03.11.2017 07:34 Age: 139 days

Namibia improves slightly in ‘Doing Business 2018’ report

Namibia slightly improved its ranking in the World Banks's annual 'Doing Business' report from 108 in last year's report to 106 this year. The report was released yesterday.

The world Bank recently published its 15th edition of Doing Business: Reforming to Create Jobs report. It was first launched in 2003. The report examines red tape and hurdles small and medium businesses face, covering topics such as starting a business, cross-border trading, paying taxes, resolving insolvency and getting electricity. 

The report further indicates that Namibia maintained her ranking of seventh within the now 16 SADC member states. In 2014 and 2016 Namibia ranked sixth, while in 2015 the country ranked fifth. Namibia improved in two out of the ten areas, namely ‘Getting Electricity’ and ‘Enforcing Contracts’.

According to the Economic Association of Namibia (EAN), the country's ranking indicates that considerable effort is required to become the most competitive economy in SADC, let alone the continent. 

The reasons are an increase in the number of procedures (12 now up from 10) and consequently an increase in the number of days it takes to get a building permit, 160 days compared to 137. The lengthier process resulted in an increase in the costs of getting the permit from 0.5 percent of the value to 2.5 percent.

Given the high prices for residential property and the contraction in the construction industry, these areas warrant urgent attention,” commented Klaus Schade of the Economic Association of Namibia.

The report also shows that Namibia slipped substantially regarding ‘Resolving Insolvency’ by 26 places to rank 123, mainly because the strength of the insolvency framework is regarded as weaker this year (6.0) than last year – 7.5 out of 16.

Another area of concern is the ranking in terms of ‘Trading Across Borders’. Namibia dropped five ranks to rank 132nd simply because other countries improved and moved forward, while time and costs of imports and exports have not changed for the country.

“In order to become the logistics hub for southern Africa the border procedures have to be streamlined and costs have to be cut,” Schade noted.

The World Bank also reports that there has been no improvement in any indicators for ‘Getting Credit’ and therefore, the score remained at 60.0 – like last year, but the country slipped six places to rank 68, because other countries improved their scores.

The same applies to ‘Starting a Business’ where Namibia scored the same as last year (68.9), but moved down two ranks to rank 172 out of 190 countries.

“The launch of NamBizOne, a single-window platform, has apparently not have had any positive impact so far on the procedures (10) and time (66 days) it takes to start a business. In order to stimulate economic growth and job creation, concerted efforts by all institutions involved are needed to make a single-window for registrations a reality,” said Schade.

In terms of ‘Paying Taxes’ the country declined in ranking from 74 to 79, ‘Protecting Minority Investors’ dropped from 81 to 89 and Registering Property, which went down from 174 to 175, remain areas for substantial improvements.

“The improvement is in contrast to the decline in competitiveness according to the World Economic Forum’s Global Competitiveness Report (GCR) 2017-18 that was released in September 2017. However, the GCR uses a different methodology and is in part based on the Executive Opinion Survey.

“The results point often in the same direction, namely lack of reform in Namibia results in declining competitiveness, while other countries are moving ahead. Namibia’s main challenges of poverty, income inequality and unemployment will only be overcome if a more conducive environment for the private sector to invest and operate is created.

“New technologies offer opportunities to reduce bureaucratic processes, time and costs,” Schade concluded.