Malawi drops on World Bank business ranking

Malawi, reeling from years of economic mismanagement, continues to fall on international business rankings as latest figures show the landlocked country has slipped six places from 151 to 157 out of 185 global economies on the 2013 World Bank Doing Business index.

According to 10th edition of Doing Business report series released on Monday, Malawi performed poorly in areas dealing with construction permits and paying taxes.

Doing Business, which is a survey conducted across 185 countries, shows how easy or difficult it is for a local entrepreneur to open and run a small to medium-size business when complying with relevant regulations.

The 185 economies the data set covers included: 46 economies in sub-Saharan Africa, 33 in Latin America and the Caribbean,24 in East Asia and the Pacific, 24 in Eastern Europe and Central Asia, 19 in the Middle East and North Africa and 8 in South Asia, as well as 31 OECD high income economies.

Minister  Bande conceded that the business climate is in shambles

It measures and tracks changes in regulations affecting 11 areas in the life cycle of a business: starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency and employing workers.

The indicators are used to analyse economic outcomes and identify what reforms have worked, where and why.

The report said in Malawi “trading across borders became easier thanks to improvements in customs clearance  procedures and transport links between the port of Beira in Mozambique and Blantyre.”

At the same time, the reports says: “Malawi made dealing with construction permits more expensive by increasing the cost to obtain the plan approval and to register the property.”

The report further says Malawi introduced mandatory pension contribution for companies on paying taxes.

The breakdown figures basing on the World Bank report rank Malawi on position 141 out of 185 in starting a business, 97 out of 185 in registering property, 168 out of 185 in trading across borders, 129 out of 185 in dealing with construction permits, 144 out of 185 in getting electricity, and 82 out of 185 in protecting investors.

Malawi is also ranked on 134 out of 185 in resolving insolvency and 58 out of 185 global economies in paying taxes.

Meanwhile World Bank Senior Private Sector Development Specialist responsible for Zambia and Malawi Brian Mtonya told Business Times that Malawi’s slip on the rankings is due to the fast paced reforms being implemented by other countries.

Said Mtonya: “Most countries registered an average of three reforms as compared to one for Malawi. Therefore there is need for Malawi to fast track the way it is implementing critical reforms in improving the business climate.”

On his part, Trade Minister John Bande conceded that the business climate is in shambles but blamed it on past regime saying before May 2012, doing business in Malawi left a lot to be desired as many reforms were hanging in the office of former president late Bingu wa Mutharika.

“When President Joyce Banda took over in April this year, she pushed for the enactment of a number of reforms. So far, we have already passed 12 reforms and another three will be addressed in the next sitting of parliament,” said Bande as quoted by the paper.

He therefore remained optimistic that in next year’s rankings Malawi will perform better due to reforms that president Banda is initiating.

As expected Asian countries continued to top the list with Singapore leading the list for seventh consecutive year followed by its ally Kong-Kong China, others are New Zealand, USA, and Denmark. Georgia became new entrant to the top 10.

Meanwhile, Bahamas and Malta have been added to the rankings bringing the number of economies under review to 185.

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