Thursday, December 11, 2014

Iraq Worsens Its Ranking On World Bank’s Doing Business 2015 Report

Each year the World Bank releases its Doing Business report, which ranks countries from around the world on how easy or hard it is for a small to medium sized company to begin operating. It looks at eleven areas such as starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts, resolving insolvency, and labor market regulations. The 2015 addition included 189 countries. Iraq has been towards the bottom of these rankings for quite some time given its cumbersome government regulations. In the latest report Iraq even did worse than it did the previous year.

From 2014 to 2015 Iraq went from 146 to 156 in ease of doing business according to the World Bank’s survey. That put the country near the very bottom of the Middle East and North Africa. The nations that did the best were the United Arab Emirates at 22 out of 189 countries, followed by Saudi Arabia at 49, Qatar at 50, Bahrain at 53, Tunisia at 60, Oman at 66, Morocco at 71, and Kuwait at 86. The remainders were in the bottom half and included Lebanon at 104, Egypt at 112, Jordan at 117, Iran at 130, Yemen at 137, the West Bank and Gaza at 143, Algeria at 154, Iraq at 156, Syria at 175, and Libya at 188. The region therefore had a range of scores from many that were doing quite well with their private sector and then those that were hindering it due to its bureaucracy and red tape. Iraq has regularly been at the wrong end of that spectrum due to its history of state-run economic policy, and its lack of reforms to promote business post-03.

World Bank Ease Of Doing Business Rankings Middle East-North Africa 2015
UAE 22
Saudi Arabia 49
Qatar 50
Bahrain 53
Tunisia 60
Oman 66
Morocco 71
Kuwait 86
Lebanon 104
Egypt 112
Jordan 117
Iran 130
Yemen 137
West Bank and Gaza 143
Algeria 154
Iraq 156
Syria 175
Libya 188

On a few of the eleven factors that the World Bank included in its rankings Iraq did very well putting it towards the top of countries in the report. The issues that Iraq did the best on were filing for construction permits, getting electricity, and paying taxes. Getting construction permits takes eight steps, and approximately 119 days. That put it towards the very top of all countries in the world at 9 out of 189. In the region only the United Arab Emirates at 4 did better, with Saudi Arabia at 21, Oman at 49, Jordan at 126, Egypt at 142, and Iran at 172. Electricity is another crucial factor to run a business and Iraq ranked 36 in that category. It takes four steps and around 77 days to be connected to the national grid. Again, in the region that was quite good with only the UAE at 4 and Saudi Arabia at 22 better. What the report didn’t seem to include was the reliability of that power supply as Iraq is notorious for blackouts and the need for private generators to make up for the shortages. Finally when it came to paying taxes Iraq ranked 52. That actually put in middle of the region with the UAE, 1, Saudi Arabia, 3, Oman, 10, and Jordan, 45, doing better, while Iran, 124, and Egypt, 149 did worse. That showed that the business environment in Iraq was not onerous on all fronts. Unfortunately there were far more barriers to get a company up and running.

On the seven remaining factors in the World Banks’ survey Iraq was towards the very bottom. On registering property it was 109, on enforcing contracts it was 141, for starting a business it was 142, on protecting minority investors it was 146, on trading across borders it as 178, getting credit it was 180, and finally on resolving insolvency it had the worst ranking of 189. On starting a business Iraq actually did worse from 2010-2014. It takes ten steps to register a business and 29 days. The costs for doing so actually increased since 2010 with the price for filing a name certificate and hiring a lawyer to draft the articles of association all going up. The price for importing and exporting products were also very costly. To export it takes ten documents, 80 days and a total cost of $3,550, and to import it’s 82 days and $3,650. That is a huge amount of time and money and why Iraq was eleven from the bottom in that category. Overall, these factors explain why Iraq’s private sector is dwarfed by the public one. It takes far too long and too much money, not to mention payoffs to government officials, which was not included in the World Bank paper to open a business in Iraq. That doesn’t mean that people don’t try all the time, but the process is so laborious it hinders a thriving economy.

Iraq’s World Bank Rankings 2015 (Rankings are out of 189 countries)
Construction permits – 9
Getting electricity – 36
Paying taxes 52
Registering property – 109
Enforcing contracts 141
Starting a business – 142
Protecting minority investors 146
Trading across borders 178
Getting credit – 180
Resolving insolvency 189

For decades Iraq lived under a command economy under Saddam. Although he did carry out some economic reforms in his later years, the idea that the state should be in control still predominates within the bureaucracy and with many of the country’s leaders today. That’s the reason why all the talk of economic reform in the country since 2003 has gone largely nowhere. In fact, the ministries have attempted to increase the government’s hold on sectors of the economy by creating monopolies with its state-run businesses. Until that changes Iraq will remain towards the bottom of rankings like this one by the World Bank.


Tijara Provincial Economic Growth Program, “Assessment of Current and Anticipated Economic Priority In Iraq,” United States Agency for International Development, 10/4/12

World Bank Group, “Economy Profile 2015 Iraq,” Doing Business 2015 Going Beyond Efficiency, November 2014
- “Regional Profile 2015 Middle East and North Africa (MENA),” Doing Business 2015 Going Beyond Efficiency, November 2014

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