• 151st place in the world two consecutive years
• Access to electricity, the Achilles heel of Burkinabè companies
• Getting credit: 11 places lost
New underperformance for Burkina Faso in the Doing Business 2020 report (DB/2020). Published at the end of October 2019 by the World Bank, the document ranked Burkina 151st in the world out of 190 countries covered by the study. In the previous edition (DB/2019), Burkina had already occupied this same area, the country stopped.
While the world ranking has not changed, some indicators have changed. The Economist of Faso offers you in this file, the main developments by category.
In the order of this report, first is “Starting a business”. This indicator measures the number of procedures, time, cost and minimum capital required for a small or medium limited liability company to officially start, in the largest business city of each economy.
To compare data across 190 economies, Doing Business uses a standardized business that is 100% country-owned, with a start-up capital equal to 10 times per capita income, engaged in general industrial or commercial activity, and employs between 10 and 50 people a month after the start of operations, all of whom are citizens.
For DB/2020, Burkina Faso’s score is 88.2, the highest score is 100, compared to 88.19 in 2019. So it is ahead of Ghana (85) and Mali (84.3). On the other hand, it was overtaken by Côte d’Ivoire (93.7) and Benin (90.6). The regional score of sub-Saharan Africa for this indicator is 80.1.
Management of building permits. This indicator tracks the procedures, time and costs involved in building a warehouse – including obtaining the necessary licenses and permits, submitting all necessary notifications.
In terms of score, Burkina leads Ghana, Mali, the region average and Côte d’Ivoire, with 68.7 out of 100 points in the ranking. At this level, compared to the previous edition, we noticed a decrease in points. In DB/2019, Burkina’s score was 73.25 out of 100.
Access to electricity: Burkina is ranked 183rd out of 190 countries
Access to electricity. This is the 3rd indicator of the Doing Business ranking. It measures the procedures, time and cost required for a company to obtain a permanent electrical connection. At this level, the country lost 2 spots, as it was ranked 181st in the previous edition.
Access to electricity remains the Achilles heel of businesses in Burkinabè again this year. Although the calculated price has fallen year by year, it still remains higher than the regional average and advanced economies. Required to count according to the percentage of per capita income: 8,977.4% for Burkina Faso, 3,187.5% for the region average and 61% for developed countries.
In terms of the reliability of the offer and the transparency of the tariff index, the country is rated 0 out of 8. Statistics that place the country ultimately in the sub-region with a score of 29.4 out of 100. On the face of it, Ghana (77.4); Ivory Coast (59.2); Mali (51.8); the region average (50.4) and Benin (33.8).
Registration of ownership
This topic examines the steps, time and costs involved in registering a property, considering the typical case of an entrepreneur who wants to buy land and or building that is already registered and there is no title dispute. And at this point, Burkina Faso has scored a few more points this year. From 50.47 points from 100 in the 2019 ranking, it became 51.4 points in DB/2020. A good point brought by “quality land management” and its five dimensions: infrastructure reliability, information transparency, geographical coverage, settlement of land disputes and equal access to rights in possession. Rated out of 30, Burkina has a score of 12.5 against 11 in DB/2019. The score is higher than region 9 for the Doing Business 2020 edition.
However, in the “Property Registration” category, Burkina Faso lags behind Ghana (59.4); Ivory Coast (58.6); Benin (56.3), the sub-Saharan region (53.6) and Mali (51.6).
Protect minority investors
It measures the strength of minority shareholder protections against the misuse of company assets by directors for their personal benefit as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce risk of abuse.
In this category, Burkina got two more points this year. The score dropped from 40 to 42 out of 100, lifting the country to 120th place from 140th it occupied for this category in DB/2019.
This heading lists the taxes and mandatory contributions that a medium-sized company must pay or withhold in a particular year, as well as the administrative burden of paying taxes and contributions and following procedures after -file (VAT reimbursement and tax control). The final round of data collection for the project was completed in May 2019 for the 2018 calendar year (January 1, 2018 to December 31, 2018). Burkina has a score of 55.9 (154th place), ahead of Benin (171st) and Mali (173rd).
In terms of quality, Burkina Faso and Benin showed the same mark, 49.3, against 64.8 for Côte d’Ivoire, the best performance in the region.
By tax type, work -related tax and other contributions represent 21.4% of the total, followed by income tax with 16.2% and other taxes represent 3.6%.
cross border trade
For this point, Doing Business records the time and costs associated with the logistics process of exporting and importing products. It measures the time and cost (excluding tariffs) associated with three sets of procedures-document compliance, border compliance and transportation within the country-as part of the overall process of exporting or importing shipment of goods.
Getting credit: 11 places lost
This category explores two types of issues: the strength of credit investigation systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. At this level, although the number of points remains unchanged, i.e., 30/100, Burkina Faso has lost 11th place in the ranking by country. It went from 140th place to 151st in a year.
What are the indices that deteriorate? Looking at the document, we realize that the indicators have changed slightly from one year to another. The country’s collapse is justified by the lack of credit information compared to other countries in the sub-region. In fact, on a score of 0 to 8, Burkina Faso shows 0, as does Benin. Ivory Coast, for example, leads with a score of 8.
This credit information answers the questions:
– Has the data been shared with companies and individuals? Has positive and negative credit data been shared?
– Data from retailers or utility companies – in addition to data from banks and financial institutions, is it distributed?
– Is there at least two years of distributed historical data?
– Is the data on loan amounts less than 1% of per capita income distributed?
-Under the law, do borrowers have the right to access their data at credit bureaus or credit registries?
-Can banks and financial institutions access borrowers’ credit information online? (for example, through an online platform, a system-to-system connection, or both)?
– Are credit scores from bureaus or registers offered as a valued service?
– Do banks and financial institutions assess the trustworthiness of borrowers?
– To all these questions of investigators, the answer is no.
Evaluation of reforms and increasing communication
A few days before the publication of the Doing Business 2020 report, which ranked Burkina Faso 151st out of 190 economies analyzed, the second ordinary session of the steering committee for the monitoring mechanism for improving the business climate took place. The working meeting was held on Tuesday, November 5, 2019 in Ouagadougou in the presence of Prime Minister Christophe Dabiré.
The latter dramatically underlined the very important importance of “taking appropriate measures to reposition itself, as this classification depends on the influx of foreign investment”.
He also called not only for respect for deadlines and procedures but also invited committee members to diligently implement the priority reforms contained in the 2019 minimum matrix.
According to the Minister of Commerce, Industry and Handicrafts, Harouna Kaboré: “this working session aims to assess the overall implementation of reforms to improve the business climate”. The meeting also aims to review the Doing Business report and get inspiration from it.
He also stressed the fact that from 2014 to 2019 Burkina Faso fell in the ranking of Doing business, however, all the reforms carried out since then have made it possible to “stop the bleeding”.
For the latter, the ranking of Doing Business depends not only on the number of reforms but also on the appreciation of those who benefit from them, hence the interest of better communication.
According to private sector representative Lancina Ki, “the government has made many reforms but the private sector believes it will be better”. The latter remains optimistic if the trend is maintained. He remarkably affirmed that Burkina Faso was on the right track.
As a reminder, “Doing Business” is a ranking of 190 countries in relation to their ease of doing business. Created in 2002 by the World Bank Group, this ranking measures business regulation and its effective application in 190 economies and in selected cities at the subnational and regional level.
Countries are ranked according to the ease of doing business there, from 1 to 190, with first place indicating the highest level of ease. The index corresponds to the average of the rankings in the 10 indices analyzed (starting a business, getting loans, fixing insolvency). Each index is assigned the same coefficient.
Edition number: 319