Ghana has moved up ten places to 67 in the rankings of doing business in the world, thanks to two new reforms that led to enhanced credit availability, the International Finance Corporation said (IFC) on Thursday.
Ghana ranks topmost in registering property, access to credit and is among the first 10 economies by reform pace, the IFC said in a new report for 2011 launched simultaneously globally.
Overall, the country ranks fourth in Africa in improving general business environment after Mauritius, Rwanda and Tunisia.
The findings are contained in Doing Business 2011: Making a Difference for Entrepreneurs, the eighth in a series of the flagship annual reports published by IFC and the World Bank benchmarking the regulations that enhance business activity and those that constrain it.
The report presents qualitative indicators on business regulation and the protection of property rights for 183 economies from Afghanistan to Zimbabwe. The data are current as of June 2010.
The doing business indicators focus on regulations relevant to the life cycle of small to medium-sized domestic business, the formal economy and centred on major cities.
It does not measure all aspects of the business environment such as macroeconomic stability, corruption, level of labour skills, proximity to markets, or regulations specific to foreign investment or financial markets.
The IFC said the key driver for the significant improvement in Ghana’s performance was a national collateral registry and a private credit reference bureau introduced recently.
In the sub region, Ghana remains overall the easiest place to do business and ranks tops in 2 other indicators Registering Property and Paying Taxes. Sierra Leone is the easiest place to Start a Business and provides the best Protection for Investors; Burkina Faso provides simplified regulations for getting a Construction Permit, Cape Verde tops in Trading Across Borders and Enforcing Contracts while neighbouring Cote d’Ivoire makes it easiest in legally Closing a Business.
“Ghana has established Africa’s newest centralised Collateral Registry and by improving credit information and legal rights through granting an operating license to a private credit bureau, the West African country led the world in making it easier for business to obtain credit,” IFC said in a statement.
Ghanaian authorities welcomed the announcement and said much more could be attained in coming years.
Mr Mike Oppong Adusah, head of the Collateral Registry, said the facility had significantly restored mistrust between lenders and borrowers and that this could lead to reduction in lending rates in the near future.
“We are expecting lending rates, especially to small businesses, to reduce in the next 2 to 5 years because the risk factor that is always the concern for the lenders has been automatically addressed in the establishment of the registry,” Mr Adusah said.
He said the operations of the registry were being expanded to rope in rural banks and traditional private lenders.
Mr Adusah described as “very striking” the impact of the registry in eliminating the option of lenders seeking redress at the courts in order to execute actions against defaulting borrowers.