic of Congo made paying taxes more complicated for companies by introducing a new social Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 88 DB year Economy Reform security contribution paid by employers, though it subsequently reduced the rate of the contribution. Zambia made paying taxes easier for companies by implementing electronic filing and payment for VAT. At the DB2016 Zambia same time, Zambia made paying taxes more costly by increasing the property transfer tax rate. The Republic of Congo made paying taxes easier for companies by reducing the corporate income tax rate and by DB2015 Congo, Rep. abolishing the tax on the rental value of business premises and the tax on company-owned cars. Gabon made paying taxes easier for companies by DB2015 Gabon introducing an electronic system for filing and paying VAT. Kenya made paying taxes more costly for companies by DB2015 Kenya increasing employers’ social security contribution rate. Namibia made paying taxes more complicated for companies DB2015 Namibia by introducing a new vocational education and training levy. Senegal made paying taxes easier for companies by DB2015 Senegal abolishing the vehicle tax and making it possible to download the declaration forms for VAT online. Sierra Leone made paying taxes more complicated for DB2015 Sierra Leone companies by introducing a capital gains tax. Swaziland made paying taxes less costly for companies by DB2015 Swaziland reducing the corporate income tax rate. The Seychelles made paying taxes easier for companies by reducing the business tax rate applicable to income above 1 million Seychelles rupees ($77,700) and by introducing a DB2015 Seychelles simplified new tax return allowing joint filing and payment of the business tax, VAT and corporate social responsibility tax. On the other hand, it increased employers’ pension fund contribution rate. Togo made paying taxes less costly for companies by DB2015 Togo reducing the payroll tax rate. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 89 DB year Economy Reform Tanzania made paying taxes more complicated for companies by introducing an excise tax on money transfers. On the other DB2015 Tanzania hand, it made paying taxes less costly by reducing the rate of the skill and development levy. The Democratic Republic of Congo made paying taxes easier for companies by simplifying corporate income tax returns DB2015 Congo, Dem. Rep. and abolishing the minimum tax payable depending on a company’s size. On the other hand, it increased the rate for the minimum lump-sum tax applied to annual revenue. Zambia made paying taxes easier for companies by abolishing the medical levy and by introducing an online DB2015 Zambia system for filing corporate income tax, VAT and some labor taxes. At the same time, it also increased the property transfer tax. Burundi made paying taxes less costly for companies by DB2014 Burundi reducing corporate income tax rate. Burkina Faso made paying taxes easier for companies by DB2014 Burkina Faso abolishing the separate capital gains tax on real estate properties. Côte d'Ivoire made paying taxes more costly for companies by increasing the employers’contribution rate for social DB2014 Côte d'Ivoire security related to retirement, increasing the rate for the special tax on equipment and eliminating several kinds of tax relief for businesses. The Republic of Congo made paying taxes easier and less DB2014 Congo, Rep. costly for companies by merging several employment taxes into a single tax and lowering the tax rate on rental value. Gabon made paying taxes less costly for companies by DB2014 Gabon reducing the corporate income tax rate. The Gambia made paying taxes easier for companies by DB2014 Gambia, The replacing the sales tax with a value added tax. Madagascar made paying taxes easier and less costly for DB2014 Madagascar companies by training taxpayers in the use of the online system for value added tax declarations and by reducing the Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 90 DB year Economy Reform corporate income tax rate. Mauritania made paying taxes more costly for companies by DB2014 Mauritania introducing a new health insurance contribution for employers that is levied on gross salaries. Rwanda made paying taxes easier and less costly for companies by rolling out its electronic filing system to the DB2014 Rwanda majority of businesses and by reducing the property tax rate and business trading license fee. Senegal made paying taxes more costly by increasing the corporate income tax rate. At the same time, Senegal DB2014 Senegal facilitated tax payments by making tax forms available online and creating the Center for Medium Enterprises. South Sudan made paying taxes more costly for companies DB2014 South Sudan by increasing the corporate income tax rate. The Seychelles made paying taxes more complicated for DB2014 Seychelles companies by introducing a value added tax. Togo made paying taxes more costly for companies by increasing corporate income tax rate and employers' social DB2014 Togo security contribution rate and by introducing a new tax on corporate cars. At the same time, Togo reduced the payroll tax rate. South Africa made paying taxes easier for companies by DB2014 South Africa replacing the secondary tax on companies with a dividend tax borne by shareholders. The Democratic Republic of Congo made paying taxes more DB2014 Congo, Dem. Rep. costly for companies by increasing the employers' social security contribution rate. Botswana made paying taxes more costly for companies by DB2013 Botswana increasing the profit tax rate. Kenya made paying taxes faster for companies by enhancing DB2013 Kenya electronic filing systems. DB2013 Liberia Liberia made paying taxes easier for companies by reducing Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 91 DB year Economy Reform the profit tax rate and abolishing the turnover tax. Malawi introduced a mandatory pension contribution for DB2013 Malawi companies. Mali made paying taxes less costly for companies by reducing the corporate income tax rate—though it also introduced a DB2013 Mali new tax on land. At the same time, Mali simplified the processes of paying taxes by introducing a single form for joint filing and payment of several taxes. DB2013 Ethiopia Ethiopia introduced a social insurance contribution. Nigeria introduced a new compulsory labor contribution paid DB2013 Nigeria by the employer. DB2013 Swaziland Swaziland introduced value added tax. DB2012 Togo Togo reduced its corporate income tax rate. The Seychelles made paying taxes less costly for firms by DB2012 Seychelles eliminating the social security tax. Rwanda reduced the frequency of value added tax filings by DB2012 Rwanda companies from monthly to quarterly. The Gambia reduced the minimum turnover tax and DB2012 Gambia, The corporate income tax rates. Côte d’Ivoire eliminated a tax on firms, the contribution for DB2012 Côte d'Ivoire national reconstruction (contribution pour la reconstruction nationale). Burundi made paying taxes easier for companies by reducing DB2012 Burundi the payment frequency for social security contributions from monthly to quarterly. The Democratic Republic of Congo made paying taxes easier DB2012 Congo, Dem. Rep. for firms by replacing the sales tax with a value added tax. The Republic of Congo reduced its corporate income tax rate DB2011 Congo, Rep. from 38% to 36% in 2010. DB2011 Côte d'Ivoire Côte d’Ivoire made paying taxes less costly for companies by Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 92 DB year Economy Reform reducing the corporate income tax rate. DB2011 Cabo Verde Cape Verde abolished the stamp duties on sales and checks. Chad increased taxes on business through changes to its DB2011 Chad social security contribution rates. Burkina Faso reduced the statutory tax rate and the number DB2011 Burkina Faso of taxes for business and introduced simpler, uniform compliance procedures. Burundi made paying taxes simpler by replacing the DB2011 Burundi transactions tax with a value added tax. DB2011 Mauritius Mauritius introduced a new corporate social responsibility tax. DB2011 Madagascar Madagascar continued to reduce corporate tax rates. DB2011 Niger Niger reduced its corporate income tax rate. Kenya increased the administrative burden of paying taxes by DB2011 Kenya requiring quarterly filing of payroll taxes. São Tomé and Principe reduced the corporate income tax DB2011 São Tomé and Príncipe rate to a standard 25%. The Seychelles removed the tax-free threshold limit and DB2011 Seychelles lowered corporate income tax rates. Sierra Leone replaced sales and service taxes with a goods DB2011 Sierra Leone and service tax. Zimbabwe reduced the corporate income tax rate from 30% to 25%, lowered the capital gains tax from 20% to 5% and DB2011 Zimbabwe simplified the payment of corporate income tax by allowing quarterly payment through commercial banks. South Africa made paying taxes less costly for companies by DB2010 South Africa abolishing the stamp duty. Sudan made paying taxes less costly for companies by DB2010 Sudan reducing the corporate income and capital gains tax rates and abolishing the labor tax. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 93 DB year Economy Reform Sierra Leone made paying taxes easier for companies by improving training and equipment at the tax authority, DB2010 Sierra Leone publishing a consolidated income tax act and introducing a value added tax system that replaces 4 different sales taxes. Uganda reduced the time required for companies to prepare, DB2010 Uganda file and pay value added tax through improved efficiency of taxpayer services and banks. Togo made paying taxes less costly for companies by DB2010 Togo reducing the corporate income tax rate. Malawi made paying taxes less time consuming for DB2010 Malawi companies by encouraging the use of electronic systems. Niger made paying taxes easier for companies by eliminating DB2010 Niger the tax on interest. To encourage business start-ups, Cameroon exempted new DB2010 Cameroon businesses from the business license tax for their first 2 years of existence. Cape Verde made paying taxes less costly for companies by DB2010 Cabo Verde reducing the corporate income tax rate. The Democratic Republic of Congo made paying taxes more DB2010 Congo, Dem. Rep. costly for companies by raising the sales tax rate. Angola made paying taxes easier for companies by DB2010 Angola introducing mandatory electronic filing for social security contributions for those with more than 20 employees. Benin made paying taxes less costly for companies by DB2010 Benin reducing the corporate income and payroll tax rates. Note: For information on reforms in earlier years (back to DB2006), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 94 TRADING ACROSS BORDERS In today’s globalized world, making trade between WHAT THE TRADING ACROSS BORDERS economies easier is increasingly important for INDICATORS MEASURE FOR IMPORT & EXPORT business. Excessive document requirements, burdensome customs procedures, inefficient port Documentary compliance – cost (US$) & time operations and inadequate infrastructure all lead to (hours) extra costs and delays for exporters and importers, stifling trade potential. Obtain, prepare and submit documents: What do the indicators cover? -During transport, clearance, inspections and port or border handling in origin economy Doing Business records the time and cost associated with the logistical process of exporting and -Required by origin, transit and destination economies importing goods. Under the new methodology introduced this year, Doing Business measures the Covers all documents by law and in practice time and cost (excluding tariffs) associated with three Border compliance – cost (US$) & time sets of procedures—documentary compliance, (hours) border compliance and domestic transport—within the overall process of exporting or importing a Customs clearance and inspections shipment of goods. The ranking of economies on the Inspections by other agencies ease of trading across borders is determined by Port or border handling sorting their distance to frontier scores for trading across borders. These scores are the simple average Obtaining, preparing and submitting of the distance to frontier scores for the time and documents during clearance, inspections and port or border handling cost for documentary compliance and border compliance to export and import. Domestic transport* Loading and unloading of shipment To make the data comparable across economies, a few assumptions are made about the traded goods Transport between warehouse and terminal/port and the transactions: Transport between terminal/port and border Time Obtaining, preparing and submitting  Time is measured in hours, and 1 day is 24 documents during domestic transport hours (for example, 22 days are recorded Traffic delays and road police checks while as 22 × 24 = 528 hours). If customs shipment is en route clearance takes 7.5 hours, the data are recorded as is. Alternatively, suppose that * Although Doing Business collects and publishes data on documents are submitted to a customs the time and cost for domestic transport, it does not use agency at 8:00 a.m., are processed these data in calculating the distance to frontier score for overnight and can be picked up at 8:00 trading across borders or the ranking on the ease of trading a.m. the next day. In this case the time for across borders. customs clearance would be recorded as Cost 24 hours because the actual procedure  Insurance cost and informal payments for took 24 hours. which no receipt is issued are excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 95 Assumptions of the case study  For each of the 189 economies covered by  Shipping cost based on weight is assumed to Doing Business, it is assumed that a shipment be greater than shipping cost based on travels from a warehouse in the largest business volume. city of the exporting economy to a warehouse  If government fees are determined by the in the largest business city of the importing value of the shipment, the value is assumed economy. For 11 economies the data are also to be $50,000. collected, under the same case study assumptions, for the second largest business  The product is new, not secondhand or used city. merchandise.  The import and export case studies assume  The exporting firm is responsible for hiring different traded products. It is assumed that and paying for a freight forwarder or customs each economy imports a standardized shipment broker (or both) and pays for all costs related of 15 metric tons of containerized auto parts to international shipping, domestic transport, (HS 8708) from its natural import partner—the clearance and mandatory inspections by economy from which it imports the largest value customs and other government agencies, port (price times quantity) of auto parts. It is or border handling, documentary compliance assumed that each economy exports the fees and the like for exports. The importing product of its comparative advantage (defined firm is responsible for the above costs for by the largest export value) to its natural export imports. partner—the economy that is the largest  The mode of transport is the one most widely purchaser of this product. Precious metal and used for the chosen export or import product gems, live animals and pharmaceuticals are and the trading partner, as is the seaport, excluded from the list of possible export airport or land border crossing. products, however, and the second largest product category is considered as needed.  All electronic submissions of information requested by any government agency in  To identify the trading partners and export connection with the shipment are considered product for each economy, Doing Business to be documents obtained, prepared and collected data on trade flows for the most submitted during the export or import recent four-year period from international process. databases such as the United Nations Commodity Trade Statistics Database (UN  A port or border is defined as a place Comtrade). For economies for which trade flow (seaport, airport or land border crossing) data were not available, data from ancillary where merchandise can enter or leave an government sources (various ministries and economy. departments) and World Bank Group country  Government agencies considered relevant offices were used to identify the export product are agencies such as customs, port and natural trading partners. authorities, road police, border guards,  A shipment is a unit of trade. Export shipments standardization agencies, ministries or do not necessarily need to be containerized, departments of agriculture or industry, while import shipments of auto parts are national security agencies and any other assumed to be containerized. government authorities. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 96 TRADING ACROSS BORDERS Where do the region’s economies stand today? How easy it is for businesses in economies in Sub- trading across borders suggest an answer (figure 9.1). Saharan Africa (SSA) to export and import goods? The The average ranking of the region and comparator global rankings of these economies on the ease of regions provide a useful benchmark. Figure 9.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of trading across borders Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 97 TRADING ACROSS BORDERS The indicators reported here are for trading a shipment and import is collected from local freight forwarders, of goods by the most widely used mode of transport customs brokers and traders. Comparing these indicators (whether sea, land, air or some combination of these). across the region and with averages both for the region The information on the time and cost to complete export and for comparator regions can provide useful insights. Figure 9.2 What it takes to trade across borders in economies in Sub-Saharan Africa (SSA) Time to export: Border compliance (hours) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 98 TRADING ACROSS BORDERS Cost to export: Border compliance (USD) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 99 TRADING ACROSS BORDERS Time to export: Documentary compliance (hours) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 100 TRADING ACROSS BORDERS Cost to export: Documentary compliance (USD) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 101 TRADING ACROSS BORDERS Time to import: Border compliance (hours) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 102 TRADING ACROSS BORDERS Cost to import: Border compliance (USD) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 103 TRADING ACROSS BORDERS Time to import: Documentary compliance (hours) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 104 TRADING ACROSS BORDERS Cost to import: Documentary compliance (USD) Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 105 TRADING ACROSS BORDERS What are the changes over time? In economies around the world, trading across borders systems. These changes help improve their trading as measured by Doing Business has become faster and environment and boost firms’ international easier over the years. Governments have introduced competitiveness. What trade reforms has Doing Business tools to facilitate trade—including single windows, risk- recorded in Sub-Saharan Africa (SSA) (table 9.1)? based inspections and electronic data interchange Table 9.1 How have economies in Sub-Saharan Africa (SSA) made trading across borders easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform Benin made trading across borders easier by further developing its electronic single-window system, which DB2016 Benin reduced the time for border compliance for both exporting and importing. Côte d’Ivoire made trading across borders easier by implementing a single-window platform for importing, which DB2016 Côte d'Ivoire reduced the time required for documentary compliance. Ghana reduced the documentary and border compliance time for importing by developing electronic channels for DB2016 Ghana submitting and collecting the final classification and valuation report. Madagascar reduced the time for border compliance for both exporting and importing by upgrading port infrastructure— DB2016 Madagascar and also reduced the time for documentary compliance for importing. Mali reduced the time for documentary compliance for both DB2016 Mali exporting and importing by introducing an electronic data interchange system. Mauritania reduced the documentary and border compliance DB2016 Mauritania time for importing by eliminating the preimport declaration and value attestation and making the manifest electronic. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 106 DB year Economy Reform Niger increased the time and cost for documentary and DB2016 Niger border compliance for importing by making a preshipment inspection mandatory. Rwanda increased the time and cost for documentary and DB2016 Rwanda border compliance for importing by making preshipment inspection mandatory for all imported products. Togo reduced the time for documentary and border compliance for importing by implementing an electronic DB2016 Togo platform connecting several agencies for import procedures and payments. Tanzania reduced the time for both exporting and importing by implementing the Tanzania Customs Integrated System DB2016 Tanzania (TANCIS), an online system for downloading and processing customs documents. The Democratic Republic of Congo made trading across DB2016 Congo, Dem. Rep. borders more difficult by increasing the port handling time and cost for exporting and importing. Zambia increased the documentary and border compliance time for both exporting and importing by shifting all DB2016 Zambia clearance authority to a central processing center at the initial stage of implementing a web-based customs platform (ASYCUDA World). Benin made trading across borders easier by reducing the DB2015 Benin number of documents needed for imports. The Central African Republic made trading across borders DB2015 Central African Republic more difficult by increasing border checks and security controls at the border post with Cameroon. Côte d’Ivoire made trading across borders easier by simplifying the processes for producing the inspection report DB2015 Côte d'Ivoire and by reducing port and terminal handling charges at the port of Abidjan. DB2015 Ghana Ghana made trading across borders easier by upgrading Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 107 DB year Economy Reform infrastructure at the port of Tema. Tanzania made trading across borders easier by upgrading DB2015 Tanzania infrastructure at the port of Dar es Salaam. Uganda made trading across borders easier by implementing DB2015 Uganda the ASYCUDA World electronic system for the submission of export and import documents. Angola increased documentation requirements for cross- DB2014 Angola border trade by introducing a mandatory registration for all traders and a new license for export and import transactions. Burundi made trading across borders easier by eliminating DB2014 Burundi the requirement for a preshipment inspection clean report of findings. Benin made trading across borders easier by improving port management systems, enhancing the infrastructure around DB2014 Benin the port and putting in place new rules for the transit of trucks. The Central African Republic made trading across borders DB2014 Central African Republic easier by rehabilitating the key transit road at the border with Cameroon. The Republic of Congo made trading across borders easier by DB2014 Congo, Rep. implementing prearrival processing of ship manifests and making improvements in customs administration. Guinea made trading across borders easier by improving port DB2014 Guinea management systems. Madagascar made trading across borders easier by rolling out DB2014 Madagascar an online platform linking trade operators with government agencies involved in the trade process and customs clearance. Mozambique made trading across borders easier by DB2014 Mozambique implementing an electronic single-window system. Mauritania made trading across borders easier by introducing DB2014 Mauritania a new riskbased inspection system with scanners. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 108 DB year Economy Reform Rwanda made trading across borders easier by introducing an DB2014 Rwanda electronic single-window system at the border. Swaziland made trading across borders easier by streamlining DB2014 Swaziland the process for obtaining a certificate of origin. Chad made trading across borders more difficult by DB2014 Chad introducing a new export and import document. Togo made trading across borders more difficult by granting DB2014 Togo monopoly control of all port activities at the port of Lomé to a private company. Benin reduced the time required to trade across borders by implementing an electronic single-window system integrating DB2013 Benin customs, control agencies, port authorities and other service providers at the Cotonou port. In Botswana exporting and importing became faster thanks to the introduction of a scanner by the country’s customs DB2013 Botswana authority and an upgrade of South Africa’s customs declaration system, both at the Kopfontein–Tlokweng border post. Burundi reduced the time to trade across borders by enhancing its use of electronic data interchange systems, DB2013 Burundi introducing a more efficient system for monitoring goods going through transit countries and improving border coordination with neighboring transit countries. Ghana added to the time required to import by increasing its DB2013 Ghana scanning of imports and changing its customs clearance system. Trading across borders in Malawi became easier thanks to DB2013 Malawi improvements in customs clearance procedures and transport links between the port of Beira in Mozambique and Blantyre. Niger reduced the time to import by expanding and DB2013 Niger optimizing the use of an electronic data interchange system for customs clearance. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 109 DB year Economy Reform South Africa reduced the time and documents required to DB2013 South Africa export and import through its ongoing customs modernization program. Tanzania made importing more difficult by introducing a DB2013 Tanzania requirement to obtain a certificate of conformity before the imported goods are shipped. Tanzania made trading across borders faster by implementing DB2012 Tanzania the Pre-Arrival Declaration (PAD) system and electronic submission of customs declaration. Sierra Leone made trading across borders faster by DB2012 Sierra Leone implementing the Automated System for Customs Data (ASYCUDA). The Gambia made trading across borders faster by DB2012 Gambia, The implementing the Automated System for Customs Data (ASYCUDA). São Tomé and Príncipe made trading across borders faster by DB2012 São Tomé and Príncipe adopting legislative, administrative and technological improvements. Senegal made trading across borders less costly by opening DB2012 Senegal the market for transport, which increased competition. The Seychelles made trading across borders faster by DB2012 Seychelles introducing electronic submission of customs documents. Liberia made trading across borders faster by implementing DB2012 Liberia online submission of customs forms and enhancing risk- based inspections. Madagascar improved communication and coordination between customs and the terminal port operators through its DB2011 Madagascar single-window system (GASYNET), reducing both the time and the cost to export and import. Kenya speeded up trade by implementing an electronic cargo DB2011 Kenya tracking system and linking this system to the Kenya Revenue Authority’s electronic data interchange system for customs Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 110 DB year Economy Reform clearance. Mali eliminated redundant inspections of imported goods, DB2011 Mali reducing the time for trading across borders. Burkina Faso reduced documentation requirements for DB2011 Burkina Faso importers and exporters, making it easier to trade. Ethiopia made trading easier by addressing internal DB2011 Ethiopia bureaucratic inefficiencies. Angola reduced the time for trading across borders by DB2011 Angola making investments in port infrastructure and administration. Rwanda reduced the number of trade documents required and enhanced its joint border management procedures with DB2011 Rwanda Uganda and other neighbors, leading to an improvement in the trade logistics environment. Swaziland reduced the import time of trading across borders DB2011 Swaziland by implementing an electronic data interchange system for customs at its border posts. Zambia eased trade by implementing a one-stop border post with Zimbabwe, launching web-based submission of customs DB2011 Zambia declarations and introducing scanning machines at border posts. Uganda reduced the time required for trading across borders through expanded operating hours at the port of Mombasa DB2010 Uganda and improvements in customs processes and in border cooperation. Sudan reduced the time required for trading across borders by making it easier to file customs declarations online, by DB2010 Sudan connecting 10 additional customs offices to the electronic system and by adding 2 new scanners at the port of Sudan. Rwanda reduced the time required for trading across borders by introducing administrative changes such as expanded DB2010 Rwanda operating hours and enhanced border cooperation and by eliminating some documentation requirements. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 111 DB year Economy Reform Sierra Leone made trading across borders more costly DB2010 Sierra Leone through an increase in some fees, though it also reduced the time required for trade. Senegal made trading across borders easier and less time consuming by introducing improvements at the container DB2010 Senegal terminal at the port of Dakar and increasing the number of agencies involved in trade facilitation. Benin reduced the time needed to clear goods through DB2010 Benin customs by implementing an electronic data interchange system. Burkina Faso reduced the time needed for trading across DB2010 Burkina Faso borders by creating a one-stop shop for commercial trade documents. Cameroon reduced the time for exporting and importing, and enhanced the security of goods transiting within the country, DB2010 Cameroon by improving the single-window system (Guichet Unique du Commerce Extérieur) at Douala port and implementing a GPS tracking system and scanners for cargo. In the Democratic Republic of Congo the participation of private companies in the terminal handling process at the DB2010 Congo, Dem. Rep. port of Matadi has reduced cargo handling time by improving the quality of service. Mauritius reduced the time for trading across borders by DB2010 Mauritius introducing electronic submission for customs declarations and bills of lading with no requirement for physical copies. Mozambique reduced the time required to clear goods by DB2010 Mozambique introducing administrative improvements at customs. Mali reduced the time required for trading across borders by implementing an electronic data interchange system, DB2010 Mali improving the terminals used by Malian traders and streamlining documentation requirements. DB2010 Liberia Liberia reduced the time needed for trading across borders by creating a one-stop shop that brings together government Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 112 DB year Economy Reform ministries and agencies and by streamlining the inspection process. Malawi reduced delays in clearing goods by implementing a DB2010 Malawi risk-based inspection system and a postdestination clearance program for preapproved traders. Angola made trading across borders easier through a DB2010 Angola customs improvement program that streamlined procedures and reduced the time and cost of trade. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 113 ENFORCING CONTRACTS Effective commercial dispute resolution has many WHAT THE ENFORCING CONTRACTS benefits. Courts are essential for entrepreneurs INDICATORS MEASURE because they interpret the rules of the market and protect economic rights. Efficient and transparent Time required to enforce a contract through courts encourage new business relationships because the courts (calendar days) businesses know they can rely on the courts if a new customer fails to pay. Speedy trials are essential for Time to file and serve the case small enterprises, which may lack the resources to Time for trial and to obtain the judgment stay in business while awaiting the outcome of a long court dispute. Time to enforce the judgment What do the indicators cover? Cost required to enforce a contract through the courts (% of claim) Doing Business measures the time and cost for resolving a standardized commercial dispute through Attorney fees a local first-instance court. In addition, this year it Court fees introduces a new measure, the quality of judicial Enforcement fees processes index, evaluating whether each economy has adopted a series of good practices that promote Quality of judicial processes index (0-18) quality and efficiency in the court system. This new Court structure and proceedings (0-5) index replaces the indicator on procedures, which was eliminated this year. The ranking of economies Case management (0-6) on the ease of enforcing contracts is determined by Court automation (0-4) sorting their distance to frontier scores. These scores Alternative dispute resolution (0-3) are the simple average of the distance to frontier scores for each of the component indicators The dispute in the case study involves the breach of a  The value of the dispute is 200% of the sales contract between 2 domestic businesses. The income per capita or the equivalent in local case study assumes that the court hears an expert on currency of USD 5,000, whichever is greater. the quality of the goods in dispute. This distinguishes  The seller sues the buyer before the court the case from simple debt enforcement. To make the with jurisdiction over commercial cases worth data comparable across economies, Doing Business 200% of income per capita or $5,000. uses several assumptions about the case:  The seller requests a pretrial attachment to  The dispute concerns a lawful transaction secure the claim. between two businesses (Seller and Buyer), both located in the economy’s largest  The dispute on the quality of the goods business city. For 11 economies the data requires an expert opinion. are also collected for the second largest  The judge decides in favor of the seller; there business city. is no appeal.  The buyer orders custom-made goods,  The seller enforces the judgment through a then fails to pay. public sale of the buyer’s movable assets. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 114 ENFORCING CONTRACTS Where do the region’s economies stand today? How efficient is the process of resolving a commercial the ease of enforcing contracts suggest an answer (figure dispute through the courts in economies in Sub-Saharan 10.1). The average ranking of the region and comparator Africa (SSA)? The global rankings of these economies on regions provide a useful benchmark. Figure 10.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of enforcing contracts Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 115 ENFORCING CONTRACTS The indicators underlying the rankings may also be judicial processes index (figure 10.2). Comparing these revealing. Data collected by Doing Business show what it indicators across the region and with averages both for takes to enforce a contract through the courts in each the region and for comparator regions can provide economy in the region: the time, the cost and quality of useful insights. Figure 10.2 What it takes to enforce a contract through the courts in economies in Sub-Saharan Africa (SSA) Time (days) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 116 ENFORCING CONTRACTS Cost (% of claim) Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 117 ENFORCING CONTRACTS Quality of Judicial Processes Index (0-18) Source: Doing Business database. Note: Higher values indicate more efficient judicial processes. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 118 ENFORCING CONTRACTS What are the changes over time? Economies in all regions have improved contract reducing backlogs by introducing periodic reviews to enforcement in recent years. A judiciary can be improved clear inactive cases from the docket and by making in different ways. Higher-income economies tend to look procedures faster. What reforms making it easier (or for ways to enhance efficiency by introducing new more difficult) to enforce contracts has Doing Business technology. Lower-income economies often work on recorded in Sub-Saharan Africa (SSA) (table 10.1)? Table 10.1 How have economies in Sub-Saharan Africa (SSA) made enforcing contracts easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform Côte d’Ivoire made enforcing contracts easier by introducing DB2016 Côte d'Ivoire new provisions on voluntary mediation. Senegal made enforcing contracts easier by introducing a law DB2016 Senegal regulating voluntary mediation. Benin made enforcing contracts easier by creating a DB2015 Benin commercial section within its court of first instance. Mauritius made enforcing contracts easier by introducing an DB2015 Mauritius electronic filing system for court users. Seychelles made enforcing contracts easier by establishing a commercial court, implementing and refining its case DB2015 Seychelles management system, introducing court-annexed mediation, and addressing scheduling conflicts within the courts. South Africa made enforcing contracts easier by amending DB2015 South Africa the monetary jurisdiction of its lower courts and introducing voluntary mediation. Côte d’Ivoire made enforcing contracts easier by creating a DB2014 Côte d'Ivoire specialized commercial court. Mauritius made enforcing contracts easier by liberalizing the profession of court ushers, including by allowing registered DB2014 Mauritius ushers to serve as bailiffs in carrying out enforcement proceedings. Togo made enforcing contracts easier by creating specialized DB2014 Togo commercial divisions within the court of first instance. Benin made enforcing contracts easier by introducing a new DB2013 Benin code of civil, administrative and social procedures. Cameroon made enforcing contracts easier by creating DB2013 Cameroon specialized commercial divisions within its courts of first Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 119 DB year Economy Reform instance. Liberia made enforcing contracts easier by creating a DB2013 Liberia specialized commercial court. Rwanda made enforcing contracts easier by implementing an DB2013 Rwanda electronic filing system for initial complaints. Senegal made enforcing contracts easier by launching DB2012 Senegal specialized commercial chambers in the court. The Seychelles expanded the jurisdiction of the lower court, DB2012 Seychelles increasing the time required to enforce contracts. Sierra Leone made enforcing contracts easier by launching a DB2012 Sierra Leone fast-track commercial court. Kenya introduced a case management system that will help DB2012 Kenya increase the efficiency and cost-effectiveness of commercial dispute resolution. Lesotho made enforcing contracts easier by launching a DB2012 Lesotho specialized commercial court. Mauritius speeded up the resolution of commercial disputes DB2011 Mauritius by recruiting more judges and adding more courtrooms. Uganda continues to improve the efficiency of its court DB2011 Uganda system, greatly reducing the time to file and serve a claim. Zambia improved contract enforcement by introducing an electronic case management system in the courts that DB2011 Zambia provides electronic referencing of cases, a database of laws, real-time court reporting and public access to court records. Malawi simplified the enforcement of contracts by raising the DB2011 Malawi ceiling for commercial claims that can be brought to the magistrates court. Burkina Faso made enforcing contracts easier by setting up a DB2011 Burkina Faso specialized commercial court and abolishing the fee to register judicial decisions. Guinea-Bissau established a specialized commercial court, DB2011 Guinea-Bissau speeding up the enforcement of contracts. Ethiopia made enforcing contracts easier by reducing delays in the courts—through backlog reduction, improved case DB2010 Ethiopia management and internal training, and an expanded role for the enforcement judge. Mali improved its contract enforcement process through DB2010 Mali amendments to its civil procedure code introducing case time Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 120 DB year Economy Reform limits and allowing a summons to be served, with no intervention by the judge, upon the filing of the complaint at the competent court. Mauritius made enforcing contracts easier by setting up a DB2010 Mauritius specialized commercial division in its supreme court. Botswana made resolution of commercial disputes more DB2010 Botswana efficient by introducing case management and improving the use of information technology. Burkina Faso improved its contract enforcement system by DB2010 Burkina Faso reducing court fees and introducing alternative dispute mechanisms. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 121 RESOLVING INSOLVENCY A robust bankruptcy system functions as a filter, WHAT THE RESOLVING INSOLVENCY ensuring the survival of economically efficient companies and reallocating the resources of INDICATORS MEASURE inefficient ones. Fast and cheap insolvency proceedings result in the speedy return of businesses to normal operation and increase returns to Time required to recover debt (years) creditors. By clarifying the expectations of creditors Measured in calendar years and debtors about the outcome of insolvency Appeals and requests for extension are proceedings, well-functioning insolvency systems can included facilitate access to finance, save more viable businesses and sustainably grow the economy. Cost required to recover debt (% of debtor’s estate) What do the indicators cover? Doing Business studies the time, cost and outcome of Measured as percentage of estate value insolvency proceedings involving domestic legal Court fees entities. These variables are used to calculate the Fees of insolvency administrators recovery rate, which is recorded as cents on the dollar recovered by secured creditors through Lawyers’ fees reorganization, liquidation or debt enforcement Assessors’ and auctioneers’ fees (foreclosure or receivership) proceedings. To Other related fees determine the present value of the amount recovered by creditors, Doing Business uses the Outcome lending rates from the International Monetary Fund, Whether business continues operating as a supplemented with data from central banks and the going concern or business assets are sold Economist Intelligence Unit. piecemeal In addition, Doing Business evaluates the adequacy Recovery rate for creditors and integrity of the existing legal framework applicable to liquidation and reorganization Measures the cents on the dollar recovered by proceedings through the strength of insolvency secured creditors framework index. The index tests whether economies Outcome for the business (survival or not) adopted internationally accepted good practices in determines the maximum value that can be four areas: commencement of proceedings, recovered management of debtor’s assets, reorganization Official costs of the insolvency proceedings are proceedings and creditor participation. deducted The ranking of economies on the ease of resolving Depreciation of furniture is taken into account insolvency is determined by sorting their distance to frontier scores for resolving insolvency. These scores Present value of debt recovered are the simple average of the distance to frontier Strength of insolvency framework index (0- scores for the recovery rate and the strength of 16) insolvency framework index. The Resolving Sum of the scores of four component indices: Insolvency indicator does not measure insolvency proceedings of individuals and financial institutions. Commencement of proceedings index (0-3) The data are derived from questionnaire responses Management of debtor’s assets index (0-6) by local insolvency practitioners and verified through a study of laws and regulations as well as public Reorganization proceedings index (0-3) information on bankruptcy systems. Creditor participation index (0-4) Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 122 RESOLVING INSOLVENCY Where do the region’s economies stand today? How efficient are insolvency proceedings in economies in region and comparator regions provide a useful Sub-Saharan Africa (SSA)? The global rankings of these benchmark for assessing the efficiency of insolvency economies on the ease of resolving insolvency suggest proceedings. Speed, low costs and continuation of viable an answer (figure 11.1). The average ranking of the businesses characterize the top-performing economies. Figure 11.1 How economies in Sub-Saharan Africa (SSA) rank on the ease of resolving insolvency Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 123 RESOLVING INSOLVENCY The indicators underlying the rankings may be more these indicators across the region and with averages revealing. Data collected by Doing Business show the both for the region and for comparator regions can average recovery rate and the average strength of provide useful insights. insolvency framework index (figure 11.2). Comparing Figure 11.2 How efficient is the insolvency process in economies in Sub-Saharan Africa (SSA) Recovery Rate (0–100) Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 124 Total Strength of Insolvency Framework index (0-16) Source: Doing Business database. * Indicates a “no practice” mark. See the data notes for details. If an economy has no laws or regulations covering a specific area—for example, insolvency—it receives a “no practice” mark. Similarly, an economy receives a “no practice” or “not possible” mark if regulation exists but is never used in practice or if a competing regulation prohibits such practice. Either way, a “ no practice” mark puts the economy at the bottom of the ranking on the relevant indicator. Source: Doing Business database. Note: Higher values indicate insolvency legislation that is better designed for rehabilitating viable firms and liquidating nonviable ones. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 125 RESOLVING INSOLVENCY What are the changes over time? A well-balanced bankruptcy system distinguishes change. Many recent reforms of bankruptcy laws have companies that are financially distressed but been aimed at helping more of the viable businesses economically viable from inefficient companies that survive. What insolvency reforms has Doing Business should be liquidated. But in some insolvency systems recorded in Sub-Saharan Africa (SSA) (table 11.1)? even viable businesses are liquidated. This is starting to Table 11.1 How have economies in Sub-Saharan Africa (SSA) made resolving insolvency easier—or not? By Doing Business report year DB2011 to DB2016 DB year Economy Reform Rwanda improved its insolvency system by introducing provisions on voidable transactions and the approval of DB2016 Rwanda reorganization plans and by establishing additional safeguards for creditors in reorganization proceedings. Mozambique made resolving insolvency easier by introducing a court-supervised reorganization procedure and a DB2015 Mozambique mechanism for prepackaged reorganizations, by clarifying rules on the appointment and qualifications of insolvency administrators and by strengthening creditors’ rights. The Seychelles made resolving insolvency easier by introducing a reorganization procedure, provisions on the DB2015 Seychelles avoidance of undervalued transactions and the possibility to request post-commencement financing during the reorganization. Uganda made resolving insolvency easier by consolidating all provisions related to corporate insolvency in one law, establishing provisions on the administration of companies DB2015 Uganda (reorganization), clarifying standards on the professional qualifications of insolvency practitioners and introducing provisions allowing the avoidance of undervalued transactions. Mauritius made resolving insolvency easier by introducing guidelines for out-of-court restructuring and standardizing DB2014 Mauritius the process of registration, suspension and removal of insolvency practitioners. Rwanda made resolving insolvency easier through a new law clarifying the standards for beginning insolvency proceedings; preventing the separation of the debtor’s assets during DB2014 Rwanda reorganization proceedings; setting clear time limits for the submission of a reorganization plan; and implementing an automatic stay of creditors’ enforcement actions. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 126 DB year Economy Reform Tanzania made resolving insolvency easier through new rules clearly specifying the professional requirements and DB2014 Tanzania remuneration for insolvency practitioners, promoting reorganization proceedings and streamlining insolvency proceedings. The Democratic Republic of Congo made resolving insolvency easier by adopting the OHADA Uniform Act Organizing Collective Proceedings for Wiping Off Debts. The law allows DB2014 Congo, Dem. Rep. an insolvent debtor to file for preventive settlement, legal redress or liquidation and sets out clear rules on the steps and procedures for each of the options available. Uganda strengthened its insolvency process by clarifying rules on the creation of mortgages, establishing the duties of DB2013 Uganda mortgagors and mortgagees, defining priority rules, providing remedies for mortgagors and mortgagees and establishing the powers of receivers. Zambia strengthened its insolvency process by introducing further qualification requirements for receivers and DB2013 Zambia liquidators and by establishing specific duties and remuneration rules for them. Sierra Leone established a fast-track commercial court in an DB2012 Sierra Leone effort to expedite commercial cases, including insolvency proceedings. South Africa introduced a new reorganization process to DB2012 South Africa facilitate the rehabilitation of financially distressed companies. Malawi adopted new rules providing clear procedural DB2012 Malawi requirements and time frames for winding up a company. Namibia adopted a new company law that established clear DB2012 Namibia procedures for liquidation. Burundi amended its commercial code to establish DB2012 Burundi foreclosure procedures. Cape Verde introduced qualification requirements for DB2012 Cabo Verde insolvency administrators and a shorter time frame for liquidation proceedings. Malawi enhanced its insolvency process through a new law DB2010 Malawi limiting the liquidator’s fees. Rwanda improved its insolvency process through a new law DB2010 Rwanda aimed at streamlining reorganization procedures. Sierra Leone improved its insolvency process through a new DB2010 Sierra Leone company act that encourages financially distressed Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 127 DB year Economy Reform companies to first try to reorganize rather than going straight into liquidation. Mauritius enhanced its insolvency system through a new law introducing a rehabilitation procedure for companies as an DB2010 Mauritius alternative to winding up, defining the rights and obligations of creditors and debtors and setting out sanctions for those who abuse the system. Note: For information on reforms in earlier years (back to DB2005), see the Doing Business reports for these years, available at http://www.doingbusiness.org. Source: Doing Business database. Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 128 DISTANCE TO FRONTIER AND EASE OF DOING BUSINESS RANKING Doing Business presents results for two aggregate even though it is no longer at the frontier in a measures: the distance to frontier score and the ease of subsequent year. doing business ranking, which is based on the distance For scores such as those on the strength of legal rights to frontier score. The ease of doing business ranking index or the quality of land administration index, the compares economies with one another; the distance to frontier is set at the highest possible value. For the total frontier score benchmarks economies with respect to tax rate, consistent with the use of a threshold in regulatory best practice, showing the absolute distance calculating the rankings on this indicator, the frontier is to the best performance on each Doing Business defined as the total tax rate at the 15th percentile of the indicator. When compared across years, the distance to overall distribution for all years included in the analysis frontier score shows how much the regulatory up to and including Doing Business 2015. For the time to environment for local entrepreneurs in an economy has pay taxes the frontier is defined as the lowest time changed over time in absolute terms, while the ease of recorded among all economies that levy the three major doing business ranking can show only how much the taxes: profit tax, labor taxes and mandatory regulatory environment has changed relative to that in contributions, and value added tax (VAT) or sales tax. For other economies. the different times to trade across borders, the frontier is Distance to Frontier defined as 1 hour even though in many economies the time is less than that. The distance to frontier score captures the gap between an economy’s performance and a measure of best In the same formulation, to mitigate the effects of practice across the entire sample of 36 indicators for 10 extreme outliers in the distributions of the rescaled data Doing Business topics (the labor market regulation for most component indicators (very few economies indicators are excluded). For starting a business, for need 700 days to complete the procedures to start a example, the former Yugoslav Republic of Macedonia business, but many need 9 days), the worst performance and New Zealand have the smallest number of is calculated after the removal of outliers. The definition procedures required (1), and New Zealand the shortest of outliers is based on the distribution for each time to fulfill them (0.5 days). Slovenia has the lowest component indicator. To simplify the process two rules cost (0.0), and Australia, Colombia and 103 other were defined: the 95th percentile is used for the economies have no paid-in minimum capital indicators with the most dispersed distributions requirement (table 14.1 in the Doing Business 2016 (including minimum capital, number of payments to pay report). taxes, and the time and cost indicators), and the 99th percentile is used for number of procedures. No outlier is Calculation of the distance to frontier score removed for component indicators bound by definition Calculating the distance to frontier score for each or construction, including legal index scores (such as the economy involves two main steps. In the first step depth of credit information index, extent of conflict of individual component indicators are normalized to a interest regulation index and strength of insolvency common unit where each of the 36 component framework index) and the recovery rate (figure 14.1). indicators y (except for the total tax rate) is rescaled In the second step for calculating the distance to frontier using the linear transformation (worst − y)/(worst − score, the scores obtained for individual indicators for frontier). In this formulation the frontier represents the each economy are aggregated through simple averaging best performance on the indicator across all economies into one distance to frontier score, first for each topic since 2005 or the third year in which data for the and then across all 10 topics: starting a business, dealing indicator were collected. Both the best performance and with construction permits, getting electricity, registering the worst performance are established every five years property, getting credit, protecting minority investors, based on the Doing Business data for the year in which paying taxes, trading across borders, enforcing contracts they are established, and remain at that level for the five and resolving insolvency. More complex aggregation years regardless of any changes in data in interim years. methods—such as principal components and Thus an economy may set the frontier for an indicator unobserved components—yield a ranking nearly Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 129 identical to the simple average used by Doing Business . than it would have had before (line D is bigger than line 4 Thus Doing Business uses the simplest method: C in figure 14.2 of the Doing Business 2016 report). weighting all topics equally and, within each topic, giving The nonlinear transformation is not based on any equal weight to each of the topic components . 5 economic theory of an “optimal tax rate” that minimizes An economy’s distance to frontier score is indicated on a distortions or maximizes efficiency in an economy’s scale from 0 to 100, where 0 represents the worst overall tax system. Instead, it is mainly empirical in performance and 100 the frontier. All distance to frontier nature. The nonlinear transformation along with the calculations are based on a maximum of five decimals. threshold reduces the bias in the indicator toward However, indicator ranking calculations and the ease of economies that do not need to levy significant taxes on doing business ranking calculations are based on two companies like the Doing Business standardized case decimals. study company because they raise public revenue in other ways—for example, through taxes on foreign The difference between an economy’s distance to companies, through taxes on sectors other than frontier score in any previous year and its score in 2015 manufacturing or from natural resources (all of which are illustrates the extent to which the economy has closed outside the scope of the methodology). In addition, it the gap to the regulatory frontier over time. And in any acknowledges the need of economies to collect taxes given year the score measures how far an economy is from firms. from the best performance at that time. Calculation of scores for economies with 2 cities Treatment of the total tax rate covered The total tax rate component of the paying taxes For each of the 11 economies in which Doing Business indicator set enters the distance to frontier calculation in collects data for the second largest business city as well a different way than any other indicator. The distance to as the largest one, the distance to frontier score is frontier score obtained for the total tax rate is calculated as the population-weighted average of the transformed in a nonlinear fashion before it enters the distance to frontier scores for these two cities (table distance to frontier score for paying taxes. As a result of 13.1). This is done for the aggregate score, the scores for the nonlinear transformation, an increase in the total tax each topic and the scores for all the component rate has a smaller impact on the distance to frontier indicators for each topic. score for the total tax rate—and therefore on the distance to frontier score for paying taxes—for economies with a below-average total tax rate than it would have had before this approach was adopted in Doing Business 2015 (line B is smaller than line A in figure 14.2 of the Doing Business 2016 report). And for economies with an extreme total tax rate (a rate that is very high relative to the average), an increase has a greater impact on both these distance to frontier scores 4 See Djankov, Manraj and others (2005). Principal components and unobserved components methods yield a ranking nearly identical to that from the simple average method because both these methods assign roughly equal weights to the topics, since the pairwise correlations among indicators do not differ much. An alternative to the simple average method is to give different weights to the topics, depending on which are considered of more or less importance in the context of a specific economy. 5 For getting credit, indicators are weighted proportionally, according to their contribution to the total score, with a weight of 60% assigned to the strength of legal rights index and 40% to the depth of credit information index. Indicators for all other topics are assigned equal weights Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 130 Table 13.1 Weights used in calculating the distance to implemented regulatory reforms making it easier to do frontier scores for economies with 2 cities covered business in 3 or more of the 10 topics included in this year’s aggregate distance to frontier score. Changes Economy City Weight (%) making it more difficult to do business are subtracted Dhaka 78 Bangladesh from the total number of those making it easier to do Chittagong 22 São Paulo 61 business. Twenty-four economies meet this criterion: Brazil Armenia; Azerbaijan; Benin; Costa Rica; Côte d’Ivoire; Rio de Janeiro 39 Shanghai 55 Cyprus; Hong Kong SAR, China; Indonesia; Jamaica; China Beijing 45 Kazakhstan; Kenya; Lithuania; Madagascar; Mauritania; Mumbai 47 Morocco; Romania; the Russian Federation; Rwanda; India Delhi 53 Senegal; Togo; Uganda; the United Arab Emirates; Jakarta 78 Uzbekistan; and Vietnam. Second, Doing Business sorts Indonesia Surabaya 22 these economies on the increase in their distance to Tokyo 65 Japan frontier score from the previous year using comparable Osaka 35 data. Mexico City 83 Mexico Monterrey 17 Selecting the economies that implemented regulatory Lagos 77 reforms in at least three topics and had the biggest Nigeria Kano 23 improvements in their distance to frontier scores is Karachi 65 intended to highlight economies with ongoing, broad- Pakistan Lahore 35 based reform programs. The improvement in the Moscow 70 Russian Federation distance to frontier score is used to identify the top St. Petersburg 30 New York 60 improvers because this allows a focus on the absolute United States improvement—in contrast with the relative improvement Los Angeles 40 Source: United Nations, Department of Economic and Social shown by a change in rankings—that economies have Affairs, Population Division, World Urbanization Prospects, made in their regulatory environment for business. 2014 Revision. http://esa.un.org/unpd/wup/CD- ROM/Default.aspx. Ease of Doing Business ranking Economies that improved the most across 3 or more The ease of doing business ranking ranges from 1 to 189. Doing Business topics in 2014/15 The ranking of economies is determined by sorting the Doing Business 2016 uses a simple method to calculate aggregate distance to frontier scores, rounded to 2 decimals. which economies improved the ease of doing business the most. First, it selects the economies that in 2014/15 Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 131 RESOURCES ON THE DOING BUSINESS WEBSITE Current features Law library News on the Doing Business project Online collection of business laws and regulations http://www.doingbusiness.org relating to business http://www.doingbusiness.org/law-library Rankings How economies rank—from 1 to 189 Contributors http://www.doingbusiness.org/rankings More than 11,400 specialists in 189 economies who participate in Doing Business Data http://www.doingbusiness.org/contributors/doing- All the data for 189 economies—topic rankings, business indicator values, lists of regulatory procedures and details underlying indicators Entrepreneurship data http://www.doingbusiness.org/data Data on business density (number of newly registered companies per 1,000 working-age Reports people) for 136 economies Access to Doing Business reports as well as http://www.doingbusiness.org/data/exploretopics/ent subnational and regional reports, case studies and repreneurship customized economy and regional profiles http://www.doingbusiness.org/reports Distance to frontier Data benchmarking 189 economies to the frontier Methodology in regulatory practice and a distance to frontier The methodologies and research papers underlying calculator Doing Business http://www.doingbusiness.org/data/distance-to- http://www.doingbusiness.org/methodology frontier Research Information on good practices Abstracts of papers on Doing Business topics and Showing where the many good practices identified related policy issues by Doing Business have been adopted http://www.doingbusiness.org/research http://www.doingbusiness.org/data/good-practice Doing Business reforms Short summaries of DB2016 business regulation reforms and lists of reforms since DB2008 http://www.doingbusiness.org/reforms Historical data Customized data sets since DB2004 http://www.doingbusiness.org/custom-query Doing Business 2016 SUB-SAHARAN AFRICA (SSA) 132