Ten Worst Countries to Start a Business in Africa

Omolola Lipede
20% Complete
 03-May-2018

There are many business moguls or small scale business entrepreneurs who love to go to different places to pitch their business tents in countries across the African continent. Such one need to know the economies that are a ‘no-no’ for businesses, based on certain realities.

Economies are ranked on their ease of doing business from 1-190. A high rank (low numerical value) indicates the better, usually simpler, regulations for businesses and stronger protections of property rights. This shows that the regulatory environment is more conducive to the establishment and operation of a local firm.

Despite the vast opportunities in Africa, it remains a daunting place to start and run a business. Credit facilities are limited, electricity costs a fortune, overhead costs are throat cutting. The continent is blessed with numerous natural resources; yet, and so far, little have been achieved with such blessedness. The overall success of any country can be linked to the ability of the country to provide an enabling environment and ample opportunities for its citizenry. Majorities of the countries with least opportunities are suffering from political unrest, war, poverty e.t.c.

So, here comes the dreaded list…

  1. Somalia

Somalia, a country with a population of 14.3 million, has a land mass of 637,657sq km completes the list of the worst countries to start a business in the world, ranking the least with a large numerical value of 190. The Horn of Africa, which was known as an important commercial centre, has recently become a shadow of itself. After several political unrest and a prolonged civil war, the country has been inching towards stability, but the new authorities still face a challenge from Al-Qaeda-aligned Al-Shabab insurgents. The country is popularly known for it various natural disasters ranging from, tsunami and flood to drought and others. It takes 187 days to start a business in the country, including getting electricity and 150 days to register for property. The US and Western nations have warned individuals to avoid travelling to Somalia because of the high level of unrest and attacks in the country; currently, the country is not an ideal place to start a business despite the land being viable and virgin.

  1. Eritrea

Eritrea won independence from Ethiopia in 1993 after a 30-year war. Bordered by Sudan, Ethiopia and Djibouti, it occupies a strategic area in the Horn of Africa but remains one of the most secretive states in the world.The Horn of Africa is disturbed by prolonged periods of conflict and severe drought which have adversely affected the economy and it remains one of the poorest countries in Africa. Eritrea has a numerical value of 189 in ease of doing business in the world rank, it takes 184 days to start a business with 187 days to get electricity and 178 days to register a property before any business can kick-off in the country.The economy with a population of 5.6 million has seen hundreds of thousands of citizens fleeing the country because of human right abuse. Eritrea has faced many economic problems, including lack of financial resources and chronic drought, worsened by restrictive economic policies. For any business to thrive in any environment there must be an enabling environment in terms of amenities and security, unfortunately Eritrea has failed in such perspectives.

  1. South Sudan

A  country of more than 13 million people, Sudan also makes up the list of the worst economies to start a business. South Sudan is known for their prolonged civil war in the country which  is disrupting what remains of the economy. The country has a high numerical value of 187 in doing business world rank; days needed to start business is 181, with 187 days needed to get electricity and 181 days to register for property in the country. The  market structure of the economy is not well-organised, therefore, property rights are insecure and price signals are weak. The country has little infrastructure, about 10,000 kilometers of roads, but just 2% of them are paved. Electricity is produced mostly by diesel generators which costs a fortune. Without the needed amenities business will be a struggle in that part of the world, so, for now South Sudan is a no go area for business minded individuals.

  1. Libya

Libya is mostly desert and known to be an oil-rich country but did not make the list of best countries to start a business despite its richness, call that a resource curse? The country has a value of 185 in ease of doing business world rank: 167 days to start a business, 130 days to get electricity and 187 days to register a property in the country. The country which started well after the discovery of oil has experienced a stalling in development as a result of political chaos and insecurity. The leaders have hindered economic development by failing to use its financial resources to invest in national infrastructure. Libya suffers from widespread power outages in its largest cities, caused by shortages of fuel for power generation. Many governments advise against traveling to Libya due to its serious state of political and social instability. So, safety first before business.

  1. Central African Republic

Central African republic which is predominantly a subsistence agriculture, forestry and mining based economy, has been prone to conflict since independent from France. The country is rich in diamonds, gold, oil and uranium but enlisted among the worst countries to start a business in Africa, with a numerical value of 184. It takes 188 days to start a business, 183 days to get electricity and 169 days to register for property. The high rate of abuse of human rights and conflict put the economy among the list of worst places to start a business venture.

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  1. Congo DR

Despite being a vast country with numerous resources the country is clouded with civil war and corruption. The country sees itself placed among the worst countries in the Africa to start a business with a numerical value of 182 ease of doing business world rank. 62 days are needed to start a business with 175 days to get electricity and 158 days to register for property in the country. Recently, the economic conditions slowly began to improve as the government reopened relations with international financial institutions, international donors and implementing reforms. However, the progress of the economy remains slow because of political instability, bureaucratic inefficiency, corruption, and patronage. These menaces have dampened international investment prospects in the country.

  1. Chad

The Central African nation also made the list of worst economies to start a business in Africa. The landlocked nation appears on the list due to some economic disadvantages: taxes, freedom (personal and trade), technological readiness and red tape. The ease of doing business world rank is 180, the days needed to start a business is 185 with 177 days to get electricity and 159 days to register a property in the country. The rapid falling prices of energy have further hindered Chad, which relies on oil for more than half of its exports. The country has been marked by instability, inadequate infrastructure, and internal conflict.

  1. Congo Republic

The  sub-Saharan Africa country which is sometimes referred to as Congo-Brazzaville has been plagued with civil wars and militia conflicts, little wonder the country couldn’t escape being tagged as one of the worst countries in Africa to do business in. The country is 179 in ease of doing business world rank, has 177 days to start a business, 181 days to electricity and 177 days to register property in the country. There is a serious bottle-neck in administration when a business venture is to be established in the country. The social and political unrest also contributed to the difficulty in having a conducive environment in the economy.

  1. Guinea Bissau

The country has rich natural reserves in gold, diamonds, bauxite and iron ore, but GDP per capita is one of the lowest in the world at $1,300 and the trade deficit is 24% of GDP. The economy ranks poorly on taxes, monetary freedom, investor protection and innovation. The country has a value of 176 in doing business world rank, 178 days to start a business with 180 days to get electricity and 120 days to register for property in the country. The economy is disadvantaged by limited economic prospects, weak institutions which results in low investments prospects.

  1. Angola

Angola is one of Africa’s major oil producers, yet it was not left out in the horrid list of worst economies to start businesses in. The ease of doing business world rank is a huge numerical value of 175 with 134 days needed to start a business, 165 days to get electricity and 172 days to register a property in the country. With a population of about 29 million people, Angola is striving to tackle the physical, social and political legacy after being ravaged with 27-year civil war. The continuous fall in oil prices has slowed down the improvement in the economy, thereby, making investment and business struggle to thrive in the country.

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