DELAYS IN THE IMPLEMENTATION OF REFORMS IS REFLECTED IN THE FALL OF MOZAMBIQUE’S POSITION IN THE DOING BUSINESS 2020 RANKING

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The Doing Business 2020 report was recently published. This report evaluates the regulatory reforms implemented between May 2018 and May 2019. According to DB 2020, Mozambique is ranked at position 138, which represents a decline of 3 positions when compared to the assessment carried out last year, as shown in chart 1.

Chart 1: Evolution of the classification of Mozambique in the ranking of Doing Business

Source: The World Bank, Several DB

The reasons behind this trend in the last evaluation is a result of:
Non-implementation of structural reforms to the business environment that culminates in maintaining the 3 generalized variables considered in DB, in particular: procedure, time and cost in 10 sub evaluated indicators.
Some African countries, mainly those who were below Mozambique undertook several measures aimed at facilitating the business environment in their countries.
It is the case of Nigeria which is represented in the list of 10 countries that have undertaken most reforms, having moved from position 146 in DB2019 to 131 in DB2020. In the period under review, the Nigeria has improved in 6 indicators, that is, opening of businesses, obtaining construction permits, obtaining electricity, registration of properties, international trade and execution of contracts.
Another African country that stands out is Niger which moved from position 143 in DB2019 to 132 in DB 2020 resulting from reforms that allowed the Credit Central, Creditinfo VoLo, to collect credit data and data from more ample alternative sources which stimulated the expansion of the coverage of the credit record in that country.

This scenario of lowering the position of Mozambique could have been avoided with the implementation of the measures that were part of the central matrix of priorities for reforms in 2018, considering that of the 11 points that were established, none was completed in the allotted time.
When analyzing the performance at the level of sub-indicators, it is noted that the indicator of obtaining construction permits rose to position 61 benefiting from the reduction in the cost variable, when comparatively measured to the cost of the warehouse, which moved from 6.5% in DB2019 to 6% in DB2020.
The other indicators showed a widespread drop. However, when analyzing the three variables (procedure, time and cost) there has been no change except for marginal gains in cost component that is not necessarily the reduction of costs, but the relative increase in per capita income that may be associated to the Metical appreciation against the US dollar in the period under analysis.

Table 1: Evolution of Doing Business Indicators

Ti DB15 DB16 DB17 DB18 DB19 DB20
Opening of companies   107 124 134 137 174 176
Obtaining construction permits  84 31 30 56 64 61
Getting electricity   164 164 168 150 100 103
Registration of properties   101 105 107 104 133 136
Getting Credit   131 152 157 159 161 165
Protection of minority investors   94 99 132 138 140 147
Payment of taxes 123 120 112 117 125 127
International Trade   129 129 106 109 91 94
Execution of contracts   164 184 185 184 167 168
Resolution of insolvency   107 66 65 75 84 86
Total (Rank) 127 133 137 138 135 138

Source: The World Bank, Several DB

In the comparative analysis with the region it is verified that the Mauritius maintains the top position as the country with the best Doing Business rating in the SADC region (and in Sub-Saharan Africa). Indeed, Mauritius continues with a fast pace on reforms to the business environment totaling 4 reforms that gave rise to its ascension to the position 13 of the DB2020 ranking. In comparison with the top 3 of the region, Mozambique is in a worse position in virtually all indicators, with the exception of international trade, where it leads South Africa, and the indicator of obtaining of electricity where it is second only to Mauritius.

Chart 2: Comparison of the classification of Mozambique with the top 3 of the region

Source: The World Bank, DB2020


In the comparative analysis with the region it is verified that the Mauritius maintains the top position as the country with the best Doing Business rating in the SADC region (and in Sub-Saharan Africa). Indeed, Mauritius continues with a fast pace on reforms to the business environment totaling 4 reforms that gave rise to its ascension to the position 13 of the DB2020 ranking. In comparison with the top 3 of the region, Mozambique is in a worse position in virtually all indicators, with the exception of international trade, where it leads South Africa, and the indicator of obtaining of electricity where it is second only to Mauritius.