Special Report

Best (and Worst) Countries for Business

5. Central African Republic
>Distance-to-frontier score:
> Cost of starting a business: 204.0%
> Total tax rate: 0.0%
> Income per capita: $330

A supportive business climate often coincides with a developed economy. Central African Republic, with a GNI of just $330 per capita, is one of the poorest countries in the world and the fifth worst for doing business. The country’s internal conflict and poor infrastructure combined with inefficient, low quality business regulations are some of the obstacles businesses face. It takes nearly 100 days to establish a new electricity connection, and it costs close to $5,000. Once established, the connection is one of the most unreliable electricity sources in the world. Businesses in the Central African Republic reported losing about one-fourth of their revenue due to power outages.

4. Venezuela
>Distance-to-frontier score:
> Cost of starting a business: 88.7%
> Total tax rate: 9.9%
> Income per capita: $12,820

Government regulation is an important factor for doing business in a country — and governments strive to find a middle ground between too tight regulation that would frustrate businesses and too loose regulation that would fail to protect businesses and consumers alike. Under the rule of former President Hugo Chavez, a large share of the nation’s economy has been nationalized, including the oil and gas extraction industry — the cornerstone of the Venezuelan economy. Tight government regulation has done the country no favors in the “Doing Business 2016” report.

Starting a company in Venezuela requires 17 separate procedures — the second most of any nation measured — and it takes 144 days, longer than any country reviewed. Also, a lawyer is required for legal assistance when incorporating a company, which can cost nearly 90% of the country’s GNI per capita.

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3. South Sudan
>Distance-to-frontier score:
> Cost of starting a business: 330.1%
> Total tax rate: 6.9%
> Income per capita: $960

Gaining independence from Sudan in 2011, South Sudan is one of the youngest nations in the world. It is also one of the worst countries for business. While 122 economies have implemented reforms since June 2014, South Sudan is not one of them. The 23 procedures required to obtain a construction permit take about 124 days to complete, making it one of the most complex and time-consuming permitting systems in the world.. Additionally, infrastructure is so poor in South Sudan that it often takes well over a year to connect a building with electricity. A healthy regulatory framework promotes prosperity for both employers and employees. In South Sudan, however, there are no restrictions on overtime work and no paid vacation for workers in the country. Only two economies in the world are less hospitable for business.

2. Libya
>Distance-to-frontier score:
> Cost of starting a business: 26.9%
> Total tax rate: 22.0%
> Income per capita: $7,920

Although wealth often coincides with supportive business environment, Libya is an exception. The oil-rich country’s GNI of $7,920 per capita is far higher than other countries ranked as poorly for doing business. It is Libya’s lack of regulation that makes it one of the least hospitable countries in the world for business. There are no procedures in place for property registration and no official means of obtaining construction permits. Additionally, it takes 118 days to establish electrical connectivity in a new building in Libya- one of the longest turnarounds worldwide.

Like many of the worst countries for business, Libya has recently been hampered by violent political turmoil. Long time dictator Muammar Gaddafi was killed in the 2011 Libyan civil war. Since then, the country has yet to fully stabilize.

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1. Eritrea
>Distance-to-frontier score:
> Cost of starting a business: 38.1%
> Total tax rate: 9.2%
> Income per capita: $530

With a per capita GNI of $530, Eritrea is one of the poorest countries in the world. Government regulation, when it exists, is also the farthest removed from what most consider best practices. While business can be hindered in some nations due to lengthy and expensive processes regarding construction permits, Eritrea has no regulations or policies at all regarding new building construction. Similarly, while regulations slowing international trade can hurt business, too little regulation can as well. Eritrea has no documentation or broader compliance procedures in place for imports and exports.

Like many of the countries with the most room for improvement, Eritrea is a relatively young African nation. Gaining independence in 1993 after three decades of war, the country has since been involved in armed conflicts with neighboring countries. In the past several years, the international community has condemned Eritrea for its increasing lack of transparency.

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