As the global economy continues to evolve, African countries are beginning to gain a foothold in terms of economic freedom. The African continent has long been associated with corruption, political instability and a lack of economic opportunity. In recent years, however, the focus has shifted, as more African countries work to implement policies that promote economic freedom and growth. This policy helps create an environment conducive to business and investment.
According to the Index of economic freedom, this economic freedom is characterized by the freedom of individuals to work, produce, consume and invest in any way they choose. The Index measures the principles of economic freedom that have fueled progress in the world’s most prosperous countries and covers 12 freedoms, from property rights to financial freedom. In this article, we explore the top 10 African countries with the most improved economic freedom by 2023. These countries have made significant progress in improving their economic policies and creating an environment conducive to business and investment.
Mauritius
Mauritius tops the list of African countries with the most improved economic freedom by 2023. The country has implemented policies that promote a business-friendly environment, including tax breaks, free trade agreements and streamlined regulatory processes. The government signed the African Continental Free Trade Agreement and the Common Market for Eastern and Southern Africa, introducing a low tariff of about 5%, making it easier for companies to import and export goods. The country also has a flat tax rate of 15%, one of the lowest in the world. This has helped to attract foreign investment, particularly in the financial services sector. In addition, Mauritius ranks 13th globally on the WWorld Bank’s Ease of Doing Business Index, which measures the ease of starting and running a business. Mauritius has a diversified economy with a strong service sector, including tourism and financial services. The tourism sector alone accounts for about 8% of GDP and employs about 100,000 people. Overall, Mauritius has succeeded in creating a business-friendly environment that encourages investment, entrepreneurship and innovation. However, like any country, it faces its own set of economic challenges, such as income inequality.
Botswana
Over the years, Botswana has been a leader in promoting economic freedom in Africa. The country’s stable political climate, low taxes, sound economic policies and strong commitment to property rights have contributed to the country’s high economic growth. For example, Botswana has implemented several reforms to simplify the process of registering property and resolving disputes, placing it fourth in Africa for protection of property rights by the International Property Rights Alliance. According to a World Bank ease of doing business report, it takes an average of 13 days to register property in Botswana and an average of 5.5 days to start a business, both of which are lower than the average for Sub-Saharan Africa. The country also has a relatively low tax burden, with a corporate tax rate of 22% and an income tax rate of 25%. And the government has introduced various tax incentives to encourage investment, such as tax exemptions for certain industries and deductions for research and development.
Ivory Coast
With an overall score of 60.4 out of 100, Ivory Coast ranks 81st worldwide and third in Africa. The country has made significant progress towards economic freedom, with a diversified economy and a stable political environment. Ivory Coast has a relatively open trade policy, with a weighted average tariff of 8.6% and relatively low non-tariff trade barriers. The government has also actively pursued trade liberalization policies and participated in several regional trade agreements such as the Economic Community of West African States and the African Continental Free Trade Zone. The West African country has a relatively low tax burden, with total tax revenue accounting for about 17.4% of GDP, well below the regional average. The government has introduced pro-business policies, streamlined business registration and improved access to credit, which has attracted foreign investment.
Tanzania
Tanzania has an overall score of 60.0 out of 100, ranking 84th worldwide and fourth in Africa. Over the years, the East African country has built a diverse economy, with agriculture and tourism as the main contributors and farming and manufacturing closely. The government has also prioritized infrastructure development, with investments in transport, energy and water and sanitation. Tanzania has a relatively low tax burden, with total tax revenue accounting for about 13.1% of GDP, a result of the government implementing reforms to improve tax administration and curb tax evasion. The government has also introduced a relatively open investment regime and introduced a number of investment incentives for foreign investors. Tanzania has also made progress in protecting property rights, with improved land registration and title systems, as well as reforms aimed at improving the efficiency of the judiciary and reducing corruption.
Benin
With an overall score of 59.8 out of 100, Benin ranks 87th globally and fifth in Africa. Benin has a relatively low tax burden, with a total tax revenue of approx 15.1% of GDP. The government has also introduced reforms to improve tax administration and reduce tax evasion. In 2022, Benin implemented a new tax code to simplify the tax system and reduce the tax burden on small and medium-sized enterprises. Benin launched an online business registration and licensing platform, making it easier and faster for entrepreneurs to start and run businesses. These efforts reduced the time and cost associated with obtaining building permits and streamlined procedures for resolving commercial disputes. Benin has also made significant progress in foreign investment, pursuing pro-business policies to attract foreign investment, such as the establishment of Special Economic Zones, investment incentives for certain sectors such as agriculture and tourism.