The World Bank has said although Malawi is making strides in narrowing the gap with global regulatory best practices in business, there is need to do more if the commitment is to be fully realised.
World Bank country manager Greg Toulmin said this in an interview Thursday, in reaction to the bank’s ‘Doing Business 2020 Report’, which shows that Malawi has moved two steps up the ladder, from 111 last year to 109, out of 190 economies.
He said this shows government’s commitment to creating jobs for the young people.
Said Toulmin: “Improving the business environment will be crucial to delivering that commitment. So, it is good news that Malawi has, overall, improved its business regulations and in absolute terms, is narrowing the gap with global regulatory best practice.
“However, there is still much more Malawi needs to do—and quickly—if this commitment is to be realised in full. We look forward to working with government to help them deliver it.”
According to the bank, at its core, regulation is about freedom to do business.
By documenting changes in regulation in 12 areas of business activity in 190 economies, ‘Doing Business’ analyses regulation that encourages efficiency and supports freedom to do business including starting a business, getting electricity, getting credit, protecting minority investors, employing workers, paying taxes and trading across borders.
The report, which was published yesterday, shows that Malawi’s score has improved from 60.4 last to 60.9, although no business reform was done during the period under review.
The sub-Saharan Africa regional average ease of doing business score was, however, 51.8 on a scale of 0 to 100, below the OECD high-income average of 78.4 and the global average of 63.0.
World Bank Doing Business Index, published on Wednesday, showed that Malawi failed to sustain gains made last year on the ease of doing business, dropping to position 111 from 110 out of 190 economies.
In 2018, Malawi emerged third topmost reformer in Africa on the ease of doing business index, moving 23 steps up the ladder on the global doing business ranking to position 110 out of 190 economies from 133 last year.
Globally, the country also ranked in the top 10 reformers in the past year, having implemented four reforms that improved the business environment in the areas of dealing with construction permits, getting credit, trading across borders and resolving insolvency.
This year, Mauritius (13) and Rwanda (38) are the only two sub-Saharan African economies in the top 50 on the ease of doing business ranking while South Sudan (185), Eritrea (189), and Somalia (190) are the lowest ranked economies in the region.
Economics Association of Malawi (Ecama) executive director Maleka Thula said Thursday that an improvement in ease of doing business may act as an impetus for private sector development through both domestic and foreign direct investment.
“This is important it shows that Malawi’s economic environment is conducive for doing business. This news is critical in boosting not only investor’s confidence, but also employment opportunities for the country,” he said.
Ministry of Finance, Economic Planning and Development, in its published Financial Sector Development Strategy II (2017-2021), said it wants to increase domestic credit to private sector as a percentage of gross domestic product from 12.3 percent to 30 percent in the next five years.