WASHINGTON, October 29, 2015 – A new World Bank Group report finds that, compared to other economies in Sub-Saharan Africa, Ethiopia offers an enabling regulatory environment in several areas of doing business.
Doing Business 2016: Measuring Regulatory Quality and Efficiency finds that Ethiopia does relatively well on the indicators related to Dealing with Construction Permits and Enforcing Contracts. However, challenges remain in other areas such as business incorporation and access to finance.
The report shows that Ethiopia is among the best performers in the region on Enforcing Contracts, with a global ranking of 84 and 7th 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 – less time than in Canada.
In the area of Dealing with Construction Permits, Ethiopia ranks 73 worldwide. In fact, 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. 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 has 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, Ethiopia underperforms. 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. “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.”
Since 2004, Ethiopia has implemented a total of seven reforms easing business regulation – which is a slower pace than the regional average. Moreover, in the past year, no reforms were recorded in Ethiopia while 74 percent of Sub-Saharan economies made business easier in at least one of the areas measured by Doing Business.
Ethiopia’s ease of doing business ranking this year is 146, a modest improvement over the 2015 ranking of 148. The full report and accompanying datasets are available at https://www.doingbusiness.org/