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08.09.2004 Business & Finance

Africa ' too tough on business'

By bbc

A new World Bank report has accused African governments of putting in place a web of regulations which strangle business and keep people in poverty. The report was released as some 20 African leaders are discussing poverty and unemployment in the Burkina Faso capital, Ouagadougou.

But they are unlikely to give much of a hearing to the World Bank model.

African Union head Alpha Oumar Konare has rejected "rabid liberalism", saying the market imposes "brutal forces".

This will not come as a great surprise in Lagos, Nairobi or Johannesburg.

Many Africans know only too well that they are unlikely to get good jobs in offices or on the factory floor, no matter how hard they try.

Instead they look to other options. Some make the difficult and dangerous journey to look for work in Europe.

Many more scrape a living in the informal sector - buying and selling anything they can get their hands on.

Stagnation

A report by the World Bank offers an explanation as to why so few young Africans can find what are sometimes called "real jobs" in the formal sector.

The World Bank says that four-fifths of the most difficult countries in the world to do business are in Africa.

In Mozambique, for example, it takes 153 days to start a firm.

In Canada it takes just two days.

It takes 21 procedures to register a business in Nigeria, but just three in Finland.

No wonder firms struggle to survive in Africa, and therefore offer so little hope of employment.

The International Monetary Fund (IMF) has just reported that through privatising state-run firms Tanzania has managed to generate growth of nearly 6% a year.

This compares with the past 30 years of stagnation produced by state-run enterprises.

The question for African leaders is whether they will stick to the statist model many adopted at independence nearly 50 years ago, or whether they will accept the market-orientated formula suggested by the IMF and World Bank, despite its many difficulties.

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