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Namibia – Ease of doing business deteriorates

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The World Bank released its Doing Business 2015 report on October 29. The intention of the publication is to provide a measure of the difficulty an entrepreneur faces when starting and/or running a small or medium-sized business in a specific country given the prevailing legislative and regulatory environment. Unfortunately, Namibia’s performance in the latest edition deteriorated – it is now ranked 88th out of 189 countries in relation to the headline ease of doing business index, eight positions worse than the ranking achieved last year. On the positive side, Namibia’s 2014 performance was revised to reflect significantly superior performance. More specifically, the desert economy’s ranking for 2014 was revised from 98th to 80th on account of data revisions and changes to the methodology. It is immediately apparent that Namibia records its worst performance in relation to the ‘registering property‘ sub-index. In this regard, Namibia is ranked a very poor 173rd out of 189 countries. According to the World Bank, the main reason for Namibia’s weak score relates to the cost associated with registering a property, which is estimated at 13.8% of the property value, compared to a sub-Saharan Africa average of 9.1%. Namibia also fares poorly with regard to the ‘starting a business’ category, where the country’s ranking dropped from 152nd to 156th. Although the costs associated with starting a business are lower compared to the regional average, the time required to fulfil all the legal and regulatory requirements is significantly longer. Finally, Namibia’s ranking (136th) on the ‘trading across borders‘ indicator reflected the sharpest drop in performance compared to a year earlier (119th).

WHY DO WE CARE? Interpretation of the latest ranking is somewhat complicated due to the significant revision of Namibia’s performance last year. To a certain extent, the country’s comparative performance has improved against what it was perceived to be a year ago. Perceptions aside, this does not detract from the fact that Namibia failed to realise any significant improvements over the last year. In actual fact, the ease of doing business actually deteriorated, according to the World Bank. Also, with the people at the helm currently in election mode, and considering the time required for reshuffled ministers and department heads to settle into their new positions, it might be overly optimistic to expect a significant improvement in relation to the legal and regulatory frameworks affecting how businesses operate in the short term.

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