Egypt slides to 110 in ease of doing business ranking

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CAIRO: Egypt fell two places in the ease of doing business ranking, sliding to 110th place from 108 in 2011.

Entitled "Doing Business 2012: Doing business in a more transparent world," the International Finance Corporation’s (IFC) annual report, which focuses on the ease of doing business in 183 countries, said that in 125 economies, governments have implemented a total of 245 institutional and regulatory reforms, nearly 13 percent more than the previous year.

However, "Egypt fell in the ranking as a result of other economies implementing business regulation reforms, therefore, surpassing Egypt … on the ease of doing business, which is a relative ranking," Joanna Nasr, coauthor of the report, told Daily News Egypt.

In 2010, it was forecast that Egypt would reach 94th place by 2011.

The new ranking has little to do with Egypt’s current uncertain political climate and the absence of clear economic policies.

"The Doing Business indicators focus on specific areas of business regulations relevant to small- and medium-sized domestic businesses in 10 areas of a typical firm’s life cycle.

“The indicators do not measure all aspects of the business environment such as political stability, corruption, level of labor skills, proximity to markets, or of regulation specific to foreign investment. Therefore, the current political situation of economies around the world is not captured," said Nasr.

In 2009, Egypt reached 116th place in the global ranking, and was expected to reach 106 by 2010. A year later, results were better than expected, with the country in 99th place.

According to the report, in Egypt, “starting a business is reasonably straightforward thanks to the implementation of an efficient one-stop shop. But dealing with construction permits takes about seven months, and enforcing a contract through the courts takes almost three years on average.”

Egypt performed best in three categories, including starting a business, getting credit and trading across borders, while the lowest three were dealing with construction permits, paying taxes and enforcing contracts. It ranked 79 in protecting investors and 137 in resolving insolvency.

Singapore, Hong Kong, New Zealand, the United States and Denmark were the top five, while Guinea, Eritrea, Congo, the Central African Republic and Chad bottomed out the list. The Republic of Korea is a new entrant in the top ten.

Saudi Arabia ranked the best among Arab nations, placing 12th, while the UAE was at 33, Qatar at 36, Kuwait at 67, Jordan at 96, Yemen at 99 and Syria at 134 followed by Sudan

Tunisia placed 46th while Turkey came in 71st place and South Africa at 35.

A new indicator was added to the report, concerning the ease of getting electricity, with Iceland, Germany, Taiwan and China leading the ranking. Egypt came in at 101.

Nagla Rizk, associate dean at the American University in Cairo’s School of Business, said, "When you take indicators and you look at them in average, it can be somehow not precise enough. It is better to look at each component in itself, because a final average result might not be indicative of our situation."

The report predicts that Egypt will manage to accomplish some progress concerning construction permits and property registration, but will regress in seven other fields, such as credit facilities, investor protection, contract enforcement, or paying taxes, while keeping the same rank in trade across borders.

On the regional ranking, which compares the achievements of the 18 Middle East and North Africa countries, Egypt fell to 12th place in 2011, just after Yemen and Lebanon, and just before the Palestinian Territories and Syria.

Regionally speaking, Egypt is number two when it comes to starting a business and getting credit, but other indicator are less promising, coming in at 16th place regionally when it comes to dealing with construction permit and enforcing contracts.

After being among the top 10 global reformers in 2008, Egypt was replaced by Morocco, which simplified the construction permit process, eased the administrative burden of tax compliance, and provided greater protection to minority shareholders.

Speaking about MENA countries, Neil Gregory, senior manager at the World Bank, wrote, “The region’s entrepreneurs can be empowered by stronger institutions and better access to information.

“In more than half of the region’s economies, an entrepreneur must meet with an official to get fee schedules or documentation requirements for many business procedures."

While acknowledging the role played by entrepreneurs "in creating economic opportunities for themselves and for others," the report also stressed the importance of investing in infrastructure such as ports, roads and telecommunications.

Education and training are also vital for the economy, even though these kinds of investments typically take time to bear fruit. Still "economies that have made the transition to developing high-incomes status have generally done so by boosting the skills and capabilities of their labor force," the report added.

"Generally in Egypt and in many Arab countries, we achieve some progress in some fields, while neglecting others. We can’t just focus on GDP growth and so-called economic development without taking into consideration the impact of our decisions on the social and the political level. We lack a clear vision of where we want to head the country to," said Rizk.


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