According to the World Bank, Benin currently ranks 170^th out of 183 countries on its Ease of Doing Business Index – a measure created by the Bank to gauge the degree to which commercial enterprises encounter regulatory hurdles, legal threats to property, and the time and money spent on things such as registering a business, ensuring right of title to property, and acquiring licenses. By way of comparison, the United States ranks 4^th on ease of doing business, right after Singapore, Hong Kong, and New Zealand.

What does this ranking mean? Take, for instance, the Bank’s measure of how easy it is to start a business, which is depicted in Figure 1 below. From the figure one can see that the Bank defines business-creation costs as consisting of the time and money outlays involved in the series of legal steps necessary for the entrepreneur must take in order to legally establish an in-country firm. Using this framework, the Bank then tasks researchers to go through this process in order to establish in-country averages.

When this metric is applied to Benin, the Bank finds that Benin ranks 157^th out of 183 in ease of starting a business, making Benin one of the more difficult places on Earth to start a legal commercial enterprise. To start a business in Benin one has to complete seven bureaucratic procedures that take a total of 31 days at a total cost of about $1,140, with a minimum capital requirement of $2,122 imposed by the government for the start-up.

Figure 1:

How the World Bank Measures Ease of Starting a Business

Using similar metrics for other aspects of business operations, the Bank has ranked Benin in a number of other areas. To obtain a construction permit, for instance, Benin does better and is ranked 125^th out of 183 as it takes the completion of 15 procedures, which takes on average 320 days at a cost of nearly $1,875. While not insurmountable for many Westerners, it is nonetheless a steep proposition for most citizen of Benin.

Continuing in its assessment, the World Bank has determined that in order to obtain and register property, Benin does about the same as it ranks 129^th out of, again, 183 countries measured. To register property in Benin, the Bank finds, it takes the completion of four bureaucratic procedures that takes, on average, 120 days and costs 11.8-percent of the property’s financial value in fees and other costs to complete. This makes Benin a moderately a fairly place in which to register property.

Benin unfortunately does not do better when it comes to obtaining credit, where it falls to 152^nd out of 183—making the country one of the worst in the world in this area. Here, as depicted in Figure 2, the Bank examines the legal rights of creditors and borrowers in secured transactions and bankruptcy law as well as the strength of credit information bureaus and exchanges.

When lenders have both strong legal rights and easy access to a wide variety of information about the client’s creditworthiness, reasons the Bank, the more available credit will be. When information on borrowers is significantly lacking – as is the case in most of Africa – legal protections for creditors must in turn be very strong. Benin does poorly because creditor rights are relatively weak and there is relatively little information on potential borrowers.

Figure 2:

How the World Banks Conceptualizes Credit Acquisition

When it comes to protecting investors and minority shareholders, Benin does about as well. Here, the country ranks 154^th out of 183 countries, largely due to the difficulty of bringing shareholder lawsuits and the loose liability laws constraining directors and corporate executives. While some conflict-of-interest disclosures are required, there is otherwise very little to protect shareholders from executive malfeasance.

Benin unfortunately does even less well in the area of taxation. The World Bank estimates that pleasing the tax man in Benin requires a total of 55 payments over the course of a year which, in turn, takes up to 270 hours to complete and can consume up to 66-percent of a company’s profits. Accordingly, Benin’s tax burden is ranked 167^th out of 183 nations, making it one of the worst in the world in this area.

When it comes to engaging in cross-border trade, Benin does better. In Benin, to import goods into the country one is required to have seven documents for customs officials to inspect. On average, it takes a total of 32 days to import goods into Benin with the cost amounting to $1,400 (excluding tariffs) per container shipped into the country.

The cost to export goods is roughly similar as Benin requires seven documents to be inspected by customs’ officials, while the total cost (excluding taxes) is $1,251 per container, with delivery taking up to 30 days from point of origin. Compared to global averages this nets Benin a ranking of 127^th out of 183 on ease of engaging in cross-border trade.

Benin’s ranking plummets again when it comes to contract enforcement, where it ranks 177^th out of 183 countries ranked on this issue by the Bank. On average, reports World Bank analysts, it takes a total of 42 legal procedures to take a contract from dispute to resolution, at the cost of 825 days spent in court or otherwise attending to legal issues. The financial cost of pursing a contract claim, says the Bank, typically accounts for 64.7-percent of the value of the claim.