Top 10 business constraints identified in the SADC region

SADC Business Barriers

As a region, the Southern African Development Community (SADC) performs poorly in the World Bank’s Ease of Doing Business Rankings for 2012, attaining an average rank of 114th – down one percentage point from the 2011 figures. Of the 15 SADC countries, Mauritius earned top honours, coming in at 23th, while the Democratic Republic of Congo (DRC) is the worst performer, ranking 178th.

As part of a research and dialogue project to identify the most important business constraints for the SADC region, initiated by the SADC Secretariat in collaboration with Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), the top 10 business constraints in the SADC region were identified. You can download the full paper here, or read the summary below.

Methodology

It is difficult to conduct business in the majority of SADC nations, for a variety of reasons which contribute to a regional economic climate that is not conducive to investment or to development in general. Business competitiveness surveys over the past number of years identify the lack of stability and predictability of macroeconomic policy, and the unfavourable investment climate as the primary obstacles behind sustaining and attracting new business investment. After collating the results of several Business Climate Surveys (BCSs) and Investment Climate Assessments (ICAs), this study advances the ten most cited business constraints in SADC based on an application of the developed criteria.

List of Top 10 Barriers to Investment and Development in SADC

Poverty is one of the most important challenges facing the SADC region, and its eradication is an overarching priority in the RISDP. In an investment and economic development context, the elements emphasising upskilling of the workforce; economic and financial integration; appropriate sectoral diversification; value addition and beneficiation are important to address poverty reduction. By applying a process of cross-matching, assigning a weighting of importance to the poverty eradication imperative, and by merging similar categories of business and investment barriers, a working list of the ten most significant barriers was identified as follows (in no particular order):

  1. Access to and cost of finance.
  2. Tax rates and/or administration (including direct and indirect taxes, double taxation policies and harmonisation).
  3. Access to skilled labour (including issues related to the free movement of people in the region).
  4. Economic and regulatory policy uncertainty.
  5. Fluctuations of the exchange rate/foreign currency regulations, including with respect to remittances.
  6. Customs regulations, procedures and bureaucracy.
  7. Supply of reliable and efficient infrastructure, including transport, telecommunications, IT and energy.
  8. Corruption.
  9. Inefficient bureaucracy, including transparency of rules and regulations, business licensing and investment permits.
  10. Non-tariff and other trade barriers, including technical barriers to trade (TBT), sanitary and phytosanitary measures (SPS) and standards, quality assurance, accreditation and metrology (SQAM) issues.

Way Forward

Based on the above list of the Top 10 Business Constraints in the SADC Region, the project has conducted firm-level case studies here to cover all the identified constraints. The selection of firms encompassed a variety of sectors and SADC member states.

Full paper on the Top 10 business constraints

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