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BEHIND
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THE
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BORDER
” CONSTRAINTS ON AFRICAN
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ASIAN TRADE AND INVESTMENT FLOWS
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Regulation, Governance, and Judiciary SystemIn addition to insufficient infrastructure and financial services as well as rigidities in the labor market, large regulatory burdens and weak discipline on governance constitute significant impediments to business development among
firms operating in Africa, including those owned by Chinese and Indians.
Figure 4.24 shows that Tanzania has the highest incidence of inspections per year at an average of 27 days, compared to 19 days in Senegal and 14 days in South Africa. For all three countries, larger firms tend to be inspected more often, as do exporters. The number of inspections could be correlated with the scope and the scale of the firms activities.
Nonetheless,
the excessively high frequency of government inspections places serious constraints on them.
Corruption remains a serious issue in African countries. Small companies as well as nonexporting companies in Ghana, Senegal, South Africa,
and Tanzania chronically report the burden of having to make unofficial payments (figure 4.25). Enforcement of property rights and contracts is at the heart of a properly functioning market economy. However, many African countries have serious deficiencies
in their judicial systems, due to lack of resources and human capital, weak institutional capacity, as well as lack of transparent administration. Therefore,
business disputes tend to beTABLE 4.6
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