DOING BUSINESS Cemile Hacibeyoglu Frederic Meunier

DOING BUSINESS 2016 Cemile Hacibeyoglu Frederic Meunier May 4, 2016 What does Doing Business measure? Doing Business indicators:  Focus on regula...
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DOING BUSINESS 2016

Cemile Hacibeyoglu Frederic Meunier May 4, 2016

What does Doing Business measure? Doing Business indicators: 

Focus on regulations relevant to the life cycle of a small to medium-size domestic business.



Are built on standardized case scenarios.



Are measured for the most populous city in each country, and the second largest business city in countries with more than 100 million inhabitants.



Are focused on the formal sector.

Doing Business DOES NOT measure all aspects of the business environment such as security, macro-economic stability, prevalence of bribery and corruption, level of training and skills of the labor force, proximity to markets, regulations specific to foreign investment or the state of the financial system.

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The 11 areas of business regulation measured by Doing Business affect firms throughout their life cycle

At start-up • Starting a business • Labor market regulation

When things go wrong • Enforcing contracts • Resolving insolvency

In daily operations • Paying taxes • Trading across borders

In getting financing • Getting credit • Protecting minority investors

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In getting a location • Dealing with construction permits • Getting electricity • Registering property

Methodology changes in Doing Business 2016 •

Introduced new measures of quality: (1)Dealing with construction permits: a new index measuring the underlying quality of construction regulations and controls (2)Getting electricity: a new index measuring the underlying reliability of supply and transparency of tariff (3)Registering property: a new index measuring the underlying quality of land administration systems (4)Enforcing contracts: a new index measuring the underlying quality of judicial process, replacing the indicator on the number of procedures to enforce a contract in previous years

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Increased of the relevance: Trading across borders



Collected new data: Labor market regulation

Methodology changes and new research in Doing Business 2017 Methodology Changes

•Expanding the paying taxes indicator to cover post-filing: measuring the time and process associated with tax refunds, tax audits and tax appeals for domestic SME. New Research

•Correcting certain gender biases: assessing gender legal differences in the processes measured by Doing Business. •New annex on selling to the government: measuring the process and regulations for the life cycle of a government procurement contract. (The new data will not be included in the ease of doing business ranking.)

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Paying Taxes: measuring post-filing processes Measures the process of going through an audit on the Corporate Income Tax due to underpayment, including:



Notification of the unintentional CIT error.



Payment of interest and/or penalty fees.



Whether an unintentional error in a CIT return trigger an audit.



The time and document preparation related to the audit.

CIT audit

VAT refund

Tax appeal

Post-filing processes

Measures the process of obtaining the Value Added Tax refund related to a large capital purchase, including: • The time and document preparation related to obtaining the refund. • Payment of interest.

Measures the process of going through an administrative Tax appeal, including: • Independence from the auditor. • Payment of interest and/or penalty fees.

Regulatory efficiency and regulatory quality go hand in hand •

Economies that have efficient regulatory processes as measured by Doing Business also tend to have good regulatory quality. The quality of regulation is high but the processes for implementing it remain complex.

Both efficiency and quality are far from ideal—with regulatory transactions that are complex and expensive and that in the end do not accomplish their objectives.

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Both efficiency and quality are achieved in business regulation.

Regulatory processes are fast and inexpensive but lack quality.

Improvements over time in the quality and efficiency of business regulation •Economies in all income groups and in all regions have improved the quality and efficiency of business regulation. •Lower-income economies have improved more in the areas measured by Doing Business than high-income economies have—there is convergence. •Sub-Saharan Africa is the region that made the second largest improvement in business regulation over time.

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DOING BUSINESS PROJECT CYCLE Questionnaires - generation - 17,500 sent

Launch of DB2017 Virtual and roadshows

Data verification -Conference calls & VC’s

-Written correspondence January – February

October 27

- Travel to 30 countries

Website 1 million visits in 2 weeks

Media outreach

JULY SEPT

- 10,500 articles and mentions since launch Sept- Nov

JAN – February March MAY

Data analysis and government feedback -Coding of 58,000 data points - 231 reforms recorded

Report production June- Aug

Translations

June MAY1st cutoff JUNE date for reform

Counterparts for data

Publication/writing

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How did economies in Sub-Saharan Africa perform on the ease of doing business in 2014/2015? 1

High income: OECD

25

Europe & Central Asia

55

1

Singapore

2

New Zealand

EAC average: Burundi, Kenya, Rwanda, Tanzania, Uganda

SADC average: East Asia & Pacific Latin America & Caribbean

96 104

Middle East & North Africa

114

South Asia

128

Angola, Botswana, Democratic Republic of the Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, Seychelles, South Africa, Swaziland, Tanzania, Zambia, Zimbabwe

ECOWAS average: 117 119

Benin, Burkina Faso, Cabo Verde, Côte d'Ivoire, Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, Togo

OHADA average: Sub-Saharan Africa

143 152

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Source: Doing Business 2016.

189

Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Republic Congo, Côte d'Ivoire, Equatorial Guinea, Gabon, Guinea, Guinea-Bissau, Mali, Niger, Senegal, Togo

164

ECCAS average:

174

Angola, Burundi, Cameroon, Central African Republic, Chad, Democratic Republic of the Congo, Republic of Congo, Equatorial Guinea, Gabon, São Tomé and Príncipe

How did Sub-Saharan Africa perform on the ease of doing business in 2014/2015?

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Rank

Economy

DTF score

Rank

Economy

DTF score

32 62 72 73 95 97 101 105 108 114 114 122 126 133 139 141 142 143 143 146 147 150 151 152

Mauritius Rwanda Botswana South Africa Seychelles Zambia Namibia Swaziland Kenya Ghana Lesotho Uganda Cabo Verde Mozambique Tanzania Malawi Côte d'Ivoire Burkina Faso Mali Ethiopia Sierra Leone Togo Gambia, The Burundi

75.05 68.12 64.98 64.89 61.05 60.50 60.17 59.10 58.24 57.69 57.69 56.64 55.54 53.98 51.62 51.03 50.93 50.81 50.81 49.73 49.69 49.03 48.99 48.82

153 154 155 158 159 160 162 164 165 166 168 169 172 176 178 179 180 181 183 184 185 187 189

Senegal Comoros Zimbabwe Benin Sudan Niger Gabon Madagascar Guinea São Tomé and Príncipe Mauritania Nigeria Cameroon Congo, Rep. Guinea-Bissau Liberia Equatorial Guinea Angola Chad Congo, Dem. Rep. Central African Republic South Sudan Eritrea

48.57 48.22 48.17 47.15 46.97 46.37 45.99 45.68 45.54 45.50 44.74 44.69 44.11 41.88 40.56 40.19 40.03 39.64 38.22 38.14 36.26 34.78 27.61

Source: Doing Business 2016.

Larger share of economies in Sub-Saharan Africa improved business environment in 2014/15 compared with 11 years ago  Worldwide, 122 economies implemented 231 reforms in 2014/2015.  While in 2004/05 only 31% of the economies in Sub-Saharan Africa implemented business regulatory reforms, in 2014/15 74% of the economies did so. 92% 59%

Europe and Central Asia

55 OECD high Income

Latin America & the Caribbean

47%

% Middle East and North Africa 74%

75% South Asia

52% East Asia and Pacific

SubSaharan Africa

 During 2005 and 2015, 184 economies implemented 2,499 reforms worldwide. In Sub-Saharan Africa, 46 economies made 622 reforms over the past 11 years. 11

Reforms making it easier to start a business show results over time in reduced delays

2005 It was possible to start a business in less than 20 days in only 41 economies*, mostly in North America and Northern and Central Europe. In Sub-Saharan Africa, entrepreneurs in only 3 countries—Burundi, Ghana and Rwanda—could incorporate a company in under 20 days.

2015* Now, the time to start a business is less than 20 days for entrepreneurs in 132 economies* worldwide. In Sub-Saharan Africa, 26 of 47 economies have lowered time to start a business to below 20 days.  Development impact: Countries that regulate entry more heavily have greater corruption and larger unofficial economies, but not better quality of public or private goods. (Djankov, La Porta, Lopez de Silanes, Shleifer, February 2002, Quarterly Journal of Economics.) Note: Based on samples of 174 economies in Doing Business 2006 and 189 economies in Doing Business 2016.

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Who improved the most across 3 or more areas measured by Doing Business in 2014/15?

Source: Doing Business database. Note: Economies are selected on the basis of the number of their reforms and ranked on how much their distance to frontier score improved. First, Doing Business selects the economies that implemented reforms making it easier to do business in 3 or more of the 10 areas included in this year’s aggregate distance to frontier score. Regulatory changes making it more difficult to do business are subtracted from the number of those making it easier. Second, Doing Business ranks these economies on the increase in their distance to frontier score from the previous year. The improvement in their score is calculated not by using the data published in 2014 but by using comparable data that capture data revisions and methodology changes. The choice of the most improved economies is determined by the largest improvements in the distance to frontier score among those with at least three reforms.

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Common features of successful reformers

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Sub-Saharan Africa economies have improved regulatory processes the most in the area of starting a business

15 Source: Doing Business 2016.

There is a gap between regulatory efficiency and regulatory quality in Sub-Saharan Africa •On average, economies perform better on measures of efficiency than on measures of quality. Less than 10% of the economies covered have a lower DTF score for efficiency than for quality. •Europe and Central Asia has the smallest average gap between efficiency and quality. The largest gaps are in the Middle East and North Africa. •However Sub-Saharan Africa ranks the lowest on both dimensions. •Both a higher level of regulatory efficiency and a higher level of regulatory quality are associated separately with a lower level of corruption.

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Measuring reliability, prices and transparency in getting electricity •This year Doing Business collected new data in 189 economies on the price of electricity and the overall quality of electricity supply. •ƒ Sub-Saharan Africa has the longest total duration of outages, averaging almost 700 hours a year for a customer—while OECD high-income economies have the shortest, averaging only about 1 hour a year. •Economies in South Asia have the highest frequency of outages, averaging more than 200 outages a year for a typical customer; OECD high-income economies have the lowest, averaging 1 outage a year.

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Measuring good practices in the judiciary in enforcing contracts •Doing Business introduces a new measure in the enforcing contracts indicator set this year, the quality of judicial processes index, testing whether each economy has implemented a series of good practices in the areas of court structure and proceedings, case management, court automation and alternative dispute resolution.

Average index score as % of best score

•ƒ On average, OECD high-income economies have the largest number of judicial good ƒ practices in place as measured by the new index, while Sub-Saharan African economies have the fewest.

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Sub-Saharan Africa makes the smallest use of online systems in regulatory processes

Average score for use of online systems (0–9)

• The use of the internet to streamline business regulation remains largely confined to more developed economies. • Data for 9 Doing Business topics show that OECD high-income economies and Europe and Central Asia make the greatest use of online systems in regulatory processes. • In Sub-Saharan Africa, by contrast, very few economies use electronic platforms in business regulation.

• Of the 9 possible regulatory transactions, Australia, Denmark and Estonia enable entrepreneurs to complete 8 or more online. •

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The Central African Republic, the Republic of Congo and Equatorial Guinea are among the few economies where none of these transactions can be completed online.

Economies in Sub-Saharan Africa show the least progress in adopting electronic tax filing and payment •Since 2006 the use of electronic tax filing and payment systems has increased substantially in several regions of the world, with the most remarkable progress in Europe & Central Asia. •Sub-Saharan Africa remains the region with the smallest share of economies using electronic filing or payment. •Worldwide, 10 economies introduced or enhanced electronic systems for filing or paying taxes between 2008 and 2011. And an average of 15 economies a year have introduced such changes since 2012—with 19 doing so in 2013.

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THANK YOU! Questions

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