This brief analysis is a synthesis of the Doing Business Report 2017 data compiled upto and as of June 1, 2016. The indicators are used within the context of Algeria to analyze economic outcomes of countries of the same calibre as first reviewed back in October 2016 and identify the regulatory reforms of all legislation that are required so as the economies where they have been adopted and the reasons for which they have been implemented have born fruits. The question that such report brings to mind would therefore be about how to improve the Climate of Business in Algeria and how to go about it.  

In the meantime, the above mentioned report findings are excerpted below:

• Starting a business

Algeria made starting a business easier by eliminating the minimum capital requirement for business incorporation.

• Dealing with construction permits

Algeria made dealing with construction permits faster by reducing the time to obtain a construction permit.

• Getting electricity

Algeria made getting electricity more transparent by publishing electricity tariffs on the websites of the utility and the energy regulator.

• Paying taxes

Algeria made paying taxes less costly by decreasing the tax on professional activities rate. The introduction of advanced accounting systems also made paying taxes easier.

 The authors state at the outset that there are some important areas not covered by the Doing Business report and that it does not evaluate all of the factors such as policies and institutions that affect the quality of the framework of the economic activity of an economy or its competitiveness. It does not for example,  consider the macroeconomic stability, the development of the financial system, the size of the market, the frequency of bribery and corruption, nor the quality of the workforce, deadlines and costs as related to the logistics of the import and export of goods, indicators on the cross-border trade, or the cost of international transport as well as the effect of roads, rail, ports and inadequate communication systems that can have on operating a business and their consequences in terms of competitiveness.

However, if this report does not evaluate and/or is not intended to assess the benefits of all social and economic programs funded by tax revenues, assessing the quality and efficiency of the business regulation is something to take into account in the debate on the burden on enterprises regulatory objectives, which may vary from one economy to another.

The score awarded to each country on entrepreneurship is based on the following criteria.

– Procedures, deadlines, costs and supply minimum capital required to create a limited liability company.

– Obtaining a building permit:-procedures, time and costs related to execution of all required formalities and controls of quality and security in the system of obtaining a building permit.

– Connection to electricity: procedures, time and costs of connection to the electric network, electricity supply reliability and transparency of prices.

– Transfer of property: procedures, delays and costs of ownership transfer, and quality of the land administration system.

– Getting credit: laws on the pledging of movable property and credit information system.

– Protection of minority investors: rights of minority shareholders in transactions between related parties and corporate governance.

– Taxes and payments: payments, delays and total pay for a business applying all tax legislation as well as procedures subsequent to its declaration.

– Cross-border trade: delays and costs associated with the export of a product with a comparative advantage.

– Performance of contracts: delays and costs of settlement of a trade dispute and quality of court proceedings.

– Insolvency regulation: delays, costs, results and recovery rates in insolvency cases and solidity of the legislation in this area.

– Regulation of the labour market: labour regulation flexibility and aspect of the quality of employment.

 

The three main conclusions of this report are:

• Europe and Central Asia have improved significantly more commercial regulatory over time than any other region.
• It is in the area of entrepreneurship that economies have improved their regulatory processes the most.
• The economies in which it is easy to create a business tend to have lower levels of inequality in income on average.

 

Doing Business 2017 in its 14th Edition gives the following classification:

The first ten are :

1 2 3 4 5 6 7 8 9 10

New Zealand with a note of Singapore Denmark Hong Kong South Korea Norway UK USA Sweden Mecedoine

87.01 85.05 84.07 84.21 84.07 8282 82.45 82.13 81.74 80.87

 

Classification of the major countries. 

17. 22. 25. 28. 29. 32. 34. 40. 42. 50.

Germany Canada Portugal Netherlands France Spain Japan Russian Federation Belgium Italy

79.87 78.57 77.40 76.38 76.27 75.73 75.53 73.00 73.19 72.25

 

Ranking of middle  of the pack countries

63 66 68 69 74 77 78 83 94 102 116 120 122 123 130

Bahrain Oman Morocco Turkey South Africa Tunisia China Qatar Saudi Arabia Kuwait Argentina Iran Egypt Brazil India

68.44 67.73 67.50 67.19 65.50 64.89 64.28 63.66 61.11 59.55 57.45 57.45 56.64 56.53 55.27

Ranking of countries at lower grades than 50 requiring deep reforms

149 150 155 156 159 160 164 165 169 173

Bolivia Niger Bénin Algéria Ethiopia Mauritania Gabon Iraq Nigeria Syria

49.85 49.57 48.52 47.76 47.25 47.26 45.88 45.61 44.63 41.43

 

Ranking of countries with less than 40 points

180 184 186 187 188 189 190

Tchad Républic of Congo South Sudan Venezuela Libya Erythrea Somalia (last)

39.07 39.28 33.48 33.37 33.19 28.05 20.29

 

In summary, the deplorable ranking at the 159^th of Algeria that belies the euphoric statements of the former Minister of Industry having induced on the line the country’s authorities, and which I had been cautioning against on several occasions the Government, does not reflect the country’s significant potential.  There is no more a justifying speech that in anyway no-one believes in, therefore the only way is to go towards the necessary reforms to improve the business climate that primarily depend on Algerians themselves.

This ranking together for that matter many others would explain the collapse of the productive fabric and the importance of all hard currency services outflow and legal capital transfer that annually amounted between 2010 and 2016 to $14 / $15 billion to which the value of imports of goods need to be added for the calculation of currency.  These were $60 billion in 2013 and were brought back to $45 / $47 billion in 2016 and are currently extrapolated to be around $45 / $46 for 2017 giving approximately a total of $60 billion still less than what could paralyze the entire economic machine whose integration rate does not anyway exceed 15%.

Let us remember that the reserves of $114 billion as per the official data of both the IMF and the Bank of Algeria as at December 31, 2016. The Governor before the National Assembly on April 12, 2017 gave the amount of $109 billion as at end of March 2017 and as recorded by the official press agency APS.

With the deficit of the balance of payment as shown, during the first five months of 2017 customs statistics and those of the Office of National Statistics, reflecting an outflow of currency between April, May and June 25, 2017, the amount should be less than $109 billion on July 1, 2017.

According to this report, which gives a central place to the analysis of the informal sphere, an effective regulation would facilitate access of companies to the market, creation of jobs, productivity and the improvement of the levels of economic development in general; each new reform of the regulation is associated with a substantial increase in economic growth and thus improvement of the standard of life of the citizens. This report points out to what Haidar & Hoshi (2015) made 31 recommendations to achieve this goal for reform, classified into six different categories, depending on whether the reform is administrative or legal, and according to the level of potential resistance at the political level. 

By Dr Abdulrahmane Mebtoul, Mobile +213 0661552928- fax +213 041415837- +213 041446148