Ghana falls three places to 63rd as country increases cost of starting business by 70% – World Bank-IFC Doing Business 2012

Ghana is ranked 63rd in the world of doing business out of 183 economies, according to the World Bank-International Finance Corporation (IFC) Doing Business 2012 report released October 20, 2011 falling from the 60th position it had in the 2011 edition.

The reason for Ghana’s fall on the rankings was due to the increase in cost of starting a business in the country.

The country fell by 19 places from 85 in the previous year to 104 on the Starting a Business ranking. “Ghana increased the cost to start a business by 70%,” said the report.

Ghana was ranked 5th in sub-Saharan Africa, 5th as lower middle income country on the overall rankings. For the fourth year in a row, Mauritius was the easiest place in sub-Sahara Africa for an entrepreneur to do business with a global rank of 23, followed by South Africa, Rwanda and Botswana.

The Doing Business 2012 report assesses regulations affecting domestic firms in 183 economies and ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency, and trading across borders.

Under the Starting a Business ranking, it takes seven procedures within 12 days at a 17.3% cost per capita income at a minimum capital of 5.5% of income per capita in Ghana.

Out of 10, Ghana’s performance improved on only two rankings with an unchanged rank in the Enforcing Contracts indicator leaving the remaining seven rankings falling as much as 38 places.

Ghana ranked 104 in Starting a Business as against 85 it had in the last edition; in the Dealing with Construction Permits rankings, Ghana placed 156 as against 152.

The remaining rankings on Ghana are: Getting Electricity (ranked 68th up from 78th); Registering Property (ranked 36th from 34th); Getting Credit (ranked 48th from 45th); Protecting Investors (ranked 46th from 44th); Paying Taxes (ranked 90th from 52nd); Trading Across Borders (ranked 90th from 87th); Enforcing Contracts (ranked 45th still unchanged) and  Resolving Insolvency (ranked 106th up from 115th).

According to the report, a record number of economies in Sub-Saharan Africa improved business regulations for local entrepreneurs in the past year.

“The pace of regulatory improvements has picked up across sub-Saharan Africa. Six years ago, a third of sub-Saharan African economies made improvements to the regulatory climate for domestic firms. Between June 2010 and May 2011, 36 of 46 governments in the region implemented reforms in at least one of the 10 areas measured by the report,” the two institutions said in a joint statement.

“Entrepreneurship is constrained when regulation is too complex or onerous,” said Augusto Lopez-Claros, Director, Global Indicators and Analysis, World Bank Group. “With their impressive improvements this year, the governments of Sub-Saharan Africa are improving prospects for local businesses.”

By implementing reforms in areas such as paying taxes, getting credit, starting a business, dealing with construction permits, registering property, and resolving insolvency, the report said São Tomé and Príncipe, Cape Verde, Sierra Leone and Burundi are among the region’s most-improved economies for entrepreneurs.

“Post-conflict economies such as Burundi, Liberia, and Sierra Leone are among those that have implemented broad regulatory reforms,” says Sylvia Solf, lead author of the report. “They demonstrate that despite challenges, economies can move forward to encourage entrepreneurship.”

New data shows that improving access to information on business regulations can aid entrepreneurs. In many sub-Saharan African economies, getting essential information often requires meeting with an official, demonstrating that improving access to information remains one of the region’s areas for improvement, the statement said.

This year, Singapore led on the overall ease of doing business, followed by Hong Kong SAR, China; New Zealand; the United States; and Denmark. The Republic of Korea was a new entrant to the top 10.

By Ekow Quandzie

Watch the Doing Business Report 2011