The BEI index: an approach for measuring the business environment in Africa
Abstract
Africa is becoming more and more attractive for trade and investment, while entrepreneurs are concerned about the quality of the business environment. This paper aims to analyze the Africa’s business environment and its dimensions in order to identify the most favorable destinations for starting a business. The methodology for this study includes research reviewing the existing literature and a quantitative approach based on a composite instrument. The results of the empirical study show that three regions have a favorable business environment for starting a business, while the most important dimensions of business are related to costs incurred, time and procedures required and trade aspects.
First published online 04 April 2022
Keyword : Southern Africa, starting a business, doing business in Africa, composite index, dimensions of business environment, African regions
How to Cite
Topliceanu, S. C., & Sorcaru, S. L. (2022). The BEI index: an approach for measuring the business environment in Africa. Journal of Business Economics and Management, 23(4), 895–914. https://doi.org/10.3846/jbem.2022.16644
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Williams, C. C., & Kedir, A. M. (2017). Evaluating the impacts of starting up unregistered on firm performance in Africa. Journal of Developmental Entrepreneurship, 22(3), 1–20. https://doi.org/10.1142/S1084946717500170
Adams, S., & Opoku, E. E. O. (2015). Foreign direct investment, regulations and growth in sub–Saharan Africa. Economic Analysis and Policy, 47, 48–56. https://doi.org/10.1016/j.eap.2015.07.001
Akisik, O., Gal, G. & Mangaliso, M. (2020). IFRS, FDI, economic growth and human development: The experience of Anglophone and Francophone African countries. Emerging Markets Review, 45, 100725. https://doi.org/10.1016/j.ememar.2020.100725
Akpalu, W., & Wilson, J. (2021). Ease of doing business and total factor productivity growth in renewable energy production in Sub-Sahara Africa. SSRN. https://doi.org/10.2139/ssrn.3904608
Alonso, J. A., & Garcimartin, C. (2013). The determinants of institutional quality. More on the debate. Journal of International Development, 25(2), 206–226. https://doi.org/10.1002/jid.1710
Asongu, S., & Nwachukwu, J. C. (2018). Openness, ICT and entrepreneurship in Sub-Saharan Africa. Information Technology & People, 31(1), 278–303. https://doi.org/10.1108/ITP-02-2017-0033
Asongu, S., & Odhiambo, N. (2019a). Challenges of doing business in Africa: A systematic review. Journal of African Business, 20(2), 259–268. https://doi.org/10.1080/15228916.2019.1582294
Asongu, S., & Odhiambo, N. (2019b). Doing business and inclusive human development in Sub-Saharan Africa. African Journal of Economic and Management Studies, 10(1), 2–16. https://doi.org/10.2139/ssrn.3237386
Ayadi, L., Benjamin, N., Bensasi, S., & Raballand, G. (2013). Estimating Informal Trade across Tunisia’s Land Borders (Policy Research Working Paper 6731). The World Bank. https://doi.org/10.1596/1813-9450-6731
Barasa, L., Knoben, J., Vermeulen, P., Kimuyu, P., & Kinyanjui, B. (2017). Institutions, resources and innovation in East Africa: A firm level approach. Research Policy, 46(1), 280–291. https://doi.org/10.1016/j.respol.2016.11.008
Benjamin, N., Golub, S., & Mbaye, A. A. (2015). Informality, trade policies and smuggling in West Africa. Journal of Borderlands Studies, 30(3), 381–394. https://doi.org/10.1080/08865655.2015.1068203
Betila, R. (2021). The impact of Ease of Doing Business on economic growth: A dynamic panel analysis for African countries. SN Business & Economics, 1(10), 144. https://doi.org/10.1007/s43546-021-00143-9
Bosire, E. (2019). Does better business regulatory environment translate to increased foreign direct investment inflows? Evidence from Eastern Africa. International Journal of Economics and Financial Issues, 9(4), 119–136. https://doi.org/10.32479/ijefi.8153
Byaro, M., & Kinyondo, A. (2020). Institutional quality explains the difference of natural gas revenues to contribute in the economy: Empirical evidence from Tanzania. African Journal of Economic Review, 8(3), 84–97.
Cali, C., Davradakis, E., Fenton, N., & El-Kourchi, A. (2018). Banking sector trends in West Africa. In Banking in Africa: Delivering on financial inclusion supporting financial stability (pp. 47–74). European Investment Bank.
Charoensukmongkol, P. (2016). The interconnections between bribery, political network, government supports and their consequences on export performance of small and medium enterprises in Thailand. Journal of International Entrepreneurship, 14(2), 259–276. https://doi.org/10.1007/s10843-016-0164-1
Charoensukmongkol, P. (2020). The interplay between firm resources and government agency social capital on Thai firms’ satisfaction with export performance. International Journal of Globalisation and Small Business, 11(1), 18–38. https://doi.org/10.1504/IJGSB.2020.105581
Chewaka, D., & Zhang, C. (2021). Multinational firm growth and sustainability responses to dynamics of business regulations in host market. Sustainability, 13(24), 13945. https://doi.org/10.3390/su132413945
Dollar, D., & Kraay, A. (2003). Institutions, trade and growth. Journal of Monetary Economics, 50(1), 133–162. https://doi.org/10.1016/S0304-3932(02)00206-4
Dwumfour, R. A. (2020). Poverty in Sub-Saharan Africa: The role of business regulations, policies and institutions. Social Indicators Research, 149, 861–890. https://doi.org/10.1007/s11205-020-02277-z
Eifert, B., Gelb, A., & Ramachandran, V. (2005). Business environment and comparative advantages in Africa: Evidence from the Investment Climate Data (Working Paper 56). Center for Global Development. https://doi.org/10.2139/ssrn.1112857
Leke, A., & Signe, L. (2019). Spotlighting opportunities for business in Africa and strategies to succeed in the world’s next big growth market. In Africa’s untapped business potential: Countries, sectors and strategies (pp. 77–95). Brookings Institution.
Nageri, K. (2020). Ease of doing business and capital market development in a demand following hypothesis: Evidence from ECOWAS. Studia Universitatis Vasile Goldis, Arad, Economic Series, 30(4), 24–54. https://doi.org/10.2478/sues-2020-0023
Nageri, K., & Gunu, U. (2020). Corruption and ease of doing business: Evidence from ECOWAS. Acta Universitatis Sapientiae Economics and Business, 8(1), 19–37. https://doi.org/10.2478/auseb-2020-0002
Nardo, M., Saisana, M, Saltelli, A., Tarantola, St., Hoffman, A., & Giovannini, E. (2008). Handbook on constructing composite indicators. Methodology and user guide. OECD Publishing.
Nguyen, B., Canh, N. P., & Thanh, S. D. (2021). Institutions, human capital and entrepreneurship density. Journal of the Knowledge Economy, 12(3), 1270–1293. https://doi.org/10.1007/s13132-020-00666-w
Nketiah-Amponsah, E., & Sarpong, B. (2020). Ease of doing business and foreign direct investment: Case of Sub-Saharan Africa. International Advances in Economic Research, 26(3), 209–223. https://doi.org/10.1007/s11294-020-09798-w
Osoro, J., & Santos, R. (2018). The banking sector in East Africa – Responding to market shocks. In Banking in Africa: Delivering on financial inclusion, supporting financial stability (pp. 99–120). European Investment Bank.
Pelletier, A., & Stijns, J. P. (2018). Sub-Saharan African banking sectors: Results from a survey of banking groups. In Banking in Africa: Delivering on financial inclusion, supporting financial stability (pp. 13–46). European Investment Bank.
Pintilescu, C., & Viorica, D. (2019). Current methodological approaches in economic resilience analysis. Empirical findings in the EaP Countries. In G. Rouet & G. C. Pascariu (Eds.), Resilience and the EU’s Eastern Neighbourhood Countries: From theoretical concepts to a normative agenda (pp. 321–348). Palgrave Macmillan. https://doi.org/10.1007/978-3-030-25606-7_11
Tchamyou, V. (2017). The role of knowledge economy in African business. Journal of the Knowledge Economy, 8, 1189–1228. https://doi.org/10.1007/s13132-016-0417-1
The World Bank. (2020a). Doing business 2020: Comparing business regulation in 190 economies. The World Bank Publications.
The World Bank. (2020b). Doing business indicators. Retrieved October 20, 2020, from https://databank.worldbank.org/source/doing–business
Vaitoonkiat, E., & Charoensukmongkol, P. (2020). Interaction effect of entrepreneurial orientation and stakeholder orientation on the business performance of firms in the steel fabrication industry in Thailand. Journal of Entrepreneurship in Emerging Economies, 12(4), 453–473. https://doi.org/10.1108/JEEE-05-2019-0072
Williams, C. C., & Kedir, A. M. (2017). Evaluating the impacts of starting up unregistered on firm performance in Africa. Journal of Developmental Entrepreneurship, 22(3), 1–20. https://doi.org/10.1142/S1084946717500170