The Worst Countries for Doing Business
10. Equatorial Guinea
>Distance-to-frontier score: 40.03
> Cost of starting a business: 99.4%
> Total tax rate: 20.7%
> Income per capita: $13,340
The Central African nation of Equatorial Guinea is a resource-rich country, which has led to a great deal of wealth in the country. The country’s current GNI per capita of $13,340 is the highest of any nation on the continent. This prosperity, however, has not translated into improved welfare for the population. According to the UN, nearly one in 10 children do not live to the age of five, and less than 50% of the population has access to clean drinking water.
The nation’s wealth has also not improved the ease of doing business in the country. According to the Doing Business report, it takes 135 days and 18 separate procedures to start a business, the longest and second most procedures of the 185 countries measured.
>Distance-to-frontier score: 39.64
> Cost of starting a business: 22.5%
> Total tax rate: 21.7%
> Income per capita: $5,300
The sub-Saharan nation of Angola is one of the least business friendly countries in the world. It would cost an entrepreneur in Angola 22.5% of the country’s GNI per capita of $5,300 and take over a month to start a business. While the process is expensive and time consuming, it has improved since last year. Since June 2014, the country has made it easier to start a business by improving the registration process and reducing registration fees. The corporate tax rate has also been reduced since last year. Like in many of the worst countries for business, it is hard to sustain an enterprise through financial difficulty. In Angola, there is no framework whatsoever to assist companies that declare bankruptcy.
>Distance-to-frontier score: 39.56
> Cost of starting a business: 235.3%
> Total tax rate: 23.8%
> Income per capita: $830
Haiti, which shares an island with the Dominican Republic, is the poorest nation in the Western Hemisphere. The nation’s economy and public welfare have been hindered by years of dictatorship as well as a 7.0 earthquake that devastated the capital, Port-Au-Prince. These obstacles have likely contributed to the nation’s poor business climate.
According to the Doing Business 2016 report, “Formal registration of a company is so complicated [in Haiti] that the process cannot be completed without using the services of third parties – lawyers and notaries.” It also takes nearly 100 days to start a business, close to five times the global average time. When considering the fact that the expenses of starting a business are more than double the country’s GNI per capita, it is not surprising that there are only six registered private companies per 100,000 working-age adults compared to 1,507 private companies per 100,000 working-age people in New Zealand.
>Distance-to-frontier score: 38.22
> Cost of starting a business: 150.4%
> Total tax rate: 31.3%
> Income per capita: $1,010
Chad, Africa’s fifth-largest nation, is one of the worst countries in the world to do business. Poor infrastructure and recurring internal conflict since Chad gained independence in 1960 have hurt residents and businesses. Chad’s GNI per capita of $1,010 is one of the lowest worldwide. It takes 67 days and it costs nearly $8,000 to establish an electricity connection in the country, far longer and relatively expensive compared to other countries. Once established, the connection is one of the least reliable worldwide.
Despite its unsupportive business environment, Chad has made regulatory improvements in the past year. Chad, along with five other member nations of the Organization for the Harmonization of African Business Law (OHADA) — an organization that governs business regulation among 17 African countries — recently lowered its property transfer tax, making it easier for entrepreneurs to trade land and real estate.
6. Congo, Dem. Rep.
>Distance-to-frontier score: 38.14
> Cost of starting a business: 29.3%
> Total tax rate: 27.5%
> Income per capita: $410
The Democratic Republic of Congo is one of the least business friendly countries in the world. The country ranks especially poorly in getting electricity and enforcing contracts. It costs about $63,000 to connect a building with electricity, and enforcing contracts costs an average of 80.6% of the claim. Despite an expansive list of obstacles to doing business in the Central African nation, conditions have improved in some areas. Since June 2014, the country has made it easier for entrepreneurs to start a business by reducing the minimum capital requirement and simplifying the registration process.
The unfriendly business environment in the Democratic Republic of Congo is likely a symptom of many other complex problems. The nation is home to abundant resources, which were the focal point of a five year war involving multiple countries. The war resulted in an estimated 6 million deaths.
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