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African economies: No significant improvement in ease of doing business

World Bank Group’s Ease of Doing Business 2020 report indicates that only two African countries have showed a significant improvement in the ease of doing business.  In Doing Business 2020, the top 10 improvers are Saudi Arabia, Jordan, Togo, Bahrain, Tajikistan, Pakistan, Kuwait, China, India as well as Nigeria.

These economies implemented a total of 59 regulatory reforms in 2018/19- accounting for one-fifth of all the reforms recorded worldwide. Their efforts focused primarily on the areas of starting a business, dealing with construction permits, and trading across borders.
According to the report, Togo was ranked 97th worldwide with a 7.0 change in Doing Business score, while Nigeria settled for the 131th position, with a 3.4 change in doing business score.

The report indicated that Jordan and Kuwait are new additions to the list of 10 most improved economies. Nigeria appears as one of the top-10 improvers for the second time. India, which has conducted a remarkable reform effort, joins the list for the third year in a row. Previously, only Burundi, Colombia, the Arab Republic of Egypt, and Georgia featured on the list of 10 top improvers for three consecutive Doing Business cycles. Given the size of India’s economy, these reform efforts are particularly commendable.

World Bank indicated that factors that drive economies to reform can either be political or economic or both. The economic advancement of neighbouring countries is also an important motivational factor. Their report says research on the effects of market-liberalizing reforms in 144 economies over the period 1995-2006 finds that the most important factor in transmitting reforms between countries is their geographical and cultural proximity.

The spill over effect is magnified when more countries adopt reforms that boost economic development. Furthermore, mass media coverage affects political decisions. A recent study finds that economies with higher media coverage of Doing Business tend to carry out more business regulatory reforms, which one- and two lags between media coverage and reform implementation.

The motivation for reform in Nigeria and Togo was in part the developmental achievements of their neighbours. Rwanda’s progress over the past 10 years inspired authorities in Togo, leading several Togolese delegations to visit Kigali to learn about successful reforms. Togo’s president, according to the report, set a goal to be number one in West Africa in Doing Business 2020. To achieve this target, Togo made significant reform efforts in the areas of starting a business, registering property, and getting credit.

Similarly, after observing an economic transformation in neighbouring Uzbekistan, Tajikistan’s president took a special interest in improving the country’s ranking on the ease of doing business. Nigeria has embarked on a comprehensive reform journey following the example of Kenya. In the previous year, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business.

Most of these reforms addressed aspects of starting a business, dealing with construction permits, getting electricity, and paying taxes; the least reformed area was resolving insolvency. The most common reform features included advancing the functionality of credit bureaus and registries, developing or enhancing online platforms to comply with regulatory requirements, improving the reliability of power supply, reducing certain taxes, strengthening minority investor protections, streamlining property registration processes and automating international trade logistics. Low-income countries accounted for 11 per cent of all the regulatory changes, with Togo implementing the highest number of reforms.

The report says in Sub-Saharan Africa, Togo represents a bright spot. Sub-Saharan Africa remains one of the weak-performing regions on the ease of doing business with an average score of 51.8, well below the OECD high-income economy average of 78.4 and the global average of 63.0. compared to the previous year, Sub-Saharan African economies raised their average eased of doing business score by just 1 per cent point in Doing Business 2020, whereas economies in the Middle East and North Africa region raised their average score by 1.9.

Globally reforms in the areas dealing with construction permits and getting electricity have risen sharply in recent years, peaking in 2018/19 at 37 and 34, respectively. Twenty one of the 37 economies reforming aspects of dealing with construction permits simplified the permitting processes by streamlining interactions with agencies for preapprovals and inspections. The report said another 16 reformed their building quality control systems. In addition, 12 economies either set up or improved online platforms for processing building permits, and 3 economies launched one-stop shops.

In the area of getting electricity, Ghana and Nigeria reduced electricity connection times, the report claims. It says sixteen economies made substantial investments in modernizing electric infrastructure through the installation of substations and remote-control systems; others improved distribution network maintenance. Mainly owing to targeted improvements in electricity supply, the average global duration of power cuts fell by 8.3 per cent between 2017 and 2018. Although blackouts remain relatively frequent in Sub-Saharan Africa, utilities in this region made substantial progress in providing a better power supply to their customers.

Not all regulatory changes make it easier for entrepreneurs to do business, the report said. Some changes are a conscious trade-off. Political changes also play a role; this is according to the report. In Sudan, the new majority in the National Assembly did not endorse temporary amendments to the Compliance Act. As a result, a lapse in the provisions adversely affected Sudan’s performance on the indicators for getting credit, protecting minority investors, and resolving insolvency.

According to the ease of doing business ranking, Rwanda is on the 38th place, Belgium 46th Morocco 53rd, Kenya 56th, Tunisia 78th, South Africa 84th, Zambia 85th and Botswana was ranked 87th in the whole world. Doing Business 2020 is the 17th in a series of annual studies investigating the regulations that enhance business activity and those that constrain it.

It represents quantitative indicators on business regulations and the protection of property rights that can be compared across 190 economies- from Afghanistan to Zimbabwe- and over time. Regulations affecting 12 areas of the life of a business are covered: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, employing workers, and contracting with the government.

The employing workers and contracting with the government indicator sets are not included in this year’s ranking on the ease of doing business. The indicators are used to analyse economic outcomes and identify what reforms of business regulation have worked, where and why.

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Over 2 000 civil servants interdicted

6th December 2022

Over 2,000 civil servants in the public sector have been interdicted for a variety of reasons, the majority of which are criminal in nature.

According to reports, some officers have been under interdiction for more than two years because such matters are still being investigated. Information reaching WeekendPost shows that local government, particularly councils, has the highest number of suspended officers.

In its annual report, the Directorate on Corruption and Economic Crime (DCEC) revealed that councils lead in corrupt activities throughout the country, and dozens of council employees are being investigated for alleged corrupt activities. It is also reported that disciplined forces, including the Botswana Defence Force (BDF), police, and prisons, and the Directorate of Intelligence and Security (DIS) have suspended a significant number of officers.

The Ministry of Education and Skills Development has also recorded a good number of teachers who have implicated in love relationships with students, while some are accused of impregnating students both in primary and secondary school. Regional education officers have been tasked to investigate such matters and are believed to be far from completion as some students are dragging their feet in assisting the investigations to be completed.

This year, Mmadinare Senior Secondary reportedly had the highest number of pregnancies, especially among form five students who were later forcibly expelled from school. Responding to this publication’s queries, Permanent Secretary to the Office of the President Emma Peloetletse said, “as you might be aware, I am currently addressing public servants across the length and breadth of our beautiful republic. Due to your detailed enquiry, I am not able to respond within your schedule,” she said.

She said some of the issues raised need verification of facts, some are still under investigation while some are still before the courts of law.

Meanwhile, it is close to six months since the Police Commissioner Keabetwe Makgophe, Director General of the Directorate on Corruption and Economic Crime (DCEC) Tymon Katlholo and the Deputy Director of the DIS Tefo Kgothane were suspended from their official duties on various charges.

Efforts to solicit comment from trade unions were futile at the time of going to press.

Some suspended officers who opted for anonymity claimed that they have close to two years while on suspension. One stated that the investigations that led him to be suspended have not been completed.

“It is heartbreaking that at this time the investigations have not been completed,” he told WeekendPost, adding that “when a person is suspended, they get their salary fully without fail until the matter is resolved”.

Makgophe, Katlholo and Kgothane are the three most high-ranking government officials that are under interdiction.

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Masisi to dump Tsogwane?

28th November 2022

Botswana Democratic Party (BDP) and some senior government officials are abuzz with reports that President Mokgweetsi Masisi has requested his Vice President, Slumber Tsogwane not to contest the next general elections in 2024.

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African DFIs gear to combat climate change

25th November 2022

The impacts of climate change are increasing in frequency and intensity every year and this is forecast to continue for the foreseeable future. African CEOs in the Global South are finally coming to the party on how to tackle the crisis.

Following the completion of COP27 in Egypt recently, CEOs of Africa DFIs converged in Botswana for the CEO Forum of the Association of African Development Finance Institutions. One of the key themes was on green financing and building partnerships for resource mobilization in financing SDGs in Africa

A report; “Weathering the storm; African Development Banks response to Covid-19” presented shocking findings during the seminar. Among them; African DFI’s have proven to be financially resilient, and they are fast shifting to a green transition and it’s financing.

COO, CEDA, James Moribame highlighted that; “Everyone needs food, shelter and all basic needs in general, but climate change is putting the achievement of this at bay. “It is expensive for businesses to do business, for instance; it is much challenging for the agricultural sector due to climate change, and the risks have gone up. If a famer plants crops, they should be ready for any potential natural disaster which will cost them their hard work.”

According to Moribame, Start-up businesses will forever require help if there is no change.

“There is no doubt that the Russia- Ukraine war disrupted supply chains. SMMEs have felt the most impact as some start-up businesses acquire their materials internationally, therefore as inflation peaks, this means the exchange rate rises which makes commodities expensive and challenging for SMMEs to progress. Basically, the cost of doing business has gone up. Governments are no longer able to support DFI’s.”

Moribame shared remedies to the situation, noting that; “What we need is leadership that will be able to address this. CEOs should ensure companies operate within a framework of responsible lending. They also ought to scout for opportunities that would be attractive to investors, this include investors who are willing to put money into green financing. Botswana is a prime spot for green financing due to the great opportunity that lies in solar projects. ”

Technology has been hailed as the economy of the future and thus needs to be embraced to drive operational efficiency both internally and externally.

Executive Director, bank of Industry Nigeria, Simon Aranou mentioned that for investors to pump money to climate financing in Africa, African states need to be in alignment with global standards.

“Do what meets world standards if you want money from international investors. Have a strong risk management system. Also be a good borrower, if you have a loan, honour the obligation of paying it back because this will ensure countries have a clean financial record which will then pave way for easier lending of money in the future. African states cannot just be demanding for mitigation from rich countries. Financing needs infrastructure to complement it, you cannot be seating on billions of dollars without the necessary support systems to make it work for you. Domestic resource mobilisation is key. Use public money to mobilise private money.” He said.

For his part, the Minster of Minister of Entrepreneurship, Karabo Gare enunciated that, over the past three years, governments across the world have had to readjust their priorities as the world dealt with the effects and impact of the COVID 19 pandemic both to human life and economic prosperity.

“The role of DFIs, during this tough period, which is to support governments through countercyclical measures, including funding of COVID-19 related development projects, has become more important than ever before. However, with the increasingly limited resources from governments, DFIs are now expected to mobilise resources to meet the fiscal gaps and continue to meet their developmental mandates across the various affected sectors of their economies.” Said Gare.

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