As the global economy continues to evolve, African nations are beginning to find their footing in terms of economic freedom. The African continent has long been associated with corruption, political instability, and a lack of economic opportunities.
However, recent years have seen a shift in focus, as more African countries work to implement policies that promote economic freedom and growth. These policies are helping create an environment that is conducive to business and investment.
According to the Index of economic freedom, this economic freedom is characterized by the freedom of individuals to work, produce, consume, and invest in any way they please.
The Index measures the principles of economic freedom that have fueled progress in the world’s most prosperous countries and covers 12 freedoms, from property rights to financial freedom. In this article, we explore the top 5 African countries with the most improved economic freedom in 2023.
These countries have made significant strides in improving their economic policies and creating an environment that is conducive to business and investment.
Mauritius tops the list of African countries with the most improved economic freedom in 2023. The country has implemented policies that promote a business-friendly environment, including tax incentives, free trade agreements, and streamlined regulatory processes. The government signed the African Continental Free Trade Agreement and the Common Market for Eastern and Southern Africa, and implemented a low tariff rate of around 5%, which makes it easier for businesses to import and export goods. The country also has a flat tax rate of 15%, which is one of the lowest in the world. This has helped to attract foreign investment, particularly in the financial services sector. Additionally, Mauritius ranks 13th globally on the World Bank’s Ease of Doing Business Index, which measures the ease of starting and running a business. Mauritius has a diversified economy with a strong service sector, including tourism and financial services. The tourism sector alone accounts for around 8% of its GDP and employs around 100,000 people. Overall, Mauritius has been successful in creating a business-friendly environment that encourages investment, entrepreneurship, and innovation. However, like any country, it faces its own set of economic challenges, like income inequality.
Over the years, Botswana has been a leader in promoting economic freedom in Africa. The country’s stable political environment, low taxes, sound economic policies and a strong commitment to property rights has contributed to the country’s high levels of economic growth. For example, Botswana has implemented several reforms to simplify the process of registering property and resolving disputes, making it rank 4th in Africa for property rights protection by the International property rights alliance. According to a World Bank’s ease of doing business report, it takes an average of 13 days to register property in Botswana, and an average of 5.5 days to start a business which are both lower than the average for Sub-Saharan Africa. The country also has a relatively low tax burden, with a corporate tax rate of 22% and a personal income tax rate of 25%. And the government has implemented several tax incentives to encourage investment, such as tax holidays for certain sectors and deductions for research and development.
With an overall score of 60.4 out of 100, Côte d’Ivoire ranks 81st globally and third in Africa. The country has made significant strides towards economic freedom, with a diversified economy and a stable political environment. Côte d’Ivoire has a relatively open trade policy, with a weighted average tariff rate of 8.6% and relatively low non-tariff barriers to trade. The government has also actively pursued trade liberalization policies and participated in various regional trade agreements, such as the Economic Community of West African States and the African Continental Free Trade Area. The west African country has a relatively low tax burden, with total tax revenue accounting for approximately 17.4% of GDP, well below the regional average. The government has implemented pro-business policies, streamlining business registration and improving access to credit, which have attracted foreign investment.
Tanzania has an overall score of 60.0 out of 100, ranking 84th globally and fourth in Africa. Over the years, the east African country has built a diverse economy, with agriculture and tourism being the main contributors and agriculture and manufacturing closely. The government has also prioritized infrastructure development, with investments in transportation, energy, and water and sanitation. Tanzania has a relatively low tax burden, with total tax revenue accounting for approximately 13.1% of GDP, a result of the government implementing reforms aimed at improving tax administration and reducing tax evasion. The government has also implemented relatively open investment regime and a number of investment incentives available to foreign investors. Tanzania has also made progress in protecting property rights, with improved land registration and titling systems, as well as reforms aimed at improving the efficiency of the judicial system and reducing corruption.
With an overall score of 59.8 out of 100, Benin ranks 87th globally and fifth in Africa. Benin has a relatively low tax burden, with total tax revenue accounting for approximately 15.1% of GDP. The government has also implemented reforms aimed at improving tax administration and reducing tax evasion. In 2022, Benin implemented a new tax code aimed at simplifying the tax system and reducing the tax burden for small and medium-sized enterprises. Benin launched an online platform for business registration and licensing, making it easier and faster for entrepreneurs to start and operate businesses. These efforts reduced the time and cost associated with obtaining construction permits and streamlined procedures for resolving commercial disputes. Benin has also made significant progress with foreign investments, by implementing pro-business policies, to attract foreign investment, such as the establishment of special economic zones, investment incentives for certain sectors such as agriculture and tourism.
Source: ventures Africa