ease of doing business Africa

2020 World Bank Ranking of Best African Countries To Do Business

Last Updated on November 23, 2021 by Ope Quadri

With 1,380,614,641 people, making it the second most populated continent, Africa remains an investment destination for foreign investors who want to tap into the market strength of the continent.

While the collective headcounts of Africa is significant, each of the countries has several measures in place in order to encourage Foreign Direct Investment (FDI).

Interestingly, investors do not really rely on the promises made by the government, they dig deeper to know if there are indicators to make business activities easier called Ease of Doing Business Index, a research of the World Bank Group.

Significance:

Government may make promises, but implementation is paramount and it also shows the seriousness of government to protecting interest of foreign investors.

That’s why Ease of Doing Business report in Africa has been a valued tool for investors seeking to invest in the continent. It is meant to assist the overall business climate.

In the 2020 report, top two most populated countries – Nigeria and Ethiopia – weren’t on the top 20 friendliest countries to invest.

Countries like Mauritius with a population less than a local government in Lagos State, threw Nigeria in 21st spot to rank as number one Africa country that makes it easier to set up business.

Incredibly, foreign investors rarely look away when planning to invest in Africa because of its population, Nigeria’s and Ethiopia’s market strength is huge.

But it isn’t by market strength, researchers put into consideration indicators like security, tax policy, power supply, the attitude of government officials, clearance at port and terminals among others to measure how easy it is to do business on the African continent

Below is a list of top 20 countries with best Ease of Doing Business in Africa

  1. Mauritius
  2. Rwanda
  3. Morocco
  4. Kenya
  5. Tunisia
  6. South Africa
  7. Zambia
  8. Botswana
  9. Togo
  10. Seychelles
  11. Namibia
  12. Malawi
  13. Ivory Coast
  14. Djibouti
  15. Egypt
  16. Uganda
  17. Ghana
  18. Swaziland
  19. Lesotho
  20. Senegal

The performance of the top 20 countries may be surprising to those who have not been following international trade and investment.

Mauritius

As small as Mauritius is, it is the “biggest” fish in the ocean in terms of creating a suitable environment for investments and businesses.

Ranked number 13 among 190 economies in the ease of doing business, that spot earns the Indian Ocean island nation number spot on the continent.

It ranked 20 in the 2018 report, meaning investment-friendly policies are being implemented in the country surrounded by beaches, lagoons and reefs.

It’s tax regime and very low crime rate put the country ahead of over 50 other African countries. And it continues to attract tourists and investors around the World.

Rwanda

Ranked 38 among 190 economies in the ease of doing business, Rwanda is one of the two African countries that made the Global Top 2 Countries in Doing Business Report for 2020.

Those who have been following closely innovations and investment in country that has thrown the horror of genocide behind itself, know that it isn’t really surprising that Rwanda, a country of 13,353,740 according to worldometers.info, has brilliant investment policies in place so that investors get value from their money.

One of the things that Rwanda does better than his neighbours is the fact that it exempts newly formed small and medium-size enterprises from paying the trading license tax for their first two years of operation Plus it also makes it easier to register their business.

Morocco

The North African country bordering the Atlantic Ocean and Mediterranean Sea has taken a step ahead in using technology to develop its agriculture sector known as Artificial Intelligence.

Ranked number 3 in Africa and 53 in the global ranking, Morocco takes the business interest of foreign investors seriously.

Kenya

With a literacy rate of 81.54% , Kenya didn’t only generate $5.792 billion from exports in 2017, but also maintains key indicators of ease of doing business

Now wonder companies like NIC securities Limited, Apex Africa Capital Ltd and Dyer and Blair among others are doing well in the East African country.

  • Rank in Africa: 4
  • Global ranking: 56

Tunisia

Ranked 5 in Africa and 78 among 190 economies in the ease of doing business, Tunisia is one of the investment destinations in Africa.

South Africa

Despite its seasonal xenophobic attacks on foreigners majorly from Africa, South Africa is number 84 among 190 economies in the doing business report while it occupies 6th position in Africa

Others and their ranking is shown below:

African countries Continental Ease of Doing Business Ranking Global Ranking
Zambia 7 85
Botswana 8 87
Togo 9 97
Seychelles 10 100
Namibia 11 104
Malawi 12 109
Ivory Coast 13 110
Djibouti 14 112
Egypt 15 114
Uganda 16 116
Ghana Ghana is ranked 17 over Nigeria and in recent times companies are closing shops in Nigeria to relocate to Ghana because of some favourable investing indicators Ghana have over Nigeria. 118
Swaziland 18 121
Lesotho 19 122
Senegal 20 123

Why The Big 2 Didn’t Make The List

As earlier pointed out, Nigeria is the most populated country and the largest economy on the continent, unfortunately, local and foreign investors find it more challenging to set up business because of insecurity, poor power supply, poor democratic principles among others.

In the 2020 Doing Business Report, Nigeria is ranked 131 globally and 21st on the continent while Ethiopia ranked 159 in the World ranking, it’s 34 on the continent.

Both countries still use their population as an advantage, but that narrative may change moving forward as countries like Mauritius, Kenya, Rwanda continue to put more efforts in ensuring businesses get value from their investment.

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