By Tinishu Solomon |
Ethiopia has a better regulatory environment that promotes the ease of doing business compared to other Sub-Saharan Africa countries, a new World Bank Index report says.
According to the report – Doing Business 2016: Measuring Regulatory Quality and Efficiency – Ethiopia performed well on the indicators related to dealing with construction permits and enforcing contracts.
The report showed that Ethiopia was among the best performers in the region on enforcing Contracts, with a global ranking of 84 and is placed seventh in the region.
This is due, in part, to past efforts to ease the process of contract enforcement which has resulted in considerable time gains.
For example, over a decade ago, it took an entrepreneur in Addis Ababa 690 days to resolve a commercial dispute. Today it takes only 530 days.
In the area of dealing with construction permits, Ethiopia ranks 73 worldwide.
The time to build a warehouse in Ethiopia is 129 days –compared to 152 days on average in the high-income Organization for Economic Cooperation and Development (OECD) economies.
This year’s Doing Business report completes a two-year effort to expand benchmarks that measure the quality of regulation, as well as the efficiency of the business regulatory framework, in order to better capture realities on the ground.
However, challenges remained in other areas such as business incorporation and access to finance.
On the five indicators that saw changes in this report – Dealing with construction permits, getting electricity, enforcing contracts, registering property and trading across borders–Ethiopia had substantial room for improvement.
For instance, in addition to the steps, time and cost to get connected to the grid, the getting electricity indicator assesses power outages through the quality of supply and transparency of tariffs index. On this metric, the report says Ethiopia underperformed.
Similarly, on registering property, Ethiopia can improve when it comes to the quality of the land administration system; its reliability, transparency and geographic coverage”
“Ethiopia has made some progress in several key areas of business regulation in the past decade,” said Qaiser Khan, acting World Bank country manager for Ethiopia, said in a statement the bank released on Friday.
“For instance, 12 years ago it took a local entrepreneur 47 days to start a business in Addis Ababa. Now, it takes only 19 days.
“Yet, the regulatory burdens of cost, procedures and paid in minimum capital requirements surpass the regional average, which means there is still work to be done,” Kahan added.
Since 2004, Ethiopia has undertaken seven reforms easing business regulation–which is a slower pace than the regional average.
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