Sub-Saharan Africa

Selected investment climate indicators
An annex to the World Development Report 2005 contains indicators from the World Bank’s Investment Climate Surveys and the Doing Business Database, with explanations of how the indicators were constructed. Findings for the region include:

Investment Climate Surveys
Doing Business Database
Uganda illustrates that potential returns to investment climate improvements are large

Investment Climate Surveys

• The Investment Climate Surveys in Eritrea (2002), Ethiopia (2002), Kenya (2003), Nigeria (2001), Senegal (2004), Tanzania (2003), Uganda (2003) and Zambia (2003) cover over 2000 registered firms and an additional 1000 micro and informal firms were interviewed in Kenya, Senegal, Tanzania, and Uganda.
• An unreliable electricity supply is reported as a constraint by over 52 percent of firms in the region, 42 percent in South Asia, 24 percent in East Asia and Latin America and less than 10 percent in Eastern Europe and Central Asia. Losses from power outages average 6-7 percent of sales in Zambia and Ethiopia, and 10 percent of sales or more in Senegal, Eritrea and Kenya.
• Policy uncertainty is rated as a major or severe constraint by 27 percent of firms in Uganda and 57 percent in Zambia.
• Unpredictable interpretations of regulations is a problem reported by 40 percent of firms in Uganda and 70 percent in Zambia.
• Corruption is the top constraint of many firms. In Kenya, over 75 percent of firms report bribes are paid, averaging over five percent of sales.
• Only half of firms expressed confidence that courts would uphold their property rights.

Doing Business Database

• Registering property can take over 300 days in Angola, Côte d’Ivoire, Ghana and Rwanda.
• Resolving a bankruptcy can take 4.5 years in Angola, the Democratic Republic of Congo and Kenya—but just half that time in Botswana, Côte d’Ivoire, Ghana, Namibia, Nigeria and Uganda.

Uganda illustrates that potential returns to investment climate improvements are large:

The Report looks at Uganda’s experience to show the importance of persistence, rather than perfection, in translating investment climate reforms into increased growth and poverty reduction. Uganda launched its program of investment climate improvements in the early 1990s, after a period of civil conflict. Reforms covered many areas of the investment climate, and the persistence of the government’s reform efforts enhanced its credibility, giving firms the confidence to invest. The process provided the basis for growing its economy by an average of four percent per year during 1993-2002 (or eight times the average in Sub-Saharan Africa) and reducing the share of its population living below the poverty line from 56 percent in 1992 to 35 percent in 2000.

The Report shows that the returns to investment climate improvements can dwarf the impact of international aid flows. The manufacturing value added in South Africa is significantly larger than all official aid flows to Sub-Saharan Africa.