African countries catching up with Mauritius

I have had the opportunity to chat with the Harvard economists who came up with the concept of the World Bank Doing Business ranking.

At that time, they were advising the head of the World Bank and concluded that its traditional advisory approach was not working. A ranking, they thought, would pitch countries against one another and each one would then try to do their best to improve and reform voluntarily to be able to move up the ranking.

They were right. Since the creation of the ranking several countries have indeed been implementing reforms. Mauritius, like other countries, has been implementing changes and has been leading the African region. The main problem now is that Mauritius, whilst still leading in Africa, has moved down in the ranking and other African countries are catching up very fast.

In Mauritius, the standard answer for why the country has moved back is that there has been a change in methodology. That is true, but that change in methodology has been pre-announced and explained in detail for the past two years. With more than a decade of existence, the ranking itself had to change to take into account new developments, findings and loopholes. It’s worthwhile to note that this change in methodology has adversely affected other African countries as well.

One of those countries catching up with Mauritius is Rwanda, where reforms went beyond the superficial level of just gaming the ranking. Instead reforms became deep-rooted and served to make the government machinery more efficient in its delivery of services. As such, when registering property was identified as being a problematic area, the government went ahead with the creation of a cadastral system and an electronic registry of land. This has been in existence for at least 7 years now. On the other hand, a digitized registry has only recently been started in Mauritius.

When businesses were facing difficulties, not only did the registration system change to allow businesses to get registered within 6 hours, but the government has also put in place one-stop centres at district level for trade licences to be delivered efficiently. The laws pertaining to investment, industrial zones and immigration were all reviewed in a bid to making it easier for both local and foreign businesses to flourish. Many of those reforms do not impact the doing business ranking, but they make a huge difference for the business community.

When comparing the hiring of labour in the two countries, we find stark differences. The character certificate systems epitomize these differences. In Mauritius, when you hire labour, very often a character (morality) certificate is required, for which you must submit a birth certificate, a marriage certificate, proof of address and an ID and two photocopies of each of these documents. The stamp cost, cost of making photocopies, cost of transport as well as the cost of the character certificate itself, can add up to at least Rs 200.

To obtain the same document in Rwanda, you need to show an ID and provide a photograph. The person who takes your request does so directly on a computer; in Mauritius, you need to fill in a form on paper; the person taking the request registers it in a book and gives you two set of receipts, one for payment and the other for picking up your document. In Rwanda, you get the document if you are in a hurry the same day else it is within a few days. In Mauritius, it takes at least a month for that certificate to be delivered although it says that you will receive it in 3 weeks. The reason why Rwanda can do that is because the agencies have invested in automating the documentation of its judiciary and police system.

This is only a minor example but it shows fundamental differences. When you look at other areas of doing business such as getting electricity, taxation, trading across border or construction permits, countries on the continent are implementing an increasing number of reforms. In addition, they have understood that merely changing laws and procedures does not work. New reforms include areas of change management and leadership development to ensure that those providing the services become more attuned to the need for change and efficiency.

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