Investment, Export and Growth in Africa

Findings from a Survey of African Employers’ Organisations

ABOUT THE SURVEY

Assessment of the conduciveness of policies and business conditions for the promotion of investment, export and growth in Africa

Survey of Business Africa member organisations

Responses from 21 countries

Conducted between September and November 2012

Survey Respondents

AlgeriaBurkina FasoCongoCote d’IvoireEgyptEthiopiaGabonGhanaGuinea KenyaLesotho

MaliMauritiusNamibiaNigerNigeriaTanzaniaUgandaSouth AfricaSwazilandZambia

Conduciveness of Policies to Investment and Growth

Policy Incentive/Adequate Inadequate/Disincentive

Fiscal policy 55.0 45.0

Monetary policy 70.0 30.0

Income/Wage policy 65.0 35.0

Trade policy 47.4 52.6

Education and skills development policy 15.0 85.0

% of Respondents

Conduciveness of Policy Environment to Industrialisation and SMEs

% of Respondents

Yes No0

10

20

30

40

50

60

40

60

45

55

Industrialisation SME development

%

Tax Rates

Tax Range (%) % of Respondents

Personal Income Tax Corporate Income Tax

Minimum Rate

less or equal to15 72.2 38.9

more than 15 27.8 61.1

Maximum Rate

15 to 25 29.4 26.7

more than 25 70.6 73.3

Special Corporate Tax Rate

Examples of activities/sectors: Farming Mining EPZ Manufacturing Global Business (Offshore)

% of Respondents

60%40%

Yes No

Access to Credit

% of Respondents

Easy

Difficult

Very Difficult

0 10 20 30 40 50 60

20

60

20

%

Interest on Loans

% of Respondents

Low

Reasonable

High

Very high

0 10 20 30 40 50 60 70

5.3

21.1

68.4

5.3

%

Central Bank and Inflation Rates

Rate (%) % of Respondents

Central Bank Rate Inflation Rate

Less or equal to 5 35 30

6 to 10 35 40

more than 10 30 30

Incentives for Domestic Enterprises to Invest

None Low Moderate High

In the economy 5.0 30.0 60.0 5.0

In specific sectors - 15.0 65.0 20.0

In SMEs 15.0 30.0 45.0 10.0

% of Respondents

Incentives for Foreign Direct Investment

% of Respondents

None

Low

Moderate

High

0 10 20 30 40 50 60 70 80

5

5

75

15

%

Incentives for Exports

None Low Moderate High

To African countries 15.0 45.0 25.0 15.0

To other countries 15.8 36.8 26.3 21.1

% of Respondents

Regional GroupingsCEEAC

CEDEAOCEMAC

COMESAEAC

ECOWASIOR-ARC

IGADSADCSACU

UEMOA

Main African Export• Food & Live Animals

– Agricultural products– Tea– Coffee– Cocoa– Sugar– Tobacco– Cattle– Fish and fish preparations– Wine– Canned fruits– Water

• Manufactured Goods– Textile, articles of apparel and clothing

accessories– Industrial goods

• Crude Materials, Chemicals & Metals– Timber– Rubber– Cotton– Gold– Copper– Platinum– Uranium– Diamond– Cobalt– Gas– Minerals– Hides/skin– Petroleum– Oil– Building materials

Constraints to Export• Erosion of trade preferences• Distance from main markets - transport cost• Lack of skilled labour• Competition from low cost producers• High cost of labour• Low productivity• Exchange rate fluctuations• Delays at ports/customs clearances• Lack of appropriate infrastructures• Market knowledge and information

Constraints to Export• Lack of export promotion policies• High taxes/tariffs• Administrative constraints• Government regulations• Absence of market knowledge/information• Supply side constraints/ low productive capacity• Lack of business opportunity• Lack of export finance• Lack of value added and quality products• Rules of origin• Certification and standards

Constraints to Intra-African Trade• Tariff & Non-tariff barriers• Customs regulation and procedures• Inadequate Trade related infrastructures• Poor quality products/standards• Poor logistics• Lack of conducive institutional framework and

business environment• Lack of proper legal/regulatory frameworks• Inadequate trade and investment policies• Lack of openness to movement of goods, capital

and people

Constraints to Intra-African Trade• Lack of trade finance and export credit• Financial constraints• Low financial sector development• Low productive capacity and competiveness• Lack of supply incentives• Convertibility of currency• Competition from China and India• Lack of skills • Lack of export/investment promotions• Similarity of products/lack of product

diversification

Investment in Infrastructure

Adequate Inadequate

Roads 45.0 55.0

Energy 25.0 75.0

Communications 50.0 50.0

% of Respondents

Is Bureaucracy a Constraint to Business?

% of Respondents

45%

55%

Important Very important

Other Major Constraints to Business ( % of Respondents)

Access to finance 63.2

Cost of finance 57.9

Lack of skilled labour 47.4

Customs and trade procedures/regulations 42.1

Cost of IT and telecommunication services 36.8

Tax administration and regulations 36.8

Poor ethics in the labour force 31.6

Tax rates 31.6

Legal environment 31.6

Labour regulations 31.6

Public infrastructure 26.3

Practices of competitors in the informal sector 21.1

Business licensing and permits 21.1

Conclusion

• Macroeconomic management in many African economies has improved over the past decade

• But deeper reforms are required to– improve the business environment– stimulate, investment and trade– enhance productivity and competitiveness– sustain growth and development