Tanzania has emerged the most economically free country among East African Community (EAC) states according to the ‘State of Economic Freedom Report 2023’ released by the Heritage Foundation.
The annual Index of Economic Freedom shows that Tanzania scored 60 points, followed by Kenya and Burundi that scored 52.5 and 52.2 percent respectively. DRC and Burundi scored 47.9 and 41.9 points respectively.
The index of Economic Freedom 2023 report is a comprehensive analysis of economic freedom and policies of 184 sovereign countries worldwide.
The report assesses factors such as trade, investment, property rights, government intervention in the economy, evaluating their impact on economic growth and prosperity.
The concept of economic freedom serves as a vital framework for evaluating the extent to which individuals and businesses have the freedom to make economic decisions. In countries with low economic freedom, governments exert coercion and constraints on liberties, restricting choice for individuals and businesses, which can ultimately hinder prosperity.
Measuring Economic Freedom
This ranking uses four broad categories with three key indicators each, both qualitative and quantitative, to measure economic freedom that include rule of law, size of the governmet, regulatory efficiency and open markets.
Only four countries in the world have a score of 80 or above, Ireland, Singapore, Switzerland, and Taiwan, categorizing them as completely free economically.
From a regional perspective, Europe ranks the strongest in economic freedom.
Despite being a powerhouse within Europe, Germany ranks 10th in the continent, with a score of 73.7. One of the categories Germany scored the weakest in was government spending (28.3/100). Over the last three years, government spending has averaged 49% of GDP.
Ireland ranks third globally, scoring particularly high in categories like property rights and judicial effectiveness. The country also has no minimum capital requirement—which is typically a banking regulation and corporate law issue determining how many assets an organization must hold—making it attractive for businesses to set up shop on the Emerald Isle.
Continent with the least economic freedom in the world
Currently, Africa is the continent with the least economic freedom in the world, however, it is also the region with the highest potential for economic growth.
A booming population, and thus, labor force, are promising for future innovation. In fact, it’s anticipated that Africa will see an increase of 2.5 billion people by the end of the century.
The lowest scoring country in Africa is Sudan, a country under further strain thanks to rife civil conflict. Historically, economic development has been constrained by rampant corruption and a lack of institutional capacity.