DB Rankings fall to record lows
Botswana has not been doing well in the Doing Business rankings in recent years. The general trend indicates a deterioration in the ease of doing business.
The World Bank’s Doing Business (DB) Reports are an annual series of assessments of the business environment in participating countries. The DB assessment measures business regulation and the protection of property rights across 190 countries in 2019, based on quantitative indicators covering the life cycle of businesses. It focuses on factors that have been shown to be supportive of business development, or constraints to it. The DB indicators cover 11 aspects of the business life cycle: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and the labour market regulation.
The results provide a measurement of country performance in each area and overall (the DB score), and a comparative ranking against other countries included in the survey. The 2019 DB report is based on information gathered in mid-2018.
In the latest (2019) report rankings, Botswana moved five places downwards from 81 out of 190 countries in 2018 to 86 (position one is the best), the lowest ranking Botswana has ever had. At position 86, Botswana is below Mauritius (rank 20), Rwanda (29), Kenya (61), and South Africa (82), and just above Zambia (87).
According to an analysis by Econsult Botswana, a local independent economic think tank, it is interesting to compare this with the ranking ten years ago (DB 2009): Mauritius (24), Rwanda (143), Kenya (84), South Africa (32), Zambia (99). According to Econsult, headed by Managing Director (MD) Dr. Keith Jefferis, Botswana was then ranked number 39, the highest rank Botswana has ever achieved was 19 (out of 155 countries) in 2005. There was another improvement in 2009 where Botswana was ranked among the top 10 countries in Africa for implementing essential reforms in 2007/08, but the general downward trend has been consistent. An analysis of the 2019 DB indicators shows there was a big improvement in dealing with construction permits. This was achieved by reducing the time taken to process permit applications and streamlining procedures by allowing third party engineers to do some of the work. Out of 190 countries, Botswana was ranked number 39 in 2019, up from 59 in 2018.
Other indicators where Botswana performs relatively well include trading across borders and paying taxes. However, the direction of change is worrying, as the ranking on these two indicators has fallen. Trading across Borders was ranked 55 out of 190 countries in 2018 down from 50 out of 190 countries in 2017, while Paying Taxes was ranked 51 out of 190 countries in 2018 from 47 out of 190 countries in 2017. The three indicators which had the lowest rankings were Starting a Business, Getting Electricity and Enforcing Contracts at 157, 133 and 134 out of 190 countries in 2019 from 153, 124 and 133 out of 190 countries in 2018 respectively
Botswana’s DB score improved from 64.94 out of 100 in 2018 to 65.40 out of 100 in 2019, where 100 is the highest score possible. This implies that even though some aspects of the business environment improved (higher score), other countries improved faster (lower ranking).
Botswana’s performance in the DB ranking is worrying, according to Dr. Jefferis. He said to improve, the country has to increase its scores across the 11 indicators, and do so faster than other countries. This implies that Botswana has to improve its score in relation to the best performer in the index and faster than other countries.
Dr. Jefferis said this is because the DB rankings improve in relation to an improvement in DB score. However, he said an improved score does not guarantee an improved ranking if other countries are progressing faster. For example, out of the ten indicators above, the scores of six indicators did not change, three had improved score and only one had a marginal decline – and the overall rank for Botswana was a movement of five places downwards in 2019. Simply put, Botswana’s performance in DB ranking in 2019 decreased because other countries where improving faster than us.