WASHINGTON, October 27, 2015 –
A new World Bank Group report finds that Egypt made some important improvements in its business regulations for local entrepreneurs, although challenges remain.
Doing Business 2016: Measuring Regulatory Quality and Efficiency
, released today, finds that Egypt strengthened minority investor protections by prohibiting subsidiaries from acquiring shares issued by their parent company. With these stronger legal protections, Egyptian minority investors can now be more confident about their investments as conflicts of interest are better regulated.
This year’s report also finds that Egypt is amongst the best performers in the Middle East and North Africa in the area of Starting a Business. Over a decade ago, an entrepreneur in Cairo took nearly 40 days to start a business, but the required time is now only 8 days. Moreover, Egypt requires no minimum capital unlike the majority of MENA region economies so budding entrepreneurs in Cairo have less barriers to incorporate. Egypt is also the best performer in the region on Getting Credit as the credit bureau covers a significant share of the adult population and collects all the main relevant areas of information to assess credit-worthiness. Thanks to this, a small business in Cairo with a good financial history is more likely to get credit and hire more workers. Finally, getting a new electricity connection is relatively fast in Cairo as it takes 64 days, compared to 97 days at the global level.
This year’s Doing Business report completes a two-year effort to expand benchmarks that measure the quality of regulation, as well as efficiency of the business regulatory framework, in order to better capture realities on the ground. For example, in addition to the steps, time and cost to build a warehouse, the Dealing with Construction Permits indicator, through its Building Quality Control index, assesses whether safety mechanisms are in place. In this area, Egypt performs better than the global and regional averages as building inspections are carried out during and after construction. With such methodology expansions, Egypt now ranks 131 globally on the ease of doing business over the recalculated Doing Business 2015 ranking of 126.
In the past five years, the pace of reforms has declined as Egypt implemented only 2 reforms – compared to 4 on average for economies in the Middle East North Africa region. Therefore, Egypt’s rank on the ease of Doing Business has not improved over that time span and entrepreneurs still face challenges in several areas. On Trading Across Borders (rank of 157), for instance, importing is time consuming, and it takes an average of 120 hours to comply with border procedures compared to a global average of 87 hours. On Enforcing Contracts (155), Egypt is one of two economies in the region where it takes more than 1,000 days to resolve commercial disputes through the court. On Getting Electricity (144), Egypt underperforms in large part due to the reliability of supply and transparency of tariffs index which, among other things, measures power outages.
“Improving the business environment is essential for Egypt to boost investment and create jobs”
said
Asad Alam, World Bank Country Director for Egypt
. “
I am encouraged to note the priority the government is placing on this important agenda.”
Contacts
